Bitcoin Lure: All about Bitcoin Forks

All about Bitcoin Forks

Ensuring safety of your Bitcoins after a fork

Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a peer-to-peer (user-to-user) basis. A Blockchain is a decentralized and distributed digital ledger that is used to record transactions across the network so that a Block (a record) cannot be altered later without the alteration of all subsequent blocks and the shared agreement (consensus) of the network.

The first distributed blockchain was conceptualised by an anonymous person known as Satoshi Nakamoto in 2008 and implemented in January 2009 as a core component of the first digital currency, Bitcoin (BTC), where it serves as the public ledger for all transactions. The invention of the blockchain made it possible for Bitcoin to solve the double spending problem without the use of a trusted authority or central server.

Bitcoin’s software code is open source (free) and can be viewed and utilized by anyone. However for those wishing to participate in the Bitcoin network as a miner, node operator, or wallet administrator, need to be updated and changes made to the bitcoin protocol. New features and changing of the core metrics of the protocol are only done with consensus all all concerned.

Soft Forks & Hard Forks

A Soft Fork is an updated version of the protocol which is backward compatible with previous versions. Conducting a soft fork of the Bitcoin software is less challenging on the network as only a majority of node users need to upgrade. All nodes, whether updated or not will continue to recognize new blocks and maintain compatibility on the Blockchain.

A change of the Bitcoin protocol that is not backward compatible with the older version is called a Hard Fork. All the clients in the Bitcoin network will need to upgrade their software for the recognition of new blocks. A hard fork is a permanent divergence in the blockchain that usually occurs when non-upgraded nodes cannot validate blocks created by upgraded nodes. Hard fork execution can create a risky situation if half of the nodes are running the latest version and mining blocks, and the other half are running the older version and mining a different set of blocks. This can result in a fork of the blockchain which is different from a fork of the software, due to different chains.

Bitcoin Cash (BCH) - August 1, 2017

As Bitcoin gained in popularity, the number of transactions increased and caused delays in processing and confirming them. There had been several proposed solutions to Bitcoin’s scalability issues, but the one that stood out the most is called Segregated Witness or SegWit. In simple terms, SegWit is an upgrade to the bitcoin blockchain that removes some data from the blockchain to free up space so that more transactions can be processed in a shorter period of time. But the opponents of SegWit wanted larger block sizes.

Eventually a compromise was made for Bitcoin to receive the SegWit upgrade and then increase the block size somewhat. However, this was not enough for some of the community members who wanted larger blocks initially.

Therefore, when SegWit was implemented on August 1, 2017 the bitcoin blockchain split into two to create the new altcoin Bitcoin Cash (BCH) which allows for the creation of larger blocks on its blockchain. The original bitcoin blockchain was updated with SegWit and can now process more transactions than before.

The difference between the Bitcoin blockchain and the Bitcoin Cash blockchain is that Bitcoin has its block size capped at 1 megabyte, whereas Bitcoin Cash’s block size is capped at 8 megabytes.

More info
https://www.bitcoinmarketjournal.com/bitcoin-vs-bitcoin-cash/

Bitcoin Cash official website
https://www.bitcoincash.org/

Bitcoin Gold (BTG) - October 25, 2017

After the hard fork on August 1, 2017 that produced Bitcoin Cash, many bitcoiners have been waiting for the possibility of a fork taking place in November 2017 with the "Segwit2x" plan (details below). However, a lot of bitcoin proponents didn’t know about another fork called Bitcoin Gold (BTG) that’s scheduled to take place on October 25, 2017.

The project first announced on Bitcointalk.org in July was created by Jack Liao, the founder of Lightning ASIC a mining firm based out of Hong Kong and an anonymous developer named “h4x3.” The forked protocol aims to change Bitcoin’s consensus algorithm allowing users to mine the currency with graphic processing units (GPU) rather than the high powered and expensive specialised computers called ASIC used by rich mining companies. According to the development team, Bitcoin Gold will use the Equihash algorithm used by the altcoin Zcash rather than bitcoin’s original SHA256 which makes for memory intensive opeartions rather than the use of pools of high powered ASIC computers. The idea was to loosen the grip of mining companies on the confirmation of Bitcoin transactions.

Even though it was announced back in July 2017, the news of the Bitcoin Gold fork is just starting to come around people’s

radar. Even though the user-activated hard fork will take place on October 25 the full network launch is scheduled for November 1, 2017.

More info
https://news.bitcoin.com/another-bitcoin-fork-bitcoin-gold-project-plans-to-fork-bitcoin-next-month/

Also Read: How to ensure safety of your Bitcoins - Bitcoin Gold hard fork explained
https://99bitcoins.com/the-bitcoin-gold-hard-fork-explained-coming-october-25th

Bitcoin Gold official website
https://btcgpu.org/

Cancelled: Bitcoin (B2X) - November 16, 2017

A group of Bitcoin companies plans to deploy a hard fork to double Bitcoin’s block weight limit to 8 megabytes around November 18th 2017. Known as “SegWit2x,” this incompatible protocol change follows from the New York Agreement (NYA) and is embedded in the BTC1 software client.

SegWit2x is highly controversial. Most of Bitcoin’s development community, a number of other companies, some mining pools and — if public polls and futures markets are representative — a majority of users and the market are not on board with this hard fork. Some of them are even engaged in a sort of protest movement, under the banner “NO2X.”

The New York Agreement was born in the heat of Bitcoin’s scaling debate under the looming threat of a contentious hard fork led by the alternative protocol implementation Bitcoin Unlimited. This effort was, to a large extent, spearheaded by proponents of a block size limit increase and opponents of the Segregated Witness (SegWit) protocol upgrade, like Bitmain and Bitcoin.com. These companies leveraged hash power from their mining pools to delay SegWit activation, while planning to increase the block size limit with a hard fork. This could have “split” the Bitcoin network into two incompatible blockchains and currencies.

SegWit2x was presented as a middle-of-the-road compromise between the two warring camps of the scaling debate. “One side” would get SegWit, while the “other side” would get a capacity increase hard fork. Most signatories believed, at least at the time of the agreement, that this would be a solution that should keep the Bitcoin network together.

More info
https://bitcoinmagazine.com/articles/2x-or-no2x-why-some-want-hard-fork-bitcoin-november-and-why-others-dont/