Bitcoin Forks can create new, exciting features for the Bitcoin Network or fracture the entire community in two over something as small as increasing the block size from 1 MB to 2 MB. Any change, no matter how big or small, can have profound consequences for the network and ultimately the price of Bitcoin long term. As such, understanding the types of forks as well as the history behind them will make sure you don’t waste your money on the wrong thing.
What Is A Bitcoin Fork?
A Bitcoin fork is when the code that runs the Bitcoin network is changed in one way or another. This changed code becomes its own “branch” that’s forked off from the main “tree” of the previous code. These changes result in a new set of rules for all the nodes that make up the Bitcoin Network and also impacts the Blockchain.
A fork can happen with any software and because all cryptocurrencies use software, this means it’s not just Bitcoin that has forks. Forks are also a big part of how Bitcoin Core, the software that runs on all Bitcoin Nodes, gets upgraded and maintained. These changes have historically caused a lot of confusion and controversy in the community and as such, can be a very hot topic.
Bitcoin Hard Fork Vs Soft Fork
There are two main types of Bitcoin forks, each with a slightly different meaning:
- Soft Fork: These are changes to the code that do not result in a whole new blockchain being created. Critically this means they’re backwards compatible with nodes that don’t upgrade
- Hard Fork: These are changes to the code that are so big, that they break backwards compatibility. This results in the creation of an entirely new blockchain and if a node wants to interact with this new blockchain, it needs to upgrade to the new code
As no one runs or owns the Bitcoin Network, getting agreement on what things should be changed or upgraded between all the various parties can be difficult. Usually a hard fork is only accepted if the changes benefit all parties positively. It also requires an overwhelming majority of nodes upgrade to the new code.
Bitcoin Fork History
Since Bitcoin was created, many software developers have tried to hard fork Bitcoin for various reasons. Sometimes this was to fix perceived flaws in the code, while other times it was for purely selfish reasons. Only two very minor Bitcoin hard forks have ever succeeded, these were:
In contrast, here are just some of the dozens of failed Bitcoin hard forks:
- Bitcoin XT (2014)
- Bitcoin Classic (2016)
- Bitcoin Unlimited (2016)
- Bitcoin Diamond (2017)
- Bitcore (2017)
- Bitcoin God (2017)
- Super Bitcoin (2017)
- Bitcoin Cash (2017)
- Bitcoin Gold (2017)
- Bitcoin Private (2018)
- Bitcoin Atom (2018)
- Bitcoin Zeo (2018)
- Bitcoin Post-Quantum (2018)
- Bitcoin Satoshi’s Vision (2018)
Bitcoin XT was the first major hard fork that Bitcoin ever saw. Developed by Mike Hearn, he proposed a number of new features with the most notable one being an increase to the Bitcoin Blockchain block size. Originally set at 1 MB by Satoshi Nakamoto, he wanted to increase it to 8 MB in order to increase the transactions per second that the Bitcoin Blockchain could handle.
This effectively started what many call The Blocksize Wars with many later hard forks trying to essentially do the same thing. While there’s nothing wrong with having faster transactions, if the size of blocks is increased then this in tern increases the size of the Bitcoin Blockchain.
As the entire blockchain needs to be downloaded and stored on all Full Bitcoin Nodes, the bigger it is, the more costly a Bitcoin Node becomes. Seemingly small increases in the block size can result in huge and expensive requirements for node runners which decreases the decentralisation and security of the entire network. For example, a block size of 128 MB could result in the blockchain growing at a rate of 6.5 TB per year!
After Bitcoin XT died off into irrelevance after a few months, other developers tried another hard fork in the form of Bitcoin Classic in 2016. This one only increased the block size to 2 MB, but despite this being a very small change, it still didn’t catch on and to this day is essentially irrelevant
Bitcoin Cash And Bitcoin SV
Bitcoin SV (Satoshi Vision) is a hard fork of Bitcoin Cash (BCH), which itself was a hard fork of Bitcoin. Its cryptocurrency BSV and blockchain are very similar to Bitcoin with the main difference being that the size of its blocks are once again much bigger.
Created by an Australian computer scientist called Craig Write in November 2018, it aimed to increase the block size so that more transactions could be handled. This would mean Bitcoin SV could be used as a global cash and thus, fulfill the “vision” of the original Bitcoin Whitepaper written in 2008 by Satoshi Nakamoto.
|1 MB -> 4 MB
|8 MB -> 32 MB
|128 MB -> 2 GB -> Infinite
|21 Million BTC
|21 Million BCH
|21 Million BSV
Bitcoin Gold was a hard fork that also followed after Bitcoin Cash. Rather than trying to increase the block size even further, the developers instead tried to alter the code to make Bitcoin Mining more resistant to ASICs and thus, rely more on GPU mining. This meant that the rules for the Proof Of Work consensus mechanism had to change.
On top of this they also proposed a 100,000 coin increase to the supply that would be used to fund further development of the Bitcoin Gold network over time. The Bitcooin Gold fork took place in October, 2017.
The Athena Assessment
While the terminology might sound a bit weird, forks are just changes in software code which most people deal with on a daily basis. From updating the apps on your phone to having to sit and wait the 10 hours for your computer to do those dreaded Windows Updates, it’s not anything new or complicated.
Things do start to get a bit more messy as no one runs or owns Bitcoin, so upgrades are more complicated and prolonged. However given how much is at stake, this is probably a good thing!
If you want to Invest In Bitcoin, it’s important to understand what Bitcoin forks are as well as the formal procedure behind how Bitcoin gets updated via the Bitcoin Improvement Proposal system. This ensures that you won’t get confused about potential upgrades and changes in the future.
What Was The First Bitcoin Fork?
Bitcoin XT was the first major Bitcoin hard fork occurring in 2014. Developed by Mike Hearn it proposed to increase the Blockchain block size from 1 MB to 8 MB.
How Many Times Has Bitcoin Been Forked?
Is A Hard Fork Good Or Bad?
Whether a hard fork is good or bad largely depends on what change is being proposed. Hard forks are, by there very nature, a large change so this can often cause a lot of disruption and confusion within the community. This can also impact the price of the cryptocurrency particularly around the time of the hard fork.