Forks can be seen as different paths a blockchain takes to improve. Find out why a blockchain 'splits' and what it means for the whole deal.
If you are into the crypto world you probably have encountered the term "fork" somewhere along the way. But what exactly is a fork, and why are they so significant in the realm of cryptocurrencies? In this blog post, we'll explore the concept of cryptocurrency forks, including their types, reasons for existence, and some famous examples.
Cryptocurrency forks are essential mechanisms that allow the evolution, innovation, and governance of blockchain networks. They can lead to the creation of new cryptocurrencies and shape the future of the blockchain ecosystem.
A fork is a significant and intentional alteration of a blockchain's protocol or underlying rules. It is a fundamental concept that can impact the entire cryptocurrency ecosystem. Forks can be classified into two primary types: hard forks and soft forks.
Cryptocurrency forks exist for several reasons, such as:
Forks are often used to make technologicalimprovements to a cryptocurrency. This can include increasing transaction speed, enhancing security, or scaling the network to handle more transactions. The goal is to keep the cryptocurrency secure, efficient, and user-friendly.
Disagreements within the cryptocurrency community or among developers can lead to forks. These disputes may involve fundamental issues such as the direction of the project, governance, or major changes to the protocol. Forks provide a way for different factions to pursue their vision.
Some forks are created to introduce innovative features or solve specific problems. Developers may see the need for a new chain to experiment with unique concepts, such as improved privacy, smart contracts, or governance models. These forks can pave the way for fresh ideas and experimentation.
A hard fork is a substantial and non-backward-compatible change to a cryptocurrency's protocol. When a hard fork is implemented, it means that the new rules introduced are not compatible with the old ones. This results in a permanent split in the blockchain, with two separate chains with different transaction histories.
The original chain adheres to the old rules, while the new chain follows the updated rules. Miners and nodes in the network must decide which chain they want to support by upgrading their software. Hard forks often lead to creating a new cryptocurrency with a distinct name and development team.
A soft fork is a backward-compatible change to the protocol, meaning that nodes that have not upgraded to the new rules can still participate on the updated blockchain without issues.
Initially, both upgraded and non-upgraded nodes follow the same chain. Over time, the chain with the most computational power and miner support becomes the dominant chain, while the other chain gradually becomes less relevant.
Soft forks do not lead to a permanent split, but they can create temporary chains that merge back into the main one over time.
Cryptocurrency forks offer various benefits to the ecosystem:
Here are a few well-known examples of cryptocurrency forks:
A friendly fork is a collaborative split from an existing blockchain, typically aimed at improving or experimenting with new features while maintaining a shared history and community with the original project. These forks involve developers and stakeholders working together with a common vision, and users can choose to continue on the original blockchain or migrate to the new one.
THORChain and its dedicated team of developers were the pioneers in creating a fully decentralized and open exchange system. Maya Protocol, on the other hand, is an attempt to build a backup plan, a different option to $RUNE and THORChain, which helps make the cryptocurrency ecosystem stronger, maintaining backward compatibility and complementing it with new unique features, innovation, and reliability.