What is a fork?

One of the most classic features of cryptocurrencies is that they are built on an open source code. This simply means that the code that is the starting point for cryptocurrencies such as Bitcoin is not secret. Instead, it is available to anyone who wants to take a look.

Behind a cryptocurrency is usually a team working together on the project in question. These are called nodes . The work involves, among other things, generating new blocks on the block chain from which the cryptocurrency is built.

In some cases, major changes to the project are relevant, but this is often easier said than done. One miner may come up with a proposal that another miner perceives as very radical compared to the previous version of the cryptocurrency.

In the worst case, they do not agree on how to do it, and it results in the cryptocurrency being forked / split. In this article, we will take a closer look at what it really means that a cryptocurrency is forged.

Hvordan fungerer kryptovaluta og blokkjeder?

What is a fork?

In order for the blockchain of a cryptocurrency to be updated, it is dependent on the mines behind the cryptocurrency reaching consensus. They simply have to agree on how to do it.

But as we mentioned in the introduction, it is often easier said than done. A miner has a suggestion that they themselves think is good, while one or more nodes may completely disagree. If they fail to reach a consensus, then a fork arises.

A fork is when two or more nodes do not agree on how to develop the blockchain further, and then the result can be that the cryptocurrency is forked / split. This means that the node or nodes that disagreed break out of the group and continue on their own.

Mining for nybegynnere

There are different types of forks

However, it is not always that a fork ends in the worst possible way, so the term “fork” can be divided into two main groups. These main groups are soft forks and hard forks.

Below we will take a closer look at both of these concepts. What is a soft fork and what is a hard fork, and what is it that separates these two?

Soft fork

Soft fork is a term that indicates that the nodes are able to reach consensus in connection with what could potentially develop into a hard fork.

The proposed update is in accordance with the rules that apply to the blockchain at the relevant time. Earlier and new versions of the blockchain are compatible, and the blockchain will have no problem recognizing new blocks.

As it did not develop into a major conflict, a concept was needed that conveyed this as well – and that was how the concept of soft fork came to be.

Hard fork

But a fork can also be a hard fork. It may go without saying, but this is the opposite of a soft fork. In connection with a soft fork, the nodes manage to reach consensus in the end, but this is more or less impossible in connection with a hard fork.

A hard fork is characterized by one or more nodes deciding to work further based on the rules that they proposed to implement in the existing blockchain. Then it is called that the cryptocurrency is forked, or split, as it is also called in good Norwegian.

There are a number of examples of cryptocurrencies that are the result of a hard fork behind the scenes, but we will return to this a little further down in this article.

This is how a fork works

But how does a fork really work? It will of course vary a bit based on whether it is a soft fork or a hard fork.

There are undoubtedly slightly greater consequences of a hard fork than a soft fork. A soft fork can be described as a calm discussion, while a hard fork will look more like a quarrel where there is no hope that the parties will reconcile.

The result of a fork is simply that a new cryptocurrency is created. This can be done in two ways, either by the nodes developing a completely new token from scratch, or by taking part of the open source code of the original cryptocurrency and building on it.

Here you get an introduction to what forks are:

Examples of new cryptocurrencies

As we saw above, the result of most hard forks is that a new cryptocurrency is created. For example, Bitcoin has been the root of many hard forks, which has resulted in, among other things, Bitcoin Cash.