Understanding Hard Forks in Cryptocurrency


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Regardless of the cryptocurrency, bifurcation will always have a strong reaction. If you are just a bitcoin speculator and not a blockchain tech researcher, you may still see confusion here. Bifurcation, exactly what should be called blockchain bifurcation, how does blockchain bifurcation occur?

This also starts with the design of the blockchain itself.
The world of cryptocurrency is a one-off transaction. The so-called transaction is an event where I transfer a coin to you, and the blocks in the blockchain are used to record the storage space of these transaction information. The initial block size of the bitcoin is 32M, Satoshi Nakamoto does not intend to limit the size of the block, but only a small number of people are used, each block size is only a few kilobytes in size, in order to avoid wasting computing resources, and to avoid DDOS attacks to ensure the safe operation of the Bitcoin system, Satoshi Nakamoto temporarily limits the size of the block to 1M. In terms of bitcoin trading volume at the time, this 1MB is enough to use and more than enough.
But now nearly ten years have passed. More and more people are using Bitcoin. The size of the 1M block has brought serious problems Now, due to the limitation of the size of the Bitcoin block, the bitcoin network is overstocked. The transaction makes the transaction abnormally slow. In the slowest case, you transfer a bitcoin to your friend. He may receive your transfer within three days. At this time, you either wait or pay a higher transaction. Fees, of course, even if you pay higher transaction fees, still need to wait. In order to solve the above problems, we all decided to expand the block, and then there are two slightly conflicting methods. This is called bifurcation: soft bifurcation and hard bifurcation.


Hard fork


is a software upgrade that introduces new rules that are not compatible with old software into the network. You can think of it as an extension of the rule (making the block size 2MB, rather than 1MB new rules will need to be hard forked).
After the fork, nodes that continue to run legacy software will find that the new transaction is invalid. Therefore, in order to switch to a new chain and continue to dig a valid block, all network nodes must be upgraded to new rules.
When there is some kind of political stalemate, some people in the community stick to the old rules and problems will arise. The hash rate and network power of the old chain will become outdated. What is important is that the old chain of data and rules is still seen as having value, and the miners, of course, want to continue mining, and developers also want to continue to support it.

The DAO’s hard fork is the best analysis case to show differences in community rules. We now have two different software blockchains, ETC and ETH, each with different concepts and currencies. Take ETH and ETC as examples. Since the community after the DAO event has different opinions, most people choose the forked new chain (ETH), and a few people stick to the old chain (ETC), so ETH and ETC coexist. Down.

So strictly speaking, ETC is the father, ETH is the son instead. the extensive support of ETH, ETH has become the mainstream.

Soft bifurcation


is to strengthen some rules. Therefore, the new rule may negate 1MB blocks and support 500K blocks. Soft bifurcation is backward compatible.
Nodes that have not been upgraded will continue to treat the new transaction as valid. However, the block that the upgraded node continues to dug will be rejected by the upgrade node. So soft bifurcation requires most of the network’s power.
If the soft fork gets a few Hash computational support, it may become the shortest chain and then be encouraged by the network. Or it can be split like a hard fork and run alone.
Soft fork is a common way to upgrade Bitcoin because it puts the risk of network fragmentation low. Successful soft forks in the past include BIP 66 software upgrade (involving signature verification) and P2SH (Modify bitcoin address format).

Example: Bitcoin Cash


BCH, short for Bitcoin Cash,In addition, BCC was the early BCH name and is now deprecated. BCH forked on Bitcoin at 478559 on August 1, 2017, creating a precedent for bitcoin bifurcation.
BCH is BTC’s expansion plan. It uses 8M blocks and does not support SegWit, because the development team believes that SegWit with blocks as large as 8M has become irrelevant. BCH learned lessons from the Ethereum bifurcation last year and joined two-way replay protection. Therefore, there was no confusion about assets loss after the fork. Later, other bifurcation coins generally followed the example of universal replay protection.
Judging from the current situation, BCH is the most successful of several bifurcation currencies in bitcoin, and its influence has been continuously expanded. It has received support from numerous exchanges and purses, and even some currency circles believe that BCH is the real bitcoin. On the 12th of November, BCH prices soared, reaching a record high of 2,500 U.S. dollars, and the market value was once over 30 billion U.S. dollars. It briefly surpassed Ethereum to become the second largest digital currency. However, the price of BCH dropped sharply afterwards and is currently in a turbulent state. BCH is jointly developed and maintained by various teams such as Bitcoin ABC, Bitcoin Unlimited, and BitcoinXT.

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References

Btcmanager
Bitcoin Split
Simple Guide to Blockchain Forks


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