For most readers, the topic of this article is new and incomprehensible. Nevertheless, the world's first cryptocurrency - Bitcoin, which has been developing rapidly and successfully for nine years, continues to strengthen its position, becoming the most powerful digital decentralized currency. What is the Fork, what is the difference between Hardfork and Softfork, why does it happen, what is consensus, how many forks in Bitcoin, how to achieve the success of Hardfork?
What is Fork?
Fork (fork) is the division of the blockchain of the cryptocurrency into two branches. Thus, the source code of the digital currency is changed. A person who has certain knowledge in this field, it is not difficult to create a new cryptocurrency. Moreover, the source code is open.
The Difference Between Hardfork and Softfork
Here we come to the second extremely interesting question - and what's the difference between Hurdfork and Softfork? It is already covered in the name: Hardfork. This is more dramatic than Softfork, "hard" change of software, after which new rules of the network are established, as a result they will be incompatible with the old software. Thus, the creation of a new cryptocurrency is possible only with the help of Hardfork, by changing the bitcoin block from 2 MB or more. After the creation of a new coin, the system will function according to a completely different principle.
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Softfork is, on the contrary, a more delicate, "soft" modeling of the program code of cryptocurrency. From the Hardfork this operation is distinguished by the fact that it does not require a total replacement of the software of machines that work in the blockchain network. Usually, carrying out the Softfork is due to the desire to eliminate possible flaws in the cryptocurrency, to correct or improve it. Note that the user at any time can cancel the Softfork, because he did not change the program code rigidly, only corrected it by 1MB or less.
Why is this happening, what is the Forks' task? Hardfork and Softfork are of a common nature, they are designed to change the blockchain of the cryptocurrency, only the results of these operations are radically different. If in the case of Hardfork it is the creation of another, independent cryptocurrency with the ability to conduct transactions much more quickly (as a rule, to try to promote a new coin and speculate it), then the Softfork sets only the modification and not the replication of the blockchain system.
For the network to be homogeneous and develop in the right direction, participants must adhere to uniform rules, keeping the system from Fork and out of sync. This is what it is usually called a consensus in mining.
Algorithm for using common accepted by all participants of the rules of bitcoin of the network is called proof-of-work. The idea is that the participants in the competitive process find a solution to a complex cryptographic problem. The participant who first decides it, and most network nodes agree with the correctness of the generated block, will have the right to add a new block to the blockchain. Then this process is repeated.
The mechanism of consensus is a kind of chain, a mutual guarantee, where all participants are obliged to agree with everything that happens on the network. The nodes of the system that do not recognize the block that was accepted by most participants, and vice versa, agreed with the block not recognized by the majority, will automatically be excluded from the network consensus. In this case, they will have to form their own parallel network.
The first forks
After the appearance of Bitcoin, eight years passed when he had his first fork. Then it was called Bitcoin Cash, and over time it was announced another fork - Bitcoin Gold (now the 20th place among the cryptocurrencies).
By the way, now the capitalization of Bitcoin Cash is about $ 21.3 billion, and the rate of the currency itself exceeds the $ 1254 mark. In the rating of the cryptocurrencies between Bitcoin Cash and another powerful electronic currency ripple (capitalization of $ 37.9 billion) is a constant competitive struggle for the third position in the list. On the second place in the rating is the Ethereum cryptocurrency with $ 85 billion of capitalization.
Market experts predict that in 2018 there will be more than fifty Forks of Bitcoin. Create it is not a problem, the question is in another - how popular will it be for other users, hence, viable and successful?
The loud and pathos name of the new cryptocurrency is not enough, for its active and high-quality promotion it will take a lot of people capable of maintaining the fork's performance, its liquidity in relation to other cryptocurrencies.
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In the future, with a positive combination of circumstances, the fork will receive an intensively growing army of supporters, a constantly growing rate and capitalization. The constant desire of the creators of new cryptocurrencies to make the system work the way they want and quick earnings, pushes market players, on the crest of bitcoin popularity, to create new, and they think, more popular and claimed cryptocurrency.
Editor: Yuliya Soroka