What is a cryptocurrency fork

Recently, cryptocurrency has become the object of generation, investment in speculative processes on target exchanges, and corresponding exchangers. A successful orientation in the terminology inherent in this area determines the achievement of goals from mining to building a correct analytical forecast for development.

One of the common specific concepts of the crypto world that appear in the cryptotheory and in the media is the “fork” of a particular coin.

Simple process description

The technological base of many cryptocurrencies is the so-called "blockchain" system - a chain of blocks. In this situation, a block refers to a certain amount of information about transactions in the corresponding system, which are recorded one after another in the order of their chronology.

The blockchain system is a continuous and straightforward transaction chain. But subsequently, the chain can be divided into two, and continue to exist independently of each other. This fork is called “fork” (translated from English - “fork”).

During the fork, the program code changes, entailing not only a change in the structure of the block, but also the possibility of using blocks, the use of which was previously excluded. Thus, at the time of the fork, the old one is modernized or a new cryptocurrency is born.

The phenomenon under consideration in a technologically complex cryptocurrency world is important. In the absence of this process in the system, sooner or later a large number of negative problems may appear that adversely affect the functioning of the system. Forks allow you to solve the issue of increasing transaction speed.

Hard and soft fork - what are the differences?

There are two categories of forks: soft fork and hard fork. The etymology of these units allows us to understand the essence of the phenomena.

• Under soft fork they understand a soft change in the chain, in which there is a rollback to a number of blocks, where the code changes. In such a situation of revolutionary change, an outside observer is not recorded.
• Hard fork is a radical change in the functioning of algorithms and program code. At this stage, new technologies are being introduced that entail a split in the blockchain system. At this moment, a new coin appears.

How to make money on a fork of cryptocurrency

The crypto investor has a question: how can I make money using forks of cryptocurrency? The process can be divided into two stages.

1. Stage number 1. An analytical understanding of the whole crypto reality (crypto market news, structural features of a particular coin, opportunities and modernization options) will make it possible to predict the occurrence of a fork. The degree of accuracy of the forecast largely depends on the quality of the analysis. Having correctly predicted the fact of the future fork of the coin of interest, the investor will already do half the work.
2. Stage number 2. Purchasing a coin and accumulating cryptocurrency on a registered wallet (similar to a fork of bitcoin). A double asset will happen automatically at the time of the fork (again, by analogy with the fork of bitcoin).

What to do next with the coins that appear is another matter. You can sell in the wake of hype or wait for the time after which to multiply the assets tens and hundreds of times (unless, of course, market events develop in the right direction). Or lose the initial investment if the coin is not in demand.

Most popular forks for 2017

In 2017, forks of the most popular cryptocurrency are in demand. We are talking about Bitcoin, which survived about twenty forks. The most famous fork was Bitcoin Cash, the appearance of which took place on 01.08.2017. The bottom line was to increase the network bandwidth by increasing the parameters of the unit several times.

Bitcoin Gold is considered an unusual fork, the rate of which for December 2017, despite the negative rhetoric of analysts, grew by fifty percent.

On December 12, 2017, another fork appeared - Super Bitcoin. The coin has its own specifics, which can be found on the Internet. How much this specificity will contribute to price increases will show further developments.

The Bitcoin God coin was the result of the hard fork of December 27, 2017. The main principle feature that distinguishes it from Bitcoin is the use of proof-of-stake - a mechanism for confirming transactions.

Expected Forks in 2018

In 2018, about fifty forks of only one bitcoin are forecasted, which indicates an increase in the popularity of the phenomenon in the modern crypto world.

The reality is complicated by the presence of the Forkgen resource, through which any developer who does not have special talents can initiate the launch of a new cryptocurrency on the cloned platform of the old bitcoin. Among other cryptocurrencies, forks are also scheduled.

Over time, the cryptoworld may be replenished with forks of Ethereum coins:

• Ethereum Uranium.
• Ethereum Star.
• Ethereum Emerald.

Risks and Prospects

One can only guess about the quality and prospects of growth in the value of forks. On the one hand, the fork should improve one or another side of coin technology, positively affecting popularity and, as a result, value. On the other hand, value and popularity are things caused by positive rhetoric, a positive information background around the corresponding cryptocurrency, faith in its potential investors.

Without trust in the product, technological upgrades cannot serve as a springboard for value growth. It is important that before or after the fork, the market believes in an existing or future coin. How to guess the very coin, predicting the development of further events, is the main question of a successful investor.

Only a thorough analysis of market volatility, and a study of the technological features of the proposed fork, will improve the quality of the forecast.

Watch the video: What is a Bitcoin hard fork? Simply Explained! (November 2024).