History of Bitcoin Forks
Even though Bitcoin is far from an ideal coin, it’s still a standard and a synonym for the words “cryptocurrency” and “blockchain.” Looking at the first virtual coin, many try to repeat its success by creating a similar one, only “better.” So, there are more and more new Bitcoin hard forks.
In this article, we will talk about the most popular Bitcoin hard forks and explain how the developers tried to improve the main cryptocurrency code.
What is a fork?
Any fork is a fork with the appearance of an additional cryptocurrency. The term came from programming, where it means “using the source code to create another project.”
At the heart of any blockchain-based project is program code. Accordingly, as practice shows, forks are possible for any coin. Why bother to fork at all?
First of all, to make changes to the network. Such a need may arise if a bug or vulnerability is found in the set of program instructions. In this case, with the help of a fork, it can be eliminated, and the appeared cryptocurrency will no longer have the same problems.
A striking example of this is Ethereum’s hard fork with the resulting emergence of Ethereum Classic. The DAO project was created based on the ETH platform, which, due to an error in the code, led to the theft of $60 million. As a result, the founder of Ethereum, Vitalik Buterin, was forced to fork the cryptocurrency.
Users who didn’t want innovations continues to work with the old code, named Ethereum Classic.
Another reason to split the crypto network is to make changes to the system operation. This is done to improve the cryptographic component or change the mining conditions. A striking example is the emergence of Litecoin, which became the first Bitcoin fork.
Its founder, Charlie Lee, held the fork back in 2011. Why was Litecoin created? First of all, to oppose Bitcoin. In particular, mining was much easier to do in the Litecoin network, and it was possible to start with the CPU, while with Bitcoin, miners switched to the GPU a long time ago. Also, the average new block creation time in Litecoin’s blockchain is 2.5 Minutes (vs. Bitcoin’s 10 minutes).
Finally, the need to fork arises when someone wants to create a new cryptocurrency based on the already proven technology.
The only condition for the fork is the open-source factor.
How the coins forked from Bitcoin?
Bitcoin Fork is the creation of a new cryptocurrency based on the Bitcoin code. At the same time, the blockchain is launched from scratch by a separate group of developers or a company and, of course, without voting.
The main reason for that is the desire to create a coin better than Bitcoin. Therefore, new technologies are often introduced into the main cryptocurrency code, or existing ones are replaced. Most often, these parameters change:
- Issuing coins;
- Encryption protocol;
- Block creation speed;
- Block size;
- Algorithm of consensus (more recently).
Since the Bitcoin code is open, everyone can use it to generate a new cryptocurrency. There are hundreds of projects created in this way, but only a few managed to break out of this vast “crowd.”
The principle of a cryptocurrency fork can be explained using the example of a network game. Many players from all over the world can participate in it: from America, China, India, Brazil, Russia. And once someone has decided to change the rules because, as it seems to him, they have imperfections. If all other players agree and accept the new rules, everything remains the same (except for the conditions, of course). If the majority of players don’t support the innovator and there are a few behind him, there are two versions of the same game with different rules. In the cryptocurrency world, this is called a fork.
What is Hard Fork?
A hard fork is a fundamental change in open source that is incompatible with used software and old protocol.
It’s easier to understand by using an example. Bitcoin Cash, with an increase in the block from 1 MB to 8 MB, is a hard fork. As a result, a new independent cryptocurrency was formed. That is, one of the main features of hard forks is the creation of a separate coin, which can exist without its “parent.” Currencies have nothing in common after the fork: own price course, other teams. Even from a technical point of view, they are very different from each other.
To conduct a hard fork, you need to get the approval of all network participants. If some miners are against this plan, there will be a split, and two chains will appear based on one code. Of course, they can exist together, but in practice, it turns out that only the strongest survive: the one that was supported by the majority.
Bitcoin Main forks
Bitcoin Cash Fork
This is one of the most successful Bitcoin hard forks, which even managed to enter the TOP-10 cryptocurrencies. The separation took place on August 1, 2017, at block 478,558. The main sticking point was the increase in the size of the block, which the community of the original Bitcoin didn’t support.
Hard fork initiators offered to set the block size to 8 MB. After that, in May, there was a planned upgrade with the block increase to 32 MB.
In the summer of 2018, the Bitcoin Cash community bumped into disagreements over the release of a new version of the Bitcoin ABC. The cryptocurrency adherents have disintegrated into two camps, which ultimately led to Bitcoin Cash hard fork and the emergence of Bitcoin Cash ABC and Bitcoin Cash SV.
At the moment, Bitcoin Cash ABC is marked with the BCH ticker, and many exchanges even started to split Bitcoin Cash SV after multiple statements by Craig Wright that he is the real Satoshi Nakamoto. Now Bitcoin Cash ABC is on the 5th line of the CoinMarketCap rating, and Bitcoin Cash SV is on the 9th.
Bitcoin Gold Fork
This hard fork was organized by the Lightning ASIC mining company, which is based in Hong Kong. The developers decided to stand out in a separate project in October 2017 at block 491 407.
The main changes concerned the rules for mining new coins. The creators have proposed to implement the Equihash algorithm, which is “ASIC-resistant,” and allows the use of video cards. The hard fork held under the slogan, “let’s make Bitcoin decentralized again.”
That experience was successful. Now the coin is in 26th place. However, there was one very sad moment in the life of Bitcoin Gold when, in May 2018, the network was under a 51% attack. After that, the major Bittrex exchange removed the coin from the site.
Bitcoin Diamond Fork
This project started in November 2017 as a result of Bitcoin separation from the blockchain at block 495 866. The developers proposed a solution to several Bitcoin problems at once:
Increased the block size to 8 MB, which accelerated the process of sending transactions;
Replaced encryption algorithms, making transactions become more anonymous; Improved block creation speed, which also had a positive effect on transaction delivery. Besides, the issue of coins was ten times increased.
The project has a website with a “road map,” which the team follows. According to their plans, by 2020, the crypto world will receive an updated anonymous Bitcoin. At the moment, Bitcoin Diamond is ranked 28th in CoinMarketCap.
Bitcoin Dead Forks
This is the first Bitcoin hard fork in history, which happened in the late summer of 2015. The main goal was to increase the speed of the network due to the bigger size of the block (8 MB). It was supposed to improve the bandwidth of up to 24 transactions per second (7 in the original Bitcoin).
However, the project was a failure, because only 12% of the required 75% of miners supported the transition. Finally, the departure of one of the main developers, Mike Hearn, put an end to the new cryptocurrency. After that, the network gradually collapsed, and as a result, only 20 nodes remained of the original 4,000.
This project was a new look at the failed Bitcoin XT. The developers suggested to increase the block size to 2 MB immediately, and after two years — up to 4 MB. The community couldn’t reach a common denominator for a long time, and the final decision was delayed.
Initially, since the beginning of 2016, about 2,000 nodes operated on the network, but a year later, there were no more than 100 of them. Once it became aware of the Bitcoin Cash hard fork, the developers called to support this coin.
Again, it was launched in May 2016 as an attempt to speed up the network. However, unlike most other projects, the creators suggested miners choose the size of the block independently. After, they would eventually take some average value.
However, a wave of criticism has fallen on Bitcoin Unlimited regarding the fact that large centralized mining pools can manipulate coin development in their interests, and small miners will be out of business. Also, some bugs were found in the code, which further undermined the credibility of this coin.
The project began to gradually drawdown. When the news provoked 70% of nodes to leave the network, the coin virtually ceased to exist.
Many projects have been trying to “beat” the success of Bitcoin for at least five years, but no one has succeeded. Bitcoin still sets the general direction of the market. However, despite this, new Bitcoin hard forks are regularly announced, which offer improved technology and new features.