In the world of cryptocurrencies, especially bitcoin, you will often hear the word ‘forking’. So far in bitcoin, two major forks have taken place, which have led to the birth of many cryptocurrencies—bitcoin cash and bitcoin gold and others.Let’s try to understand forking and its impact.
What is forking?
Forking happens because a set of miners, who create coin, believe that there are more efficient options than the existing blockchain. Forking implies a splitting of the chain on which coin runs; making it go in a different direction—with different rules than the existing blockchain as the two would now have different visions . “For example, bitcoin cash changed the block size, which means that blocks can be greater than 8 MB while bitcoin continues with 1 MB blocks. When the miners disagree with the existing rules of bitcoin, the blockchain forks or splits into two different blockchains which have different rules.
Hard and soft fork concept.
There are two kinds of forking. “Hard fork is a permanent divergence in blockchain. If a hard fork happens, then it is possible that the older coin blockchain will be scrapped in place of the upgraded one. This means that all nodes—of miners, merchants and users— will need to upgrade to the new nodes to be able to validate the new blocks. This is necessary as non-upgraded nodes will reject blocks created by upgraded nodes. In case of soft fork, there are only protocol changes and coin continues to work on the original blockchain rules. For example,to date the following coins have or will soon emerge after software client fork of bitcoin core: bitcoin XT, bitcoin classic, bitcoin unlimited, bitcoin cash, bitcoin gold, SegWit2x, litecoin, dash and zcash.