With the advent of distributed ledger technology (DLT), many terms and practices have appeared that are understood only by a narrow circle of technically savvy specialists. Have you ever heard of forks in the cryptocurrency world?
For example, Bitcoin was the first decentralized virtual currency that existed using a distributed registry, also known as blockchain.
The blockchain, as the name implies, consists of blocks of information placed in chronological order depending on the time of their verification. For a block to be added to the chain, it is necessary to observe and agree on a set of rules and protocols.
Fork means that the blockchain is divided into two parts.
Blockchain branching is used if the basic rules and protocols currently used in the blockchain must be changed. For example, to increase the size of the block or to improve the functions of the blockchain.
When these changes are implemented, they cannot be reverted. They are constant.
Changing the blockchain protocols will result in either soft (software) or hard (hard) fork.
Appear when the blockchain is updated, but the updated version is still compatible with the old one. After the update, all those who have an old version of the blockchain will still be able to access the new blocks, although they will not use the added features.
If they are miners, their attempt to check the block will result in an error. To avoid this, everyone should upgrade their software to an improved version.
This is almost the opposite of software forks. When the blockchain is updated, the separation creates a completely new chain with its own rules and protocols that do not support backward compatibility. These two chains will continue to exist, while one will not affect the other.
In the world of cryptocurrencies, it’s a obvious that forks are inevitable.
The most important part is that every serious decision should be discussed with the project community. Otherwise the very idea of a decentralized financial system disappears.