Forking: An introduction to the splitting of Bitcoin

In the cryptocurrency community, a popular term which is used very often, forking. If you’re a crypto enthusiast then you might have someday heard about it. In order to understand what a hard fork is you need to first understand what a blockchain is.

What is Forking?

To understand forking we will take the example of Bitcoin, but forking for any other cryptocurrency will be the same. Bitcoin is a digital currency which runs on some protocols/rules, to which everyone who uses Bitcoin has to follow, the miners and also the users of Bitcoin.

The rules are mostly about how large the block size should be, how should the fees be calculated and what rewards should the miners get etc. The developers regularly keep on updating the protocols in order to fix any problem on the blockchain or add some utility or to improve the performance.

A simple diagram showing the original and forked chain of Bitcoin

Some changes can be small but other changes can fundamentally change the way Bitcoin works. Sometimes it happens that the group of developers disagrees with the existing protocols of the Bitcoin or in simple words they disagree with the direction where Bitcoin is headed. The miners who want to follow the existing protocol can also disagree with the update as updating the protocol can reduce their profits.

If another set of miners, who are dissatisfied with the existing protocols can choose to go their own way and create their own version of the protocol and fork the blockchain.

So what happens when you fork a Bitcoin and how Hard Fork works?

So Bitcoin consists of two parts

  • The Bitcoin Protocol or the rules within which the miners work
  • The blockchain which stores all the transaction that has happened till now  
A diagram showing the Hard Fork process
Image Courtesy: CoinTelegraph

Step 1

If they decide to create a new protocol they go by first copying the existing Bitcoin protocol and start making changes to the protocol, they can do so because the Bitcoin protocol is open source

Step 2

After they have made changes to the protocols, they define a point of time when they want to fork the blockchain and when the fork will become active. This is done by specifying the block no. For example, you can say that your fork will go live when the block no. 2,80,000 will get published to the blockchain when the block no. reaches the given block no. the community of miner splits into two.

Step 3

Some miners decide to go with the original and the existing protocols while others who support the new protocol will follow the new forked protocol. Hard forks are incompatible with previous blocks, meaning it is not backward compatibleThe first hard fork Bitcoin experienced was in August 2017 when it forked to Bitcoin Cash. Bitcoin has had quite a successful forks like Bitcoin Unlimited, Bitcoin Gold, Bitcoin XT etc. Even Ethereum had a hard fork when it split to Ethereum Classic. 

So this was essentially the process of forking and also how a Hard Fork works.

What is Soft Fork?

A diagram showing the process of Soft fork
Image Courtesy: CoinTelegraph

Soft Forks, unlike the hard forks, is backward compatible, which is the very fundamental difference between the both. So even after forking the changes in the new protocol is still compatible with the older blocks.

We hope the concept of forking was simplified with this brief introduction and explanation. Stay tuned for more.

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