Bitcoin Forks – Details to Go Through!
The ecosystem of bitcoin incurs a massive number of hard forks; this event is a significant aspect in deciding the future price of BTC.
Therefore, you can check Bitcoin Revolution for a smoother trading experience with the best trading techniques. Forking is usually of two types, the first is soft forking, and the second is hard forking.
Hard forking aggressively impacts the original bitcoin version, and not everyone agrees on a bitcoin hard fork in the bitcoin community. On the other hand, soft forking is a peaceful maneuver widely accepted by most bitcoin miners, exchanges, investors, and users.
Some people are supportive of hard work and want their versions. A hard fork can create new coins and increase value for early holders. An example is bitcoin gold. After Bitcoin gold broke off from bitcoin, it rose from $1400 to $1610. Here is a detailed overview of bitcoin hard forks.
What is hard forking?
A hard fork of Bitcoin breaks the chain rule. It is a permanent divergence from the main Bitcoin blockchain, creating a new Blockchain network. But it will be possible to transact and mine on both chains, creating two cryptocurrencies with their own rules. Bitcoin has been through several hard forks. This list includes all hard forks on the Bitcoin blockchain up until now.
Let us look at the advantages:
First, a hard fork can circumvent the rules of the bitcoin protocol, for example, increasing block size or the block period. These changes can impact significantly like other cryptocurrencies created to be faster than bitcoin (example – Litecoin).
Moreover, a fork can alter network security parameters like hash rate or supply limit. It can also create possibilities for new ways to handle transactions and mining fees. The list of bitcoin hard forks is massive and correspondingly incurs some successful projects like bitcoin cash and bitcoin gold.
Bitcoin forking is entirely a double-edged sword. It can be profitable to bitcoin holders and the community. However, there are cons as well. If the fork is not appropriately planned and managed in an organized manner, it can lead to two hostile blockchains. Transaction replay is a significant problem when a transaction is valid on both chains, but balances become unsynchronized. This scenario can also lead to the division of hashing power and difficulty after a fork, which may decrease the hashing power on one chain or the other (Example – Bitcoin Cash).
History of bitcoin hard forks:
The fork occurred on 1 August at 13:20 UTC. It was the outcome of a disagreement among developers about handling transaction malleability. Primarily, the question was concerning increasing the block size limit before the scalability issue of bitcoin was resolved. Initially, there were three parts to this disagreement:
Part one is mainly about increasing the size of blocks from 1MB to 8MB (Bitcoin unlimited). Part two is about setting higher transaction costs for certain transactions (Segwit). Finally, part three concerns making certain types of transactions confidential and invisible on blockchain networks (Tumble Bit).
Bitcoin gold was a hard fork of the bitcoin blockchain on 25 October 2017 to create a cryptocurrency with GPU-resistant mining. BTG split from BTC’s chain at block height 491,407 and uses the same proof-of-work algorithm as bitcoin, SHA256. The fork occurred at block height 491407 and was announced publicly through cryptocurrency news websites on 10 July 2017.
The SegWit2X, also known as S2X, is a hard fork that can occur in November. It is a notable hard fork that impacted the bitcoin ecosystem excessively. This hard fork was planned to create a more efficient technical infrastructure for bitcoin.
Segwit2X was to increase the existing block size limit of 1MB and increase capacity to 2MB. The technology achieved many goals by adopting BIP141, which has already passed the governance conference after significant changes.
Differences between bitcoin hard forks:
There are several differences between bitcoin and other cryptocurrencies that have been created from it, such as Ethereum or Bitcoin Cash. First off, one of the best attributes of bitcoin is its decentralized nature, maintaining a network secured under no central authority. Additionally, Ethereum has a fixed supply cap of ether; unlike bitcoin, it is not controlled by anyone.
On the other hand, bitcoin has an extremely high level of security, it is decentralized, and anyone can participate in mining and use the network without permission or restriction. Furthermore, the network is permissionless, which provides everyone with an equal opportunity to participate in mining.
Bitcoin has many other traits and attributes that make it attractive such as its market cap value (100 billion USD), low transaction cost, and fast processing times, which are beyond comparison to almost all other cryptocurrencies like Dash or Monero.