What is Bitcoin Fork? | Types of Forks | Why Forks Happen?

If you are a player in the world of cryptocurrencies, then you might have come across a topic called as Bitcoin Fork.

So, What is Bitcoin Fork?

Bitcoin Fork is a change to the bitcoin protocol, which means making changes to the previous rule-set resulting in the creation of two different cryptocurrencies both with a shared history.

Confused?

Well, to make the explanation easier, we need to take a step back and talk about blockchain. Blockchain in simple terms is a series of cryptographic keys which move memory. The rules with which the memory is moved is decided by miners. If a majority of miners decide to change the rules, then the cryptocurrency is forked.

Based on the software changes, there are two types of forks:
1. Soft fork,
2. Hard fork.

Regardless of what the fork-type is, the changes effect the overall protocol.
1. Soft fork: Soft fork is a rule change which is backward compatible, which means that the new rules are in sync with the older protocol and actively exchange information.
2. Hard fork: Hard fork on the contrary, is not backward compatible, which means that the new protocol does not share any information with the older protocol and is a permanent split.

Bitcoin has been forked multiple times and each fork type has its own advantages and disadvantages.
The bottom line is, bitcoin is an open source platform and anyone can fork it. The idea is to understand the reasoning behind the fork. Once, you have established the why? of the fork, you can figure out if you should or should not support the change.

Blockchain technology is bound to give economic freedom to everyone who invests in it. The idea is to be aware of what is happening in this highly volatile market and invest smartly.

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