Bitcoin (BTC) has undergone several forks in its long history. These splits in the blockchain happen when the community has different views about the transaction history.
These disagreements within the community lead to a hard fork, a protocol change that creates a new set of rules for the nodes (computers) that make up the blockchain network. If a hard fork is implemented without the agreement of network participants, it can cause the network to split in two. However, not all forks lead to a split in the network.
This guide will take a closer look at hard and soft forks and discuss Bitcoin’s history of hard and soft forks.
What Is A Fork In Blockchain?
Bitcoin is powered by decentralized open software that anyone can contribute to. This software must periodically be upgraded to address security issues or implement changes proposed by developers or the community. Sometimes, these changes are supported by everyone in the community, and sometimes, differences and disagreements may emerge about the changes and the direction of the protocol.
Cryptocurrencies, including Bitcoin, have independent development teams responsible for making changes and improving the network. Sometimes, these teams implement changes to add certain features or make the cryptocurrency more secure. These changes lead to a soft fork. Sometimes, developers may use a fork to create a new cryptocurrency and ecosystem. Such forks are called hard forks and typically occur if there is a disagreement about the direction of the protocol.
Soft Fork
A soft fork changes the underlying software protocol where only previously valid transaction blocks are made invalid. Think of a soft fork as a software upgrade for the underlying blockchain. It introduces a new set of standards that must be adopted by all users on the blockchain. Soft forks are generally implemented to introduce new features and functions. Additionally, all changes made during a soft fork are backward compatible.
Hard Fork
A hard fork occurs when the code changes result in the new version no longer being backward compatible with earlier blocks. In such a scenario, the blockchain splits into the original and the new blockchain that implements the rules introduced during the hard fork. This leads to the creation of new cryptocurrencies and ecosystems. Bitcoin has seen several hard forks over the years, creating cryptocurrencies like Bitcoin Cash and Bitcoin Gold.
Bitcoin Forks: A Glimpse Into the Past
Bitcoin has seen several forks, hard and soft, since its creation. This section will examine some of the most prominent ones and how they impacted the Bitcoin ecosystem. The list is divided into soft and hard forks.
Soft Forks
Bitcoin has witnessed several soft forks, of which the most prominent are Segregated Witness (SegWit) and Taproot.
SegWit
SegWit is one of the most crucial upgrades in Bitcoin’s history, proposing reducing the bloat in the Bitcoin blockchain by removing bulky signature data and storing it in a sidechain. SegWit was an extremely controversial fork that ultimately led to the Bitcoin-Bitcoin Cash hard fork. SetWit divided transactions into two segments, reorganizing data in such a way that signature data was no longer stored with transaction data. It offered several benefits like a significant boost in block capacity, increased transaction speeds, and preventing transaction malleability.
Taproot
The Taproot upgrade was initiated to improve the privacy and efficiency of the Bitcoin network. It also encourages the implementation of smart contracts on Bitcoin, clearing the way for Decentralized Finance (DeFi) on the Bitcoin network. The Taproot upgrade received a 90% critical consensus mark on June 21, 2021, indicating strong support. However, it was not finalized until a soft fork at block 709,632 on November 14, 2021.
Hard Forks
Bitcoin’s evolution has seen multiple hard forks, each presenting a compelling vision for the future of the cryptocurrency. Here are some of the most significant hard forks.
Bitcoin XT
Bitcoin XT is widely regarded as one of the first notable hard forks of Bitcoin. It was launched by Mike Hearn in 2014 to include several new features. Bitcoin XT set a target of up to 24 transactions per second to Bitcoin’s 7. It proposed increasing the block size from one megabyte to eight megabytes to accomplish its goal. Bitcoin XT saw initial success. However, interest gradually waned, and the project was abandoned in 2018.
Bitcoin Classic
Bitcoin Classic increased the block size to 2 megabytes, compared to Bitcoin XT’s 8 megabytes. It also saw initial interest and is still active today, with a core group of developers supporting the project. However, most of the community has moved on to other projects.
Bitcoin Cash
The Segregated Witness soft fork led to considerable disagreements within the Bitcoin community. As a result, some developers initiated a hard fork to avoid protocol updates brought on by the soft fork. The result of this hard fork was Bitcoin Cash. The hard fork was initiated in August 2017, allowing a block size of 32 megabytes, significantly increasing transaction speeds and processing times. Bitcoin Cash is the most successful hard fork of the flagship currency and is the 20th largest cryptocurrency in the market.
Bitcoin Gold
Bitcoin Gold was also initiated in 2017. The idea behind the hard fork was to bring mining back to graphic processing units (GPUs) because developers felt mining had become too specialized and the hardware required was costly. Bitcoin Gold introduced a unique feature called “Post Mine.” This process allowed the developer team to mine 100,000 coins after initiating the hard fork. These coins were placed in a special endowment to grow and finance the Bitcoin Gold ecosystem and pay developers.
Bitcoin SV
Bitcoin SV is not technically a hard fork of Bitcoin because it resulted from a split in the Bitcoin Cash community by supporters of Craig White, a controversial individual who claimed to be the creator of Bitcoin. Wright proposed increasing the block size hundreds of times, enabling cheaper transactions and greater throughput for decentralized applications. Bitcoin SV only attracted a small following. Today, it retains only a fraction of that following and transaction volume compared to Bitcoin and Bitcoin Cash. White’s claims about being Satoshi Nakamoto have also been dismissed.
Other Notable Bitcoin Forks
The soft and hard forks listed above are not the only ones undergone by Bitcoin. There are several notable forks like Bitcoin Diamond, Bitcore, and Super Bitcoin, initiated in 2017. 2018 saw four more hard forks: Bitcoin Private, Bitcoin Atom, Bitcoin Zero, and Bitcoin Post Quantum. Bitcoin Unlimited was released in 2016, but its developers did not specify what type of fork it would require. Bitcoin Unlimited raised the block size to 16 megabytes but failed to garner considerable interest.
In Closing
As Bitcoin evolves, it will continue to see soft and hard forks as developers implement new features and upgrades. The forks it has already undergone have attempted to make it better or have arisen out of differences within the community. We have only briefly touched on the most prominent forks undergone by Bitcoin, and each has played a crucial role in shaping it into what it is today.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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