What the Fork Bitcoin!
A Simple Guide to What Bitcoin Forks Are and Some Viable Bitcoin Forks
In this lightning-fast pace of developments that characterize the crypto world, we look at the concept of forks of Bitcoin. In the cryptocurrency space, forks are one such intriguing phenomena that happen time to time, resulting in the creation of new currencies and coins.
Bitcoin has been the first noted cryptocurrency to gain ubiquitous acceptance (first-mover advantage), garnering interest from all quarters. Despite its wide acceptance, borderless transactions and highest market capitalization, Bitcoin is plagued with problems of its own. It has high transaction fees and scaling issues. The scaling debate has been controversial since the inception of the 1 MB block size limit back in 2010. Owing to this block limit, mining takes about an average of 10 minutes — resulting in a large increase in the number of transactions to be mined. As transactions with greater fees are favoured by Bitcoin miners, the transaction costs rise as well.
These inherent problems and/or fundamental disagreement within the community (cryptocurrencies being largely community-based) have given rise to specialized currencies such as Bitcoin Cash (BCH) and Bitcoin Gold by the process of ‘forking’ (similar to a road diverging into two roads). In simple words, cryptocurrency forks are merely protocol or crypto rule upgrades, and there are two types of forks that crypto enthusiasts typically refer to: a soft fork and a hard fork.
While both types of forks can result in significant modifications to the underlying protocol, they differ in two ways. A soft fork is a rule change that is backward compatible, which means new rules can still work with old protocol. In contrast to this, a hard fork allows for rule changes to the software but lack backward compatibility. Due to the absence of backward compatibility, hard forks lead to the creation of a new coin.
In the past, Bitcoin has forked several times to give way to coins like BitcoinXT and Bitcoin Classic, though they weren’t as noteworthy as Bitcoin Cash or Bitcoin Gold that surfaced in 2017. There are several upcoming Bitcoin forks. We take a note of the key forks of Bitcoin that have survived in these years:
Bitcoin Cash (BCH): BCH forked off from Bitcoin on August 1, 2017. It was created to have a bigger block size than Bitcoin, enabling for more transactions to be stored in a single block. While initially it expanded the block size from 1 MB to 8MB; the maximum block size has been further expanded to 32 MB. Despite their conceptual differences, Bitcoin Cash and Bitcoin have a lot in common in terms of technology. They use the same consensus process and have a supply limit of 21 million coins. In November 2018, BCH was further split into Bitcoin Cash ABC and Bitcoin Cash SV. Bitcoin Cash ABC has been renamed as the current Bitcoin Cash.
Bitcoin Gold (BTG): BTG is a hard fork of Bitcoin that was created on October 24, 2017. BTG forked from BTC blockchain after block 491406. It was created with an aim to reduce the influence of miners who used specialized equipment known as Application-Specific Integrated Circuits (ASICs). To this end, a different mining algorithm called the Equihash was adopted making BTG mineable by using simple GPUs or a personal computer.
Bitcoin Diamond (BCD): In a bid to increase Bitcoin’s scalability, BCD was launched on November 24, 2017 as a hard fork. The scalability issue was dealt by increasing the block size to 8MB and by increasing the total coin supply to 210 million, among other changes such as GPU mining.
Bitcoin Interest (BCI): Bitcoin Interest (BCI) split off the Bitcoin blockchain on January 22, 2018 to establish a version of bitcoin that pays users for mining and keeping coins for a certain amount of time in exchange for interest payments in cryptocurrency.
Bitcoin Private (BTCP): One of the latest notable bitcoin fork took place on March 2, 2018, when Bitcoin Private (BTCP) was launched. BTCP was launched on March 2, 2018 as a privacy-focused alternative to Bitcoin (BTC). It is a merge fork from bitcoin and ZClassic (which is a fork of Zcash). It utilizes the privacy features of ZClassic (such as zero-knowledge proofs) and leverages the Equihash algorithm to allow for GPU mining.
Bitcoin SV (BSV): However, the forking process did not stop with BCH. In November of 2018, the Bitcoin Cash network had its own hard split — leading to the creation of Bitcoin SV, which supporters claim is more loyal to Satoshi Nakamoto’s original vision while also delivering quicker transaction speeds and the possibility for greater scalability.
Despite the fact that all bitcoin hard forks have been met with criticism and some controversy, as many bitcoin community members believe these projects are simply cashing on bitcoin’s brand name, the bitcoin forks listed above have survived and managed to establish themselves in the altcoin market.
In addition to these, there have been debates around whether Litecoin is a fork of Bitcoin. In the ‘software project fork’ parlance, Litecoin may be termed as fork of bitcoin because the Litecoin’s project code was copied from Bitcoin and then further modified. However, Litecoin is neither a soft-fork nor a hard-fork of Bitcoin as they do not share a common ancestor (block 0 aka the Genesis block).
In essence, the bottom line remains that Bitcoin has already created a big number of forks in just a few years. While no one can tell for certain, it is likely more soft and hard forks will continue in the future, expanding the cryptocurrency community while also making it increasingly difficult.
