Recently I heard my coworkers talking about how a coin had forked. I had never heard this expression before, but I'm not surprised this a whole new different and complicated thing in the never-ending world of cryptocurrency.
According to Commodity, there are two main types of forks Soft fork and hard fork. A soft fork is any change that is backward compatible. A hard fork is any change that breaks backward compatibility.
In the case of a hard fork, a new version of a coin is created.
“For those that don’t know, a hard fork is the only currently known method for developers to update Bitcoin software. Developers split the network and essentially create a new Blockchain with altered rules. The original and the forked version of the cryptocurrency have identical Blockchains all the way up to the block when the split occurred. From there on, the two networks exist independently. After the split happened, everyone who held Bitcoins before the hard fork received the same amount of Bitcoin Cash tokens.” Cointelegraph
As I began reading about forks in cryptocurrency, I thought why developers were splitting coins in the first place. Turns out when there is a disagreement on protocols within a coin the community can end up forking a coin. I believe that within the cryptocurrency world there is an overall strong community where everything is discussed and this a good thing. Unfortunately, if every time there is a part of the community that does not come to consense about certain situations it may conclude in a divided coin.
It's not that I am against a fork in crypto but there are over a thousand coins that have been created, and on top of that there will be even more because of these forks occurring in this open source network. I can only imagen if this were to happen with fiat cash; I would not be able to keep up with all that is out there.
On the other hand, forking a coin contemplates more than that and has its consequences; and that when I believe chaos occurred. Once a coin forks the same amount a person owned in the original currency where the forked came from you will have the same amount on this new forked coin. I believe that if the community decides that the protocols within a coin don't apply to the majority and decide to fork; it makes sense, but a whole different story is to receive the same amount you had in the original coin and duplicate it to this new coin. Sure, the amount received in this new coin is not worth what it originally was worth, but that will depend on the market. If the community decides to follow the coin it may eventually be worth even more than its original coin. Latter may or may not happen, but I believe it would only make sense that this new coin forks with its history and all its previous movements; but overall this is a new coin regardless of how it became a new coin; thus it should start from 0.
If I would have invested in different crypto and one of the coins forked, I would probably support this new coin and be part of the fork because at the end as an investor you would not be losing hopefully you would get lucky and profit from this new coin. Nonetheless people may be terrified if they realize a fork is going to happen especially if they have invested a lot because their coin can notably decrease its value.
Another concern I had once reading about forks is the fact that like in many things there is a good side and a bad side. I believe that forks may also result in scams; people may buy into a new forked coin because they may not understand it and don't want to lose out on the next big thing; or being promised that you will have double the amount of coins which is not entirely true; the fact that a known person within cryptocurrency can convince a community that the way things should be done is his way and his way involves a new currency is something powerful and I believe it must be looked at because it may not always be a good thing, and it may only be in the long run to benefit a select group of people.
Video Q&A: What happens to our bitcoins during a hard fork? – Andreas Antonopoulos
Feel free to comment!
984 views2 comments