Bitcoin forks are defined as changes in the protocol of the Bitcoin network. Forks can also be defined as the situations that occur when two or more blocks have the same block height. A fork, in essence. influences the validity of the rules. Usually there are significant changes associated to hard forks, even though any type of fork usually brings change to the protocol.
Forks are typically conducted in order to add new features to a blockchain or to reverse the effects of hacking or catastrophic bugs. Forks require consensus to be resolved or else a permanent split emerges.
Soft fork vs hard fork
A soft fork is a backward compatible method of upgrading a blockchain. In other words, a soft fork is software upgrade that is backward compatible with previous versions of the software. Soft forks do not require nodes on the network to upgrade to maintain consensus. That’s because all blocks on the soft-forked blockchain follow the old set of consensus rules as well as the new ones.
However, blocks produced by nodes conforming to the old set of consensus rules will violate the new set of consensus rules, and as a result, will likely be made stale by the upgrading mining majority. This is because for a soft fork to work, a majority of miners need to recognise and enforce the new set of consensus rules. If this majority is reached, then the older network will fall into disuse, with the newer blockchain gaining recognition as the ‘true’ blockchain.
Examples of soft forks are
- Bitcoin Improvement Proposal (BIP) 66: A soft fork on Bitcoin’s signature validation.
- Pay to Script Hash (P2SH): A soft fork that resulted in multi-signature addresses on the Bitcoin network.
- Segregated Witnessing (SegWit): removed parts of the block signature in order to make blocks lighter.
A hard fork, on the other hand, is a permanent divergence from the previous version of a blockchain. A new set of consensus rules are introduced into the network that is not compatible with the older network. In other words, a hard fork can be thought of as a software upgrade that is not compatible with previous versions of the software. All network participants are required to upgrade to the latest version of the software in order to continue verifying and validating new blocks of transactions.
Under a hard fork, blocks that are confirmed by nodes that are not yet upgraded to the latest version of the protocol software will be invalid. Nodes running the previous version of the software will have to follow the new set of consensus rules in order for their blocks to be valid on the forked network. In the event of a hard fork, if there is still mining support for the minority chain, then two blockchains can continue to exist simultaneously.
Hard forks can usually fall into two subcategories, they can either be a planned hard fork or a contentious hard fork.
Major Bitcoin forks
|Name||Block Size||Mining Algorithm||Mining Hardware||Segwit||Difficult Adjustment||Max Supply|| |
|Bitcoin (BTC)||1M||SHA256||ASIC||Y||2 Weeks||21 Million||N|
|Bitcoin Cash (BCH)||8M||SHA256||ASIC||N||2 Weeks + EDA||21 Million||N|
|2017/10/23||Bitcoin Gold (BTG)||1M||Equihash||GPU||Y||10 Minutes (every block)||21 Million||N|
|2017/11/24||Bitcoin Diamond (BCD)||8M||OPTIMIZED X13||GPU||Y||2 Weeks||210 Million|| |
|2018/11/15||Bitcoin SV (BSV)||128M||SHA256||ASIC||N||21 Million|| |
The first major Bitcoin hard fork that took place, as we can see above, was Bitcoin Cash. The top-3 hard forks by market size are:
- Bitcoin Cash: Forked at block 478558, 1 August 2017, for each bitcoin (BTC), an owner got 1 Bitcoin Cash (BCH)
- Bitcoin Gold: Forked at block 491407, 24 October 2017, for each BTC, an owner got 1 Bitcoin Gold (BTG)
- Bitcoin SV: Forked at block 556766, 15 November 2018, for each Bitcoin Cash (BCH), an owner got 1 Bitcoin SV (BSV).
Each hard fork aimed to increase Bitcoin’s throughput, either by increasing the block-size, or by increasing the block frequency. Other projects like Bitcoin gold and Diamond tried to implement alternative consensus algorithms, GPU based, to further decentralisation of miners.
Want to know more about Bitcoin?
To find out more about Bitcoin, and all of its variants, make sure you download this definitive guide. It gives you access to Bitcoin’s price history, information on how to trade it, and methods to acquire this leading cryptocurrency
The post Major Bitcoin hard and soft forks. Where are they now? appeared first on Coin Rivet.