Bitcoin, Crypto currency, Blockchain

What are Cryptocurrency Forks?

Crypto-currency Forks are Changes in the Protocol of the block chain network, or the conditions that occur when two or more blocks have the same block size. In order to understand crypto-currency Forks exactly, it is essential to first learn how crypto currencies and the Blockchain work.

In other words, crypto-currencies such as Bitcoin, Ethereum, etc., can be divided. This means that either two versions of the Coins produced, or a Version to be updated. Crypto-currency Forks are based on Changes in the current Code and the algorithm of the Blockchain transaction that occurs in a new copy of the pre-existing network with some Changes. The new Fork can either replace the previous Coin, or a new expression of the Coins, with a new name and a modified algorithm.

To describe Forks, exactly, a certain context is required. Crypto-currencies are based (mostly) on a Blockchain. The Blockchain is a digital Ledger (cash book), in the transactions in Bitcoin, or another crypto-currency in chronological order and described in public. Because these actions work as decentralized systems that must recognize the user of the system, some protocols, such as transactions and confirm in the Blockchain Ledger will be attached. This approach is called “Consensus-method” (consensus method), and it is what makes the actual success of a Blockchain.

A Fork occurs when there is a clear separation in the consensus of the user or a request to change the underlying rules that monitor the Protocol. The Change in the log of a Blockchain requires a quick Amendment to the code by the developer, and this method can have serious and lasting consequences.

Forks and technical disputes

Bitcoin Cash in August 2017 based crypto-currency, is the result of a Fork of Bitcoin Classic. Bitcoin Cash increases the size of the blocks, so that more transactions can be executed in a Block.

Bitcoin Cash exists today because of a prolonged conflict to the scalability problems of Bitcoin. A group of prominent developers, investors and miners, with the solutions recommended are not satisfied, decided to increase the block size of Bitcoin, and thus to develop an additional variant of the Protocol. There are different types of Forks and in the Following, we describe the two most common variants.

Types of crypto-currency Forks

There are two types of crypto-currency Forks: Hard Forks and Soft Forks.

Hard Forks: A Hard Fork is a constant separation from an earlier Version, and all of the nodes, the an old Version operate, of the new not allowed. In this case, a Hard Fork is a non-reversible issue. It describes a permanent deviation from the prevailing Version of a Blockchain with a node on the new Blockchain, which are not coupled with nodes or transactions on the old Blockchain and this also not supported.

Hard Forks make for severe changes and make a new Blockchain without TRANS-action Kong high-impact between the versions. In Hard Forks, transactions are not permitted on the old Blockchain to the New and Vice versa. Nodes continue to work with the old Version of the Software, mark new transactions as erroneous. In order to find the correct blocks on the new Blockchain, you must accept all of the nodes in the System, the new protocols.

Soft Forks: The difference between Soft-Forks and Hard-Forks, is that in the case of Soft Forks, any development or change is backwards compatible. In short, instead of 1MB blocks, a new Protocol may support only 500K blocks. It is assumed that it is backward compatible, since old transactions can be identified by a new node.

In contrast to a Hard Fork old nodes to recognize new transactions as legitimate. However, if old-node blocks, mines can be rejected from the updated node. Therefore, the Soft Forks require more than 50% of the Hash Power in the network in order to function. If a Soft-Fork is supported by only a minority of the hashing Power in the network, it could generate a broken Blockchain.

A few days ago, some researchers said that Hard Forks can destabilize the value of a crypto-currency, and that they are for the stability of digital currencies is dangerous. Consequently, Hard Forks can divide a crypto-currency into two rival groups. You can destabilize the value of a particular Cryptocurrency and lead to a loss of confidence in the respective Blockchain. Therefore, it is for the crypto currency community is necessary to improve its regulatory system and to limit the potential for Hard Forks.

The researchers said that Hard Forks to create a new Blockchain with its original competitor to be incompatible and two technologically incompatible crypto-currencies to promote. As such, Hard Forks can force error, the crypto-currency divide users into two different groups: one that accepts a new technological change and that to maintain the Status quo.

Significance of Forks

Forks will remain a relevant part of the crypto-currency world. Forks will always be a part of the system, because these Changes still serve to solve scalability and security problems. Only with the help of Forks, crypto-currencies are changeable. You help to update protocols when needed and help them in the long term, the most robust measures and protocols to enforce.

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This article was from English into German:

Christian Rehm

Senior IT Consultant and Crypto Enthusiast always in search of interesting news.

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