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Underst anding

Crypt ocurrency

Fork s

cryptoCurrency �ork is w hen a 2 Types O� Fork to change som ething to introduce som e

A cryptocurrency project’s developers innovation.

1. Hard�ork

change the current blockchain, w hich creates

tw o di��erent coins. The �ork usually occurs A hard �ork is a signi�icant change that H ard �orks are controversial issues in the

occurs at the protocol level. It includes a cryptocurrency com m unity because they can
a�ter som e dispute w ithin the com m unity

substantial upgrade to the core rules o� the
or disagreem ent over how to im prove their harm long-term investors. Users w ho ow n the

cryptocurrency or blockchain. Exam ples

blockchain. old coin m ight need help to sell or exchange it

include:
�or any new token or even know that there are

Forks keep happening because tw o versions o� the sam e coin. The users w ho

� C reating a new hashing algorithm .

cryptocurrency has �undam ental aspects that ow n the new token m ight need to understand

m ake them inherently unstable. In particular, � C hanging the transaction size lim it. w hy anyone w ould w ant to use anything

cryptocurrency is all about decentralization: besides a hard-�orked currency.

no m ajor party, no one can gain control o� a � C reating another token �rom the identical

netw ork. It m eans that i� one person or group blockchain. 2. So�t�ork

w ith m alicious intent controls a token, they In contrast, so�t �orks are non-breaking

Signi�icant changes are generally
can destroy it or potentially take over all the changes that only involve som e rule

not expected by users and can lead to

other tokens. A �ork is som etim es an easy adjustm ents w ithin the existing blockchain

cryptocurrency netw ork instability and

w ay to resolve disputes: i one party can’t get ecosystem . Exam ples o� so�t �orks include

con�usion am ong users. The blockchains

w hat they w ant, they can m ake a new token an increased block size lim it, signature
that use hard�orks end up w ith tw o di��erent

and convince others to join. H ow ever, w ith hashing algorithm change, or a protocol layer
versions o� their coin: one �or users w ho

this approach, there’s also a risk o con using upgraded the so�tw are and one �or those w ho m odi�ication that im proves netw ork e��iciency

users: they m ight only som etim es realize that didn’t. H ow ever, this does not m ean that all w hile preserving all historical transactions and

there are tw o di��erent tokens. hard orks are bad: som etim es, it’s necessary balances.

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