What are forks?
With Ethereum’s Constantinople fork happening on block #7,280,000 around February 27, 2019, there have been multiple discussions of what it will bring to the blockchain and crypto space. This is also a good time to look into what cryptocurrency forks are.
Cryptocurrency forks are a common blockchain phenomenon. They are the result of a cryptocurrency code being split into two which creates an alternate version of the blockchain, and/or a new version of the cryptocurrency existing alongside the old one. In other words, forks happen when a blockchain community agrees to change the code. When members of that community disagree with the fork, a hard fork is created which produces another cryptocurrency. Usually though, such changes result in soft forks, which is a software upgrade without the creation of a new coin.
Types of Forks
There are two types: soft and hard forks.
Soft Forks: are changes in the code of a coin. These changes are not radical and do not result in complete changes in the entire blockchain. Soft forks can affect one of the coins, while the other will remain unaffected. Segwit is an example of a soft fork, whereby the blockchain changed, but Bitcoin remained the same.
Hard Forks: are the result of changes in cryptocurrency codes which produce old and new versions of the same coin. For example, Bitcoin Cash and Bitcoin Gold are hard forks which have happened after changes to the entire blockchain, with multiple different blockchains operating independently of each other.
How are forks created?
The creation of a fork depends on various reasons which include the need to innovate a system, increase the code’s ability or upgrade the performance and use cases of a cryptocurrency. Since the coin will be held by various users, their consensus is needed to create a whole new cryptocurrency. A hard fork instance was the creation of Ether, the cryptocurrency of the Ethereum network. Additionally, the Ethereum Constantinople hard fork is expected to be launched on block #7,280,000 around February 27, 2019, resulting into two currencies. Initially, the hard fork, was scheduled to take place in January 16, 2019, but was delayed due to issues with one of the Ethereum Improvement Protocols.
The creation of a fork does not mean that users should purchase the new cryptocurrency, but those who hold the old version of the coin might be rewarded, as in the case of bitcoin cash (BCH) where holders of bitcoin who joined the fork, received one bitcoin cash for each of their bitcoins.