Can crypto have its cake and eat it too? Sometimes, but it all comes down to having the right fork – bitcoin fork
When it comes to the inner-workings of the bitcoin protocol and the network itself- things have a tendency to get really confusing. Especially for those of us who are new to bitcoin. Sure, using an exchange platform designed with newbies in mind, like Bitvavo, can help, but it doesn’t really go too deep into explaining the mechanics of the coin.
Nor should it. Exchange platforms are ideal when trying to come to grips with an unfamiliar marketplace, especially when combined with the new technology that bitcoin requires users to interface with. So while the usefulness of an excellent, novice focused exchange platform cannot be understated- to really learn about the bitcoin system, you’re going to need to seek guidance elsewhere.
Especially when it comes to the concept of forks. Forks are a crucial concept in the wide world of cryptocurrency. Not just as they pertain to bitcoin, but because of forks, most of the crypto world exists. Without them, we’d mostly only have bitcoin, as few cryptos are genuinely novel. Most are just forks of an existing protocol- the one Satoshi Nakatomo released in 2009.
What is a Bitcoin Fork?
To put it simply, a bitcoin fork is any change that is made to the way that bitcoin is used or how it functions. The protocol is what dictates the form and function of any given cryptocurrency. The coding behind everything you see and everything you do on the network is part of this protocol. How users interact with both each other and the network itself- this is protocol.
As technology evolves, and the needs of users changes, cryptocurrencies also will need to evolve and change. Ensuring that the coin stays relevant, any possible issues or patches are created and implemented, and to add new features and functionality. Any change that occurs with the protocol must be democratically approved by the network developers. How any given cryptocurrency establishes this process for change varies greatly, but they all have some manner of a concrete system in place that dictates how the network goes about implementing protocol change.
With bitcoin, and quite fairly just about every other cryptocurrency in existence, there are two types of forks or changes that can occur. These forks are referred to as either ‘hard’ or ‘soft’. Either designation has to do with whether or not the change is backward compatible.
Bitcoin Hard Fork
A hard fork is not backward compatible. This means that the change to the protocol is so great, or so contentious, that it creates an entirely new version of the coin itself. Familiar hard forks are tokens like Bitcoin Cash. However, any altcoin that uses the bitcoin base protocol could easily be considered a hard fork. Meaning that Ethereum is a hard fork of bitcoin, as its founder was a contributor to Bitcoin in the very beginning of things, only to break off to create Ethereum so that new functionality could be implemented.
Hard forks happen when developers don’t reach a consensus about the direction the protocol should take. Take video game platforms for example. Nintendo could be argued to be one of the originators of in-home console playing. While they aren’t the only console available, their games are brand specific. Meaning that you can’t play Mario on a PlayStation or Xbox. PlayStation and Xbox are indeed still in home console video game systems, but rarely are their games interchangeable.
So you could look at these consoles as an example of hard forks.
Bitcoin Soft Fork
With soft forks, the protocol change is backward compatible. So keeping with our video game analogy, this would be similar to PlayStation 3 consoles still being able to play PlayStation 2 games. The console itself hasn’t really changed, it’s still a PlayStation, it’s just been upgraded. All the games you owned for a PS2 can be played on the PS3 console, so this would be considered soft fork technology.
How Do Bitcoin Forks Affect AltCoins?
Technically, the only fully recognized hard forks of bitcoin are the ones that are still endorsing themselves as bitcoin. So Bitcoin Cash, Bitcoin Diamond, Bitcoin Gold… etc. While altcoins like litecoin and ethereum are technically hard forks of the bitcoin protocol, they don’t really get considered that way.
This is largely because the developers of these coins have deviated so far from the original protocol, that they no longer associate themselves with the network at all. Effectively becoming their own unique entities. So when people talk about “hark forks” what they really mean are those currencies that still exist within the bitcoin network.
Examples of these are cryptocurrencies like:
- Bitcoin Cash
- Bitcoin Gold
- Bitcoin Platinum
- Bitcoin Private
Haven’t heard of a few? Don’t worry you’re not alone. There are actually quite a few hark forks of the bitcoin protocol, however, hardly any of these have really taken off to make a name for themselves. The exception perhaps being Bitcoin Cash, as it is by far the most successful hard fork to exist up until this point.