Blockchain fork
A fork in the blockchain is the division of a chain of blocks into two independent branches. This can happen because of a protocol update (when part of the network accepts new rules, while another part remains on the old ones) or for technical reasons (the simultaneous finding of two blocks). As a result, two different cryptocurrencies may appear.
Contents
What is a fork in simple words
A fork in the blockchain is the division of a single chain of blocks into two separate branches. In simple words, it is a “fork in the road” in the history of transactions when the network splits into two parts, and each goes its own way. As a result, two different cryptocurrencies may appear.
Imagine a road that branches in two. One group of cars goes left, the other goes right. They will never meet again. It is the same in the blockchain: part of the miners and users switch to new rules, while another part remains on the old ones. As a result, two parallel networks arise.
Read about how the blockchain works in the article Blockchain.
Types of forks
- Hard fork: A cardinal change of rules that is incompatible with the old version. Miners on the old version do not accept blocks from the new one. A hard fork always creates a new cryptocurrency (or two, if both branches survive).
- Soft fork: A backward-compatible update. The new version is stricter, but blocks from the old version are still accepted. A soft fork does not create a new currency; it simply updates the rules.
- Accidental fork: Occurs when two miners find a block almost simultaneously. Two chains temporarily arise, but the network quickly chooses the longest one, and the fork is resolved.
How a hard fork creates a new cryptocurrency
- Developers propose changes to the code — for example, to increase the block size.
- Miners vote for or against the changes using their computing power.
- If the changes are not accepted by everyone, the network divides.
- Those who accepted the changes go down the new chain.
- Those who did not accept them remain on the old one.
- As a result a new cryptocurrency appears (a fork coin), while the old one continues to exist.
Examples of hard forks: Bitcoin Cash and Bitcoin Gold from Bitcoin, Ethereum Classic from Ethereum.
Read about cryptocurrencies in the article Cryptocurrency.
Famous examples of forks
- Bitcoin → Bitcoin Cash (BCH) — 2017: A hard fork due to disagreements over the block size. Supporters of Bitcoin Cash wanted to increase the block from 1 MB to 8 MB to speed up transactions.
- Bitcoin → Bitcoin Gold (BTG) — 2017: A hard fork with a change of the mining algorithm to make extraction more accessible.
- Ethereum → Ethereum Classic (ETC) — 2016: A hard fork to return funds stolen as a result of the DAO hack. Part of the community disagreed with changing the history, and the network split.
- Bitcoin → Bitcoin SV (BSV) — 2018: A hard fork from Bitcoin Cash that further increases the block size.
Why forks are needed
- Protocol update: Adding new functions, improving security, improving performance.
- Resolving conflicts: When the community cannot agree on the development of the network.
- Experiments: Testing new ideas without risk to the main network.
- Earning: Cryptocurrency holders before the hard fork receive coins of the new currency in the same quantity (like dividends).
Risks of forks
- Instability: In the first days after a fork, failures and attacks are possible.
- Confusion: Two currencies with similar names can mislead.
- Replay attack: A transaction in one network can be repeated in another, which will lead to loss of funds. Therefore, it is important to wait for protection against replay.
- Reduction of overall security: The hash rate is divided between two networks, which makes them more vulnerable to 51% attacks.
Read about blockchain security in the article Blockchain.
Frequently asked questions
What is a fork in the blockchain in simple words?
A fork is the division of the blockchain into two independent branches. Like a fork in the road: one group follows the new rules, another remains on the old ones. As a result, two different cryptocurrencies may appear. Read about the blockchain in the article Blockchain.
How does a hard fork differ from a soft fork?
A hard fork is an incompatible change that creates a new cryptocurrency. The old version does not accept blocks from the new one. A soft fork is a backward-compatible update. The new version is stricter, but blocks from the old version are still accepted. A soft fork does not create a new currency. Read about cryptocurrencies in the article Cryptocurrency.
What famous forks exist?
Bitcoin → Bitcoin Cash (2017, increase of the block size), Ethereum → Ethereum Classic (2016, return of stolen funds), Bitcoin → Bitcoin Gold (2017, change of the mining algorithm). These are only the most famous examples. Read about Bitcoin in the article Bitcoin.
Why are forks needed in the blockchain?
For updating the protocol (adding functions, improving security), resolving conflicts in the community, experiments and testing new ideas. Also, cryptocurrency holders receive coins of the new currency in the same quantity. Read about the development of the blockchain in the article Blockchain.
What risks do forks have?
Network instability in the first days, confusion with similar currency names, replay attacks (when a transaction is repeated in another network) and a reduction in overall security due to the division of the hash rate. Therefore, it is important to be careful and wait for protection against attacks. Read about security in the article Blockchain.
Other terms in «Cryptocurrency and Blockchain»
Was this information helpful?
Need help with implementation?
Leave a request — our specialists will contact you and help solve the blockchain fork task. Individual approach and guaranteed results.