In the cryptocurrency world, a fork is a change to the software of the blockchain that creates new versions of the blockchain with an identical copy of previous transactions. These new versions are called "forked" blockchains and can be seen as an alternate future: They either add new features or correct existing flaws in the code. A hard fork creates a permanent divergence in the blockchain, meaning that from that point onward, there are two separate paths forward with two unique "ENDs." Read on to learn more about top cryptocurrency hard forks and how they affect the market.
What is a Cryptocurrency Hard Fork?
A new branch of a blockchain that breaks away from the parent chain. A hard fork happens when significant changes to a blockchain network cause the new network to become incompatible with the old network.
A blockchain is a decentralized network that maintains a shared and verifiable ledger. Once a change is made to the ledger, it cannot be reversed. However, a hard fork creates a new blockchain network and token that can be used as if it were a completely new product.
A hard fork can also be used to correct issues with the code that blockchains use to function. In some cases, a blockchain is hard forked to fix a critical error in the code.
What Happens During a Hard Fork?
When a fork happens, there are two separate blockchains. One of them will eventually become the new standard version of the blockchain, and the other will be discarded and become a minority version that is used by only a few people.
What happens next will depend on several factors, such as the percentage of the community that chooses to use the new blockchain, how much value each blockchain holds, and how much mining power is being employed to keep each one running.
Here are some of the scenarios that could play out during a hard fork. - One blockchain becomes dominant - If the blockchain you use becomes the standard version of the blockchain, your new blockchain will be the same as the old one. - You are forced to switch to the new blockchain - If the old blockchain's mining power disappears and the new blockchain has the majority of the mining power behind it, then it's likely that you'll have to switch to the new blockchain. - You keep everything you had before the fork - If the value of both blockchains is approximately the same, or if there are enough people who want to use your current blockchain, then you'll keep everything you had before the fork.
