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Cryptocurrency Fork

A cryptocurrency fork occurs when a blockchain network undergoes a change or upgrade, creating two separate versions of the blockchain. Forks can be soft forks, which introduce backward-compatible changes, or hard forks, which result in a permanent split in the blockchain. Hard forks create new cryptocurrencies while the original chain continues to operate, as seen with Bitcoin and Bitcoin Cash. Forks are typically initiated to introduce new features, fix issues, or change the network’s protocol.

Example

Bitcoin Cash was created as a result of a hard fork from Bitcoin, with developers seeking to improve transaction speed by increasing the block size limit.

Key points

• A cryptocurrency fork occurs when a blockchain splits into two versions due to protocol changes.

• Hard forks result in a permanent split, often creating a new cryptocurrency.

• Forks can introduce new features or address issues within the original network.

Quick Answers to Curious Questions

A hard fork creates a permanent split in the blockchain, resulting in two separate chains, while a soft fork introduces backward-compatible changes that don’t create a new chain.

Forks are initiated to introduce new features, fix security issues, or resolve disagreements within the community about the network’s future direction.

Bitcoin Cash was created from a hard fork of Bitcoin, with the goal of improving transaction speed and scalability.