At the beginning of 2009, a cryptic software developer working under the pseudonym Satoshi Nakamoto published an application that was the basis for bitcoin, one of the initial cryptocurrencies. Since then, bitcoin has become a huge hit worldwide and has inspired many other digital currencies.
Many cryptocurrencies utilize previously present technologies in Satoshi’s first concept and program. Others use the bitcoin model to modify or try to enhance it.
In some instances, bitcoin has created variations that share the same basic concept and software but are different from the initial. The bitcoin blockchain may have been subjected to the forking procedure in these instances. By forking, the blockchain itself is split into two different entities. There have been numerous forks since the beginning of bitcoin, and only a few are actually viable options.
· The term “hard fork” in bitcoin refers to a significant change in the bitcoin blockchain protocol that results in two branches. One follows the old protocol, and the other is the latest version.
· In the event of a hard fork, software implementing the bitcoin protocol and mining processes is upgraded. When the user updates their software, the new version will block transactions made using previous versions, thereby creating a new part that is part of the blockchain.
· Through this forking process, different digital currencies with names similar to bitcoin have been developed, such as bitcoin cash and bitcoin gold.
· Bitcoin XT was one of the first significant hard forks of bitcoin.
· Bitcoin cash is the most profitable alternative to the leading cryptocurrency. According to market capitalization, as of June 2021, it’s the 11th largest digital currency.
Through this forking process, various digital currencies with names resembling bitcoins were invented. They include Bitcoin Cash and Bitcoin Gold, among others. It is difficult for the uninitiated cryptocurrency investor to discern the differences between these currencies and put the different forks on an underlying timeline. Below, we’ll look at some of the most significant divisions of the bitcoin blockchain in the last few years.
Understanding Bitcoin Hard Forks
In 2009, just a few months after the launch of bitcoin, Satoshi made the initial block of bitcoin’s blockchain. This is now called”the Genesis Block because it was the beginning of cryptocurrency as we now know it. Satoshi could bring about many changes to bitcoin’s network in the early stages. However, this has become more and more difficult, and the number of bitcoin users has increased by a significant amount.
There is no way that a single person or organization can decide what time and when bitcoin should be upgraded has also made the process of upgrading the system more complicated. Since that of the Genesis Block, there have been numerous difficult forks.
Alongside hard forks, cryptocurrency such as bitcoin also uses soft forks. The main difference between a traditional fork and a smoother fork is that they will not produce a new currency. Soft forks may alter bitcoin’s protocol, but the end result remains unaltered. Soft forks are compatible with backward compatibility.
The software that implements bitcoin and mining methods is updated in a hard fork. When individuals upgrade their software, the new version will block transactions made using older versions, effectively creating a brand new branch in the bitcoin blockchain. However, users who use the older software will continue to process transactions. This means that there are two sets of transactions that are taking place on two chains.
A Timeline of Bitcoin Hard Forks
One of the first significant Bitcoin XT was one of the first notable hard forks. Mike Hearn developed the software at the end of 2014 to add some new features previously suggested. The previous version of bitcoin could handle as many as seven transactions in a second. Bitcoin XT aimed for 24 transactions per second. To achieve this, the bitcoin XT project proposed to increase blocks from one megabyte up to 8 megabytes. 3
Bitcoin XT initially saw success, with over 1,000 nodes using its software by the summer of 2015’s final days. 4 However, within a short time later, the project slowed down the interest of its users and was eventually left by the users. Bitcoin XT is not available anymore, and its website is currently inactive.
If Bitcoin XT declined, some community members desired larger block sizes. To address this, a group of developers created Bitcoin Classic in early 2016. Contrary to XT, which proposed to increase the block size up to eight megabytes. Classic was designed to limit it to 2 megabytes.
Similar to Bitcoin and XT, Bitcoin Classic saw initial interest. Around 2000 nodes were operating for a few months in 2016. The project continues to exist today, with some developers supporting Bitcoin Classic. However, the overall community of cryptocurrency users has been focusing on alternatives.
Bitcoin Unlimited has remained a mystery since its initial release in 2016. The team behind the project published the code, but they did not say what kind of fork it needed. Bitcoin Unlimited sets itself apart by permitting miners to choose what size they want for their blocks by limiting miners’ nodes to the block size they can accept, as high as sixteen megabytes.
There is still some interest in the project, but bitcoin unlimited has failed to get traction.
Bitcoin Core developer Pieter Wuille introduced the idea of creating Segregated Witness (SegWit) in the latter part of 2015. Simply put, SegWit aims to reduce the size of every bitcoin transaction, thus allowing for more transactions to co-occur. SegWit was technically a hard fork. It could have been a factor in the development of hard forks, even though it was not first suggested.
In reaction to SegWit, the bitcoin designers and customers decided to launch the process of a hard fork to stay out of the updates that it resulted in. Bitcoin Cash was the outcome of the hard fork. It separated the blockchain’s main chain in august of 2017 after Bitcoin Cash wallets stopped accepting bitcoin transactions and blocks.
Bitcoin Cash is the most profitable hard fork derived from the primary cryptocurrency. As of June 20, 2021, it was the 11th largest digital currency according to market capitalization due partially to the support of several prominent people within the crypto community and numerous popular exchanges.
Bitcoin Cash supports blocks of eight megabytes. It didn’t accept its SegWit Protocol.
Bitcoin Gold was a hard fork, released just a few days after bitcoin cash in October 2017. The people who created the hard fork wanted to bring back the mining capabilities by using basic graphic processing units (GPU) because they believed that mining had become complex in terms of hardware and equipment needed.
It was once possible to mine bitcoin with personal computers and laptops. The increasing difficulty of mining and the introduction of technology such as Application Specific Integrated Circuit (ASICs) devices specifically designed for bitcoin mining make it nearly impossible to make money mining bitcoin at home, using the processing power computer. A few bitcoin forks, like Bitcoin Gold and Bitcoin Gold, have tried attempt to help make bitcoin more accessible by modifying the technology required to establish a connection with a network.
A unique aspect of Bitcoin Gold is that Bitcoin Gold hard fork was the “pre-mine,” a process through which the development team created 100,000 coins before the fork was completed. Many of them were placed in a separate “endowment,” and developers have said that the fund is intended to help grow and fund the bitcoin gold ecosystem, with a part of those coins being used as an incentive for developers to pay.
It is generally accepted that Bitcoin Gold adheres to many principles that underlie bitcoin. But, it is different in how it uses the proof-of-work (PoW) algorithms that it requires from miners.
When SegWit was first introduced in August 2017, the developers planned to add a third element to the upgrade. This component, called SegWit2x, will cause a hard fork that stipulates the size of a block as Two megabytes.
SegWit2x was scheduled to occur as a hard fork in November 2017. However, several businesses and individuals from the bitcoin community who had initially backed SegWit2x SegWit technology decided to opt off the fork’s second part. In some ways, the backlash could be caused by SegWit2x having opt-in (rather than obligatory) replay protection. This could have had a significant impact on the kinds of transactions the new fork could accept.
On the 8th of November, 2017, SegWit2x’s team SegWit2x announced that the hard fork they planned was canceled because of differences between previous supporters and the initiative.
Bitcoin Hard Forks FAQs
The easiest way to think about the forks in a cryptocurrency’s blockchain could be by imagining that the fork is introducing the different set of guidelines that bitcoin adheres to.
After a fork in bitcoin’s blockchain splits into two different paths. Once a new rule has been put in place, bitcoin users who are mining the specific bitcoin blockchain may choose to adhere to the regulations of one or the other. It’s like an intersection.
Forks are generally carried out to improve the functionality of blockchain. Bitcoin has been through various forks since its first introduction in 2009. Each split has resulted in different versions of bitcoin’s currency. Bitcoin was made available as open-source software and was designed to be enhanced as time passed. Bitcoin forks are the natural consequence of the nature of the blockchain system, which is independent of any central authority.
The first bitcoin fork major occurred in the latter half of 2014.
Any hard fork may cause a significant effect on the cryptocurrency; it’s usually a turbulent moment in the history of crypto. In some instances, the community will be divided over the need and effect of changes caused due to fork. Additionally, the value of the cryptocurrency is typically highly volatile at the time of the fork.
The two most significant bitcoin hard forks include Bitcoin Cash and Bitcoin Gold. There were other, smaller forks. The first considerable bitcoin fork came with Bitcoin XT, introduced on the 14th of January 2014 in 2014 by Mike Hearn. The previous version of bitcoin could handle seven transactions per second Bitcoin XT aimed for 24 transactions per second. To accomplish this, it suggested expanding the capacity of the block from one megabyte up to eight megabytes.
For several years, Bitcoin has created a variety of forks. Although no one knows the future with certainty, bitcoin will likely experience hard and soft forks, continuously expanding the cryptocurrency community and making it more difficult to understand.
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