Bitcoin Blockchain Crypto
by Aziz Zainuddin, Founder and Chief Editor of Master The Crypto
Hard forks are a unique occurrence in the realm of digital currencies that has amassed polarizing views within the cryptocurrency community. Some argue that hard forks represent a negative force that creates division and chaos, while some believe that they represent a form of innovation and vibrancy of the cryptocurrency landscape. While there are merits on both sides of the argument, it is important to first understand the concept of hard forks and how they affect the cryptocurrency world. Hard Fork: what is it? Hard forks happen when the underlying source code of blockchain is altered in order to enhance a certain feature. Blockchain technology was first conceived as the technology underpinning Bitcoin, the first decentralized cryptocurrency ever created. In general, a blockchain is a distributed ledger of transactions, stored in ‘blocks’ where the data cannot be changed.
Each block is filled with thousands of different transactions that can range from someone buying a cup of coffee using Bitcoin (BTC) to a hacker illegally buying something off the dark web.
The rules of the blockchain has already been encoded into its source code since day 1, and any attempts to change a particular feature requires a change in the underlying codes.
For instance, the developers might want to enhance the blockchain’s capabilities by increasing the capacity of transactions in a block. In these cases, a hard fork is needed to enhance the features of the blockchain. Hard fork will result in a permanent split of the blockchain; the new and improved blockchain will be governed by the enhanced codes.
Categories of hard forks
There are three main types of hard forks which include:
1.
Planned Hard Forks A planned hard fork refers to an update that has already been mapped out in the project’s roadmap and is publicly known. This upgrade is similar to the software updates that is required by your smartphone apps. Planned hard forks are well-received by the community since it is an initiative to enhance the capabilities of the blockchain. Additionally, the core developers and the community will seamlessly transit to the new chain unanimously, while abandoning the less useful old chain.
A prominent example of a planned hard fork is the third stage of Ethereum ’s development called Metropolis, which aims to enhance the network’s security, scalability and privacy features.
2.
Contentious Hard Forks This type of hard fork occurs due to the internal disagreement within a project on solving a particular issue. As a result of the disagreement, a portion of the community will deviate by creating a new chain, resulting from a change in the underlying source code to enhance certain features.
Since this hard fork isn’t unanimous and not supported by all stakeholders in the community, a new coin will be created along with the new chain.
The best-known contentious hard fork is Bitcoin Cash, which was created by those who felt that Bitcoin’s scalability issue was a growing concern and the best way to address it was through increasing Bitcoin’s block size from the default 1MB to 8MB.
3. Spin-Off Coins Due to open source nature of cryptocurrencies, most notably Bitcoin, its codebase is open to the public and can be altered to create a new coin with different characteristics.
These spin-off coins can be created by almost anyone, by taking Bitcoin’s underlying codes and changing one or a few things to create an entirely new coin.
An example of a spin-off coin is Litecoin, which was a fork of the original Bitcoin. Litecoin had faster block confirmation times and a higher available coin supply. Blockchain technology A notable trait of blockchain technology is the premise of transparency and decentralization.
This can be seen throughout the industry where the code-base for most coins are publicly open for anyone to inspect and improve upon. Although it has tremendous amounts of benefits, it can also be a double-edged sword, since achieving full consensus on solutions to resolve issues may be extremely hard. In Bitcoin’s case, the creation of Bitcoin Cash was a representation of the diversity of perspectives on solving the core issue of scalability.
Additionally, anyone can create a new coin by changing a particular feature of an open-sourced coin. This can be seen from the sheer amount of projects that originate from a single codebase; there are currently 27 forks of Bitcoin. This equates to 27 different versions of Bitcoin, with the main coins being Bitcoin Cash, Bitcoin Gold, Segwit2X & Bitcoin ABC. This is truly testament to the innovation of the community.
Chaos or innovation? Based on the different categories of hard forks occurring in the industry, we can observe that hard forks can both be good or bad to the general community.
Hard forks that are contentious can transform to be a divisive event for the community, but it can also be seen as a representation of the diversity of thoughts and innovation of the cryptocurrency world. The decentralized nature of cryptocurrencies begets a strong form of empowerment for participants within the community, allowing them to pick which coins they’d support based on its merits.
It must be mentioned that with any differences in perspectives, there are also some whose preference could be said to be fostering chaos and instability. Although that seems unfortunate, these differences still serve as a manifestation of the innovation that is abundant in the cryptocurrency world.
.
