Let us understand how forking impacts blockchain and, ultimately, cryptocurrency
Blockchain is a decentralized, public software that anybody may contribute to that powers cryptocurrencies like Bitcoin and Ethereum. Because they are made up of blocks of data that can be traced back to the first transaction on the network or imagine an extremely long train, they are known as blockchains. Additionally, as they are open source, their communities are responsible for maintaining and expanding the underlying code. A fork occurs every time a community modifies the blockchain’s protocol or fundamental set of guidelines. When this occurs, the chain divides, creating a second blockchain traveling in a different direction but with the same history as the original.
Blockchains are updated for a multitude of reasons, just like any software requires updates:
- As a functionality-add
- dealing with security threats
- to settle a dispute concerning the future course of the coin within the community
However, a fork may also be used by the creators of a new cryptocurrency to produce whole new currencies and ecosystems.
Soft fork: A soft fork is similar to a blockchain’s operating system being updated. It becomes the new set of criteria for a currency as long as all users accept it. Bitcoin and Ethereum have utilized soft forks to provide new features or functionalities, often at the programming level. The adjustments work with the pre-fork blocks since the final product is a single blockchain.
A hard fork occurs when significant code changes render the previous version of the program incompatible with the new one. In this scenario, the blockchain divides into two: the old blockchain and a new one that adheres to the new set of rules. As a result, a brand-new cryptocurrency is created, which is where many well-known coins originate. Through a hard split, the original Bitcoin blockchain gave rise to cryptocurrencies like Bitcoin Cash and Bitcoin Gold.
Much as how modifications to internet protocols enable web browsing to improve over time, most digital currencies have distinct development teams in charge of network upgrades and enhancements. So, a fork may occasionally bring new features or increase the security of a coin. The Ethereum blockchain is built to support “smart contracts,” sections of code that automatically carry out a specified set of activities when specific conditions are satisfied.
Applications for smart contracts range from games to logistics tools to DeFi dapps. The Ethereum blockchain may be compared to a computer operating system since it is the foundation for all these apps. In that comparison, the many Ethereum forks—Ethereum, Ethereum Classic, and Ethereum 2.0—are like newer iterations of an operating system with improvements or functionality that earlier iterations could have lacked. A more recent fork may give developers new methods to engage with it, while an older fork may continue functioning as a reliable, well-tested platform.
