The cryptocurrency and blockchain technology industries have given birth to a plethora of new and intriguing names. The fork is one of these words. And, no, this isn’t what you eat your meal with! I’ll explain all you need to know about the Bitcoin fork in this guide.
I’ll start by defining what is Bitcoin fork. Then, we will go over some of the most famous and well-known forks in recent years. Following that, I will discuss a handful of famous Bitcoin forks.
So, what are you holding out for? We have a lot to talk about, but first, let’s figure out what this breakthrough is!
What exactly is a Bitcoin Fork?
In its most basic form, it occurs when someone produces a duplicate of the Bitcoin blockchain code and changes it. These modifications work for a variety of reasons, such as the prior blockchain being hacked or because upgrades are required. There are two sorts of blockchain forks: ‘soft forks’ and ‘hard forks.‘
A soft fork is less complicated than a hard fork since it makes only minor modifications to the blockchain. While previous transactions are no longer valid, new transactions acknowledge both old and new nodes. It makes a soft fork “backward-compatible”. A soft fork must receive “majority consensus,” which is equivalent to a public vote, to be successful.
A hard Bitcoin fork differs in that it effectively generates a new blockchain. A well-known example of a Bitcoin hard fork is Bitcoin Cash. Most blockchains, such as Bitcoin, are open source. So, anybody can access and copy the code, so anyone can start a Bitcoin hard fork.
So, now let’s go over some of the most well-known Bitcoin Forks of all time!
The Most Well-Known Bitcoin Fork
In 2017, a group of developers performed a hard fork for the Bitcoin client. It leads to Bitcoin Cash, a completely new cryptocurrency and blockchain.
The fundamental reason for this Bitcoin split was because Bitcoin transaction costs were getting prohibitively costly. In reality, what began as less than a penny per transaction in 2009 rapidly grew to a few dollars each transaction.
However, before the hard Bitcoin fork, the group of developers attempted to persuade the Bitcoin community to make the changes within the original Bitcoin client. A group of engineers intended to extend the maximum block size from 1MB to 8MB. This would have allowed miners to include more transactions in a block, lowering the fees that Bitcoin users pay to transfer cash.
Remember that a soft fork that requires a majority vote? Unfortunately, most Bitcoin users refused to adjust, causing the creation of a whole new blockchain.
On August 1, 2017, developers officially released the Bitcoin Cash blockchain. They restrict the Bitcoin Cash supply to 21 million coins, the same as Bitcoin, and each block takes 10 minutes to confirm.
On the other side, by increasing the maximum block size by eight times, the Bitcoin Cash network (or Bitcoin fork) could scale more transactions. We refer to the greatest number of transactions that a certain blockchain can process per second as scalability.
Bitcoin can only execute an average of 7 transactions per second. This is one of the present shortcomings of Bitcoin. If it is to be used as a worldwide payment system, it must enhance its scalability performance.
Because of the adjustments made during the Bitcoin split, Bitcoin Cash can now execute about 61 transactions per second. Anybody who had BTC on the day of the Bitcoin split received the same number of Bitcoin Cash (BCH) coins. This implies that if you had 0.5 BTC, you would also receive 0.5 BCH with the Bitcoin Cash.
This Bitcoin split has been a tremendous success since its inception. In fact, as of June 2018, it was the fourth most valued cryptocurrency in the sector. BCH achieved an all-time high of nearly $4000 in December 2017, with a total market value of a little under $70 billion.
Now that you’re aware of the Bitcoin Cash fork, the next Bitcoin hard fork I’d like to address is Bitcoin Gold.
The BTC Gold blockchain is a Bitcoin split that was formally established in October 2017. While Bitcoin Cash was interested in lowering transaction costs, Bitcoin Gold’s creators sought to make Bitcoin more “decentralized.”
Although Bitcoin is theoretically decentralized, there are still significant worries about transaction verification.
This is because a few Chinese pools handle the vast bulk of Bitcoin mining. A mining pool is a group of people that “pool” their hardware resources to increase their chances of obtaining the mining payout.
When you earn a Bitcoin Cash, you share it among the pool members based on how much each has invested. Finally, this provides the individuals controlling the mining pool with a lot of power and influence over the network, which some say has led to this Bitcoin fork being overly centralized.
Before mining pools were prevalent, it was workable to mine Bitcoin with a simple CPU or GPU, which meant that anybody could do it from the comfort of their own home. If you want to be eligible for the reward, you must not only be a member of a mining pool, but you must also own extremely costly ASIC hardware.
But guess who makes a lot of mining equipment? One of the industry’s largest mining pools. As a result, Bitcoin Gold implemented a new mining method that ensures that specialized and expensive hardware cannot be used to boost one’s chances of earning the mining reward.
So, now that you’ve learned about the Bitcoin Gold fork, the next section of my BTC fork tour will include Bitcoin Private!
Developers formally introduced Bitcoin Private in March 2018, however, it was not a fork of the original Bitcoin. This is when things become a little more complicated:
- Bitcoin Private is a fork of the ZClassic blockchain.
- ZClassic is a fork of the ZCash blockchain.
- ZCash is a fork of the original Bitcoin.
Rhett Creighton, the company’s creator, and principal developer, also built ZClassic, and others have subsequently joined the team. Creighton’s concept was to combine ZClassic’s privacy and secrecy with Bitcoin’s security and popularity.
As with the other Bitcoin fork I’ve mentioned, everybody holding BTC at the time of the launch received a 1:1 supply of Bitcoin Private (BTCP). In addition, everyone owning ZClassic (ZCL) received a 1:1 supply. This implies that if you had both BTC and ZCL in your possession, you would have gotten Bitcoin Private coins twice.
There will be a total quantity of 21 million BTCP coins. The block size is double that of Bitcoin, at 2MB, and it can complete transactions four times quicker. Furthermore, the mining system aims to discourage people from employing expensive hardware, making it a much fairer and egalitarian network than Bitcoin. To be more specific, it employs the Proof-of-Work consensus technique.
Not only is Bitcoin Gold quicker and fairer than the original Bitcoin, but it also enables more private transactions, as the name implies. Bitcoin Private, like the ZClassic blockchain, employs something known as “ZK-Snarks.”
Although a public ledger records each transfer, the donor and receiver remain anonymous. This differs from the original Bitcoin in that, while the sender and receiver’s real-world identities are secret, it is easy to determine how much money a certain Bitcoin address holds. Not only that, but you can view how much money a specific address has sent and received in the past.
Since its inception in March 2018, Bitcoin Gold has hit an all-time high in the market value of little more than $1.5 billion, which it achieved in April 2018.
So, now that you’ve learned about Bitcoin Cash, Bitcoin Gold, and Bitcoin Private, let’s move on to the final Bitcoin fork that I’d like to discuss: Bitcoin Diamond.
Bitcoin Diamond is a fork of the original Bitcoin client. The development team’s primary goal was to allow users to stay even more anonymous. It serves a similar role to Bitcoin Private.
Bitcoin Diamond distributed their coins somewhat differently than the other Bitcoin forks I’ve described when it originally started in November 2017. While the others maintained a total quantity of 21 million coins, Bitcoin Diamond boosted it by tenfold. As a result, if you had 0.5 BTC when the fork occurred, you would have earned 5 Bitcoin Diamond coins (BCD).
Like Bitcoin Cash, the maximum block size is 8MB. The transaction confirmation time is lower than 10 minutes. Some members of the cryptocurrency world feel Bitcoin Diamond is a hoax, and many are upset that the company has yet to create a white paper.
Bitcoin Fork: The Conclusion
That concludes my Bitcoin fork guide. Hopefully, you’ve read it all, and you should now have a solid knowledge of what a fork is and why they occur.
I’ve also included a list of four of the most prominent cryptocurrencies that have branched from Bitcoin. Some of them aim to enhance the original Bitcoin’s performance, while others aim at increasing privacy or decentralization.
Moving forward, please remember to do your research before any forthcoming Bitcoin splits. Don’t fall for criminals attempting to steal your private keys!
As always, please let me know what you think about the forks I mentioned, or if you believe Bitcoin will always be the most popular cryptocurrency.