“Hard forks” are common in computing software and are a technical term that misleads many Bitcoin and cryptocurrency enthusiasts in general. If you’ve been paying attention to Bitcoin recently, you’ll notice that it has had several hard forks. Now let’s understand some of the concepts:
What is a fork?
A 'fork' is a term that defines a technical event that happens on a blockchain because different participants need to agree on common rules.
Basically, a fork is when a blockchain splits into two and this can happen because:
Miners discover a block at the same time, which results in two chains splitting. However, this is a temporary fork, as the chain that finds the next block becomes the longer chain, with the shorter one being abandoned by the network.
Developers make conscious changes to the underlying implemented protocols. These changes to the codebase can occur due to adding new features to evolve the network or changing core rules (such as block size).
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What is Hard Fork?
A hard fork is a software upgrade that is no longer compatible with the older version. All participants must upgrade to the new software to continue participating and validating their transactions. Those who do not upgrade will be cut off from the network and their new transactions will not be validated.
What is a soft fork
A soft fork is a backwards compatible upgrade. This means that non-upgraded network nodes can validate and verify new transactions. It is much easier to implement a soft fork, as only the majority of participants need to upgrade their software. It should be noted that the functionality of a non-upgraded participant is affected.
Bitcoin Cash
When the Bitcoin community decided to fix the network speed and include more transactions in a block, two rules were implemented to improve the problem.
The first rule optimized the way transactions were recorded so that more transactions could fit into a block. The second rule changed the block size from 1 MB to 2 MB.
The community initially seemed to agree with these updates, and they were to be rolled out in two phases. The first phase of the process went smoothly, but a group of miners decided to go ahead and update the second rule on their own.
And that’s how Bitcoin Cash was created. Bitcoin Cash has a block size of 8 MB (Bitcoin has 1 MB), making it much faster than Bitcoin. But speed isn’t everything when deciding which coin is better. The power of Bitcoin Cash isn’t distributed among a large number of strangers, as is the case with most cryptocurrencies. The power is restricted to a small elite.
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Bitcoin Gold
Bitcoin Gold was created to make Bitcoin mineable on CPUs and GPUs and better distributed geographically. This means that miners don’t need to use ASICs (Application Specific Integrated Circuits). These custom-designed computer chips are very expensive and have no use other than mining. This has led to Bitcoin mining being limited to wealthy miners or large mining companies.
The implementation of this rule meant that anyone who owned a PC could participate and start earning rewards.
One problem would be the lack of replay protection. Without it, a transaction in one fork can be replayed in the other branch. This means that if you owned some Bitcoins before the fork, you get a copy of the new coin, and, say, you spend one of your coins from one branch, there is a chance that the other coins from the other branch will also be spent.
Bitcoin2X
This fork was planned in August 2017 and was to update the second rule that was supposed to be implemented when Bitcoin Cash came out (the one that changed the blockchain size from 1 MB to 2 MB).
But this was met with great skepticism, as BitcoinX2 was supposed to completely replace Bitcoin.
For this hard fork to be successful, all miners, wallets, companies, basically everything and everyone that deals with cryptocurrencies needs to agree on the fact that BitcoinX2 will replace Bitcoin.