What is the 'hard fork' about?

What is the 'hard fork' about?

Firstly, it's important to understand how the bitcoin system works. Transactions by users are gathered into "blocks" that are turned into a complex math solution. So-called miners, using high-powered computers, work these solutions out to determine if the transaction is possible. Once other miners also check the puzzle is correct, the transactions are approved and the miners are rewarded in bitcoin.

The need for high-end machinery has meant that mining is controlled by a small group of people with powerful computers.

Jack Liao, the CEO of LightningASIC, which sells mining equipment, came up with bitcoin gold as a way to change this dynamic.

The idea is to allow bitcoin gold to be mined by more people with less powerful machines, therefore decentralizing the network further and opening it up to a wider user base.

To this end, the collective behind bitcoin gold came up with a code that creates a "fork" or split in the bitcoin blockchain. That occurred on October 24 and resulted in the creation of the bitcoin gold cryptocurrency.

Hasn't a fork happened before?

Yes. In July, bitcoin underwent a similar fork that led to the creation of bitcoin cash.

There was an initial surge in price, and it hit an all-time high of $914.45, but has fallen steadily, according to data from Coinmarketcap.com. On Wednesday, bitcoin cash was trading just above $330.

Bitcoin cash's market capitalization — the total value of the cryptocurrency in circulation — is just over $5.5 billion, compared to more than $93 billion for bitcoin.