Since the dawn of cryptocurrency, there are many technologies that have emerged that have helped to elevate the industry. One of such technologies is ‘Forking’.
Cryptocurrency enthusiasts realized soon after the Bitcoin was launched that there are better mechanisms or rules following which it can run. So, they split the bitcoin blockchain, making the block size to be greater than 8 MB while the original still stands at 1 MB.
This method of splitting the blockchain is called forking and many other cryptocurrencies are following this mechanism to make their implementation much more efficient.
Types of Fork
This splitting of blockchain can be temporary or more permanent depending on the response received from the consumers. Following are the two types of forks.
A soft fork happens when a temporary split is made in the chain. The original chain will accept nodes from the upgraded fork as well as the previous version nodes but, the upgraded fork will accept only the nodes that follow the new rules that have been established for the same.
This mechanism is extremely helpful when the cryptocurrency retains its original properties and also upgrades itself with the help of some new strategies which then contributes to its growth further.
Also read: 3 major problems with Cryptocurrency
This type of fork is a more permanent one and completely splits away from its original vine. The original chain though would totally become invalid after this.
This can prove to be useful when the original blockchain is profiting in some way but not to its full potential. By rendering the previous version invalid there is some assurance that the previous consumers would migrate over to try the newly implemented fork.
Check out this YouTube video that better illustrates the forking process and what happens when digital currency keeps on forking.
There is a serious difference of opinion among cryptocurrency service providers regarding whether or not there should be the forking of digital currency.
For instance, it takes some time for consumers to get more accustomed to a new fork or it can be that they are not satisfied with the new implementation and move on to some other cryptocurrency.
Forking of cryptocurrency is another type of risk of its own added to the long-standing list of risks associated with cryptocurrency implementation. Let us know in the comment section whether you feel forking is profitable or not.