Despite its quirky name, a Bitcoin fork is not something you’d want to pick up and try to eat with. In reality, a Bitcoin fork is a process for splitting a blockchain.
Bitcoin began as a global cryptocurrency and worldwide payment system. Today, it still remains unknown exactly who created bitcoin and its unique codebase. Bitcoin is created by a process called mining which is secured by the Bitcoin codebase.
Many cryptocurrencies have copied the Bitcoin protocol and subsequently launched their own currencies with slightly different characteristics. These currencies are called Bitcoin forks.
However, the process has been the subject of much debate within the blockchain community. The most contested argument against bitcoin addresses its scalability issue, which focuses on slow transaction confirmations of the Bitcoin network.
Amounting frustrations with the original Bitcoin network resulted in multiple splits, also known as “forks”, of the Bitcoin codebase. What these Bitcoin forks are and the major five are covered in this article.
What the fork is a Bitcoin fork?
First, we’ll take you through the basics. A Bitcoin fork happens when two miners find valid blocks at the same time. Therefore, when two blocks have the same block height, this is referred to as a fork.
The odds of finding the next blocks on both branches at the same time again are rather low. However, if one split of the blockchain grows longer, miners will join this split, departing the shorter split.
The blocks in the shorter version are called “orphan blocks”. No transactions are lost since transactions on the orphaned block, if they were not already added to the valid block, are re-broadcasted to the network and added into the next valid block. These forks mostly do not change the underlying protocol. If a fork, however, is intentional, it is referred to as a permanent fork.
Five major types of permanent forks
Permanent forks are usually introduced as Bitcoin improvement proposal. If a permanent fork is changing rules and still creates new blocks recognised as valid by the old software, it is referred to as a “soft fork”.
However, if the new rules implemented by a BIP are not implemented by all miners, this results in a “hard fork”.
Founder: Charlie Lee
Max Supply: 84M LTC
Circulating Supply: little more 62M LTC (74%)
More: Block Reward Halving in August 2019
Litecoin is a Bitcoin fork from 2011. The Litecoin network aims to support more transactions in less time. Instead of creating new blocks every 10 minutes, Litecoin blocks have a block time of 2,5 minutes. Due to more frequent block generation, Litecoin miners are rewarded four times as many new coins like Bitcoin, which will ultimately result in a total of 84M LTC being created. Litecoin’s cryptocurrency LTC can be transferred in a shorter time.
2. Bitcoin Cash (Bitcoin ABC)
Started: 01.08.2017 at Block 478558
Founder: Roger Ver
Max Supply: 21M BCH (BCHABC)
Circulating Supply: 17,8M BCH (85%)
More: Bitcoin ABC: https://www.bitcoinabc.org/
Bitcoin cash resulted after a longer scalability debate in the Bitcoin community during the Summer of 2017. As a result of this disagreement, Bitcoin cash forked off on the 1st of August to increase the transaction capacity by increasing the block size to 8 MB.
3. Bitcoin Gold
Premine: 100,000 BTG
Max Supply: 21M BTG
Circulating Supply: 17,5M BTG (83%)
Bitcoin Gold is a Hard Fork of Bitcoin. The approach of Bitcoin Gold is to make mining more decentralised. Therefore, in late October 2017, an algorithm was implemented which is mined on available graphic cards instead of the highly specialised mining computers used for Bitcoin.
4. Bitcoin Diamond
Started: 24.11.2017 at Block 495866
Founder: Connor Cui
Max Supply: 210M BCD
Circulating Supply: close to 186,5M BCD (89%)
Bitcoin Diamond is a fork of Bitcoin that occurred in late November 2017. Bitcoin Diamond aims to increase privacy and offers lower fees compared to Bitcoin. The major difference is a new proof-of-work algorithm, which changed from SHA256 to X13. The block size of Bitcoin Diamond is 8 MB.
5. “Unofficial" Bitcoin fork - Bitcoin SV
Started: Nov. 2018
Founder: Craig Wright
Max Supply: 21M BSV
Circulating Supply: 17,8M BSV (85%)
Bitcoin SV is actually not a fork of Bitcoin, but instead a fork of Bitcoin cash. However, it restores the original Bitcoin protocol. The aim is to solve the scalability issue bitcoin has. Bitcoin SV has been in the news lately, due to its founder Craig Wright, trying multiple times to prove his identity as the inventor of Bitcoin.
Since Bitcoin was created by Satoshi Nakamoto, who owns the majority of the earlier BTC, the easiest way to prove ownership of these coins would be to move them. So far, this is something Craig Wright has not managed to achieve.
All in all, many Bitcoin forks have tried to improve Bitcoin by upgrading the codebase and creating a new cryptocurrency.
However, in terms of market cap, Bitcoin still holds the title as being the “biggest” by transacting more value and accounts for a larger amount of open wallets. The option of forking a currency is crucial to blockchain’s open technology, but in the end, what really counts are the members of each community and their activities.
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