Understanding Bitcoin Forks
To make things easy for everyone, let’s treat a fork just as it is, a fork in the road. Since we’re recording all of our steps in our journal (the blockchain), we can easily track the decisions we’ve made on our adventure. Let’s say that our adventurer group consists of 5 different people (miners) who all have an equal vote over the decisions we make as a group.
3 of the people in the group believe that it’s better to start using bigger backpacks so that they can carry more goods and travel for longer times.
The 2 who are remaining prefer to keep their packs light and don’t mind making frequent stops at towns and villages.
The group decides to split up, simply because of convenience and 3 of the people continue, while the other 2 remain and stock up on everything they need for the journey.
This is where the similarity ends with real life. In terms of crypto, the group would split up into two groups of 5. A fork in the road does not mean the same thing as an actual fork in real life, but it signifies that the blockchain has split into two, most likely due to a change in the consensus model or some important features, such as block size.
In cryptocurrency, if you have 1 bitcoin in the original blockchain, you will still have 1 bitcoin after the fork, plus an additional 1 bitcoin fork token. For example, when Bitcoin forked into Bitcoin Cash, BTC owners instantly had some BCH on their accounts.
Bitcoin Classic (BTC)
The first Bitcoin fork occurred in 2016 due to its scalability problems and led to the creation of the first hard fork — Bitcoin Classic. It sustained the software reliability of the original Bitcoin but improved by doubling the blockchain capacity to 2 MB (Bitcoin has only 1 MB), and it functioned only for the first eight months.
Since this wasn’t a satisfactory solution, later the same year the blockchain limit operation was handed over to a larger community of businesses, developers, miners, and users, thus starting with decentralized governance for the first time since the creation of cryptocurrencies.
Bitcoin Cash (BCH)
In 2017, when the transaction capacity hit a brick wall, fees skyrocketed due to the significant increase in Bitcoin’s value. Bitcoin Cash (BCH) was launched in August 2017 as a hard fork trying to solve Bitcoin’s limitations by increasing the block size to 8MB.
Bitcoin Cash was published by splitting the main Bitcoin chain on block 478558, creating an identical copy of the blockchain, and changing the block size to 8MB as a means of solving the scalability issue on-chain.
This move enabled Bitcoin Cash to maintain low costs, fees, and fast confirmation times, becoming 30% more profitable to mine. Miners were able to easily move the hash power between the BCH and BTC because of the identical encryption system and the additional high replay protection.
Bitcoin Gold (BTG)
Globally cryptocurrencies are becoming increasingly popular as a means of making ‘easy money’, and so another hard fork broke away — Bitcoin Gold (BTG).
This fork advocates decentralized mining of Bitcoin and provides steady income to the everyday mining enthusiasts by a rather simple divergence from Bitcoin’s proof-of-work algorithm SHA256 to Equihash.
The individual miners who mostly use middle range GPUs can now mine Bitcoin Gold, because Equihash makes it ASIC resistant. The BTG developers are devoted to keeping the coin to a 21 million limit.
Bitcoin Diamond (BCD)
Quite expectedly, another high-volume coin emerged out of the original Bitcoin blockchain as a hard fork named Bitcoin Diamond (BCD). Most distinguished features of BCD are that it has a mining pool of 210 million tokens, and it operates on X13 hashing algorithm which means that it supports GPU mining.
Other Bitcoin Forks
In December, 2017, Bitcoin God was launched, followed by Super Bitcoin, Bitcoin X, Bitcoin World, Lightning Bitcoin… the list goes on. The comforting truth is that hard forked currencies can exist and develop independently without obstructing or mixing with the Bitcoin core’s community, concept, and development.