Blockchain forks and ERC-20 Tokens: Explained

The deeper you go into the cryptocurrency subject, the more questions appear on your way? Typical for the crypto world. That’s why we’re here to help you out. Today we’re going to explain the difference between forks and tokens.

What the Fork?!

The term ‘Fork’ means a copycat core code of the existing crypto that has some changes in it. Just imagine a simple lunch fork. Like the cutlery, the core code splits into several new branches. In terms of Bitcoin, these branches represent new currency networks based on the core Bitcoin chain which we refer to as altcoins (Litecoin, DOGE, Dash, etc). Not only Bitcoin, however, has forks, but also other sustainable blockchains, like Ethereum, NEM, STEEM and so forth.

So why does the core chain split?

It happens in a few cases:

• when some significant changes take place in the core chain but cannot be unanimously approved by the community.

For example, Bitcoin scalability issues at the end of 2017 have caused controversies in the community that eventually lead to Bitcoin Cash, the fork of the original Bitcoin chain with an increased block size limit.

• When someone wants to run is own project based on that crypto and make some improvements in that.

Consider Litecoin as an example. Blocks in the Litecoin network are generated way faster than ones in the Bitcoin network (2.5 minutes against 10 minutes). Litecoin is a scalability oriented fork of Bitcoin since it provides faster transactions.

Token talk

There is another cryptocurrency type named Tokens which became quite trendy last years. Unlike forks that represent a separate chain with its own rules, protocols and standards, Tokens are based on the Ethereum network and regulated by the ERC20 standard.

From Token to Mainnet

Ethereum gives birth to a myriad of token projects because it provides easy tools for token creation and helps raise funds quickly. Some projects, however, consider the tokenization as an interim solution and migrate to mainnet after successful product launch and token distribution. This is what Tron, Qtum, EOS did. And this is what AION is doing now with the help of Changelly. Mainnet is a project’s native “end product” blockchain with its own rules, protocols and standards. And yes, these blockchains may have forks, too.

Key difference

At the first glance, the crypto terminology seems complicated. In fact, things are much easier. A blockchain fork is a copycat chain which functions separately from the original one. A token is a crypto that operates according to the ERC20 standard of the Ethereum network. Sometimes tokens migrate to mainnet to become a separate blockchain that doesn’t obey the Ethereum rules. Once separated, the blockchain can be also forked into copy chains.