Cryptocurrency Forks Demystified

Bitcoin, Ethereum, Altcoins, Mining, Trading & more

Cryptocurrency Forks Demystified

You must have noticed that the cryptocurrency world would have gone crazy wild the moment the phenomenon called as ‘Fork’. Sometimes these crazy wild moments can be for the good and sometimes it can be not so good.


And irrespective of which way it goes, you can still make a lot of money, but only if you play smart. And for those of you have been observing the cryptosphere as of recent times, you must have heard this word ‘fork’ a lot and must have witnessed quite a few ‘fork’ events.


Some of the times when the fork events that did happen during the Bitcoin’s times when the price of the cryptocurrency went for a wild ride were:


  • Bitcoin Cash Fork
  • Bitcoin Gold Fork
  • Bitcoin Diamond Fork
  • Super Bitcoin Fork


So what does Fork mean?


The word ‘Fork’ or ‘Forking generally means that it is a kind of software upgrade or software update that is done in such a way that it can be both, backward compatible or non-backward compatible. But in all aspects, majorly, ‘fork’ is more of a fancy name rather for a software update.


The way how cryptocurrencies work or function is all through code. It is in digital format and there is no physical form as the same as fiat currencies. Hence, when the cryptocurrency software is updated, it is referred to as ‘Fork’. When forking happens, it creates an alternate version of the blockchain that leaves two blockchains running simultaneously on different parts of the network, all depending upon which type of fork is happening then.


However, in the world of cryptocurrencies or in blockchains, these forks are majorly only of two types:


  • Soft Fork (Backward Compatible)
  • Hard Fork (Non-Backward Compatible)


Soft forks are also known as backward compatible which means that it is optional to use them, but Hard Forks are non-backward compatible which means that they are not optional but mandatory to be used.


What is Hard Fork?

In the crypto world, any change in the protocol or any changes that are made to the software for the purpose of upgrade that will make the old rules obsolete and makes the new code and the new rules the driving factor of the network is known an hard fork. The hard fork is a permanent change and all the users and all the nodes are required to upgrade to the latest version in order to function smoothly. This type of fork is not backward compatible and is mandatory to be updated.


A hard fork can happen at any given time the reason primarily being the change of the block size or the change of the proof of work (POW) function.


What is Soft Fork?

A soft fork is very much different from that of a hard fork, wherein which the new rules that are introduced do not make the old rules obsolete or out of action, unlike that of hard fork, thus making it backward compatible. Also, this type of fork does not need any universal update as all the old nodes within the network recognize this change. But one thing that is mandatory over here is that all the miners do need to upgrade to the latest version in order to use the new set of rules that have been introduced into the network.


Why does a fork happen?

There can be many reasons for a fork to happen, the major reason being the split of the communities or due to new feature implementations. But in most cases, it usually happens due to the split of a community.


And in a way, we can say that the hard fork is mainly due to a split of the community or perhaps a divergence where the community decides that they will no longer use the old rules that were being used in the protocol due to a variety of reasons. When there is a mutual agreement, then there will be a hard fork or a protocol upgrade that will be done which is mandatory to move forward within the network. Hence, they change the rules and decide to form a new blockchain. And that is the reason why a new version of the older version (the original blockchain) evolves from that particular block.



This is the reason why “Bitcoin Cash” (BTC) was created. The BTC underwent a hard fork majorly because the users, the miners, and the developers had demanded that the size of the block be upgraded to much bigger blocks in bitcoin. Hence they forked the bitcoin to create what we now know as Bitcoin Cash (BTC) on 1 August 2017 at 12:20 p.m. UTC.


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