Understanding Hard Forks

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Avatar for BCH.Serg
3 years ago

"Arguments are Healthy. They clear the Air." - John Deacon

October 20, 2020

Over the past few months, a tension or disagreement has build up within the BCH community, primarily by the leading figures Roger Ver and Amaury Sรฉchet. The end result is Bitcoin Cash will undergo a hard fork on the 15th of November 2020.

So what are hard forks? Why does this happen? Is there any benefits of having it?

Before we begin, i am @BCH.Serg. Please subcribe to be updated on my newest articles.

What exactly is a Hard fork?

I will use bitcoin as a primarily example on this article, but all the concepts applies to other cryptocurrencies as well.

Bitcoin is a digital currency. This means that it is implemented by a lot of software. The software is called the bitcoin protocol and it establishes the rules to which everyone should agree if they want to use Bitcoin. This includes how large the block is, what rewards miners get, how fees are calculated and others.

Just like other software project, development on Bitcoin will never be finished. There will always be a room for improvement.

The Bitcoin developers regularly push out updates to fix issue's or to increase performance. Some of this improvements are small but others fundamentally changes how the Bitcoin works. So sometimes it happens that a group of developers disagree with the direction Bitcoin is taking. The miners can also disagree because updates to the Bitcoin protocol could reduce their profits.

If a group of people are so dissatisfied, they can choose to go their own way to create their own version of protocol and fork the blockchain.

What happens when they do this?

Bitcoin consist out of two big pieces: the Bitcoin protocol and the blockchain which stores all the transactions that happened.

If they decide to create their own fork, they start by copying the Bitcoin protocol code and start making their changes. They can do this because Bitcoin is an open source. After they have implemented their changes, they define a point in time at which there fork will become active. This is done by specifying a block number.

For example, you can say that your fork will go live when block number 300,000 is published to the blockchain. When the block number is reached, the community will be split into two. Some people decide to support the original protocol while others support the fork. Each groups then starts adding new blocks to the fork they want to support. At this point, both blockchains are incompatible with each other.

Because a fork is based on the original blockchain, all transactions that hapoened on the original blockchain, also happened on the fork. So that means, if you happened to have 100 Bitcoin before the fork, you will have the same amount of the new cryptocurrency.

Some people call this free money, but it all depends on wether or not the fork can attract actual value.

We have already seen quite a few hard forks. It happened on August 1st 2017, when Bitcoin Cash was born. In this case the developers couldn't agree whether to increase the block size of Bitcoin or not.

Now you know what are hard forks and why it is created. So is there any positive or negative effects of this hard forks?

By creating forks, you create new rules. So of course there are positives on this.

The most clear cut positive is that there is a clear update. Maybe updates for security or for transactions to be faster. Secondly is it democratic. No one tells you who you want to support. You can support the original or the new fork and this is very important in decentralization.

So while hard forks sounds like a good idea, you just need to make upgrades. There are some negative consequences that comes with it.

The most notable is there is a solit in the chain. They split in hash power. The higher the hash power is the more secure it is. Second negative is the split in manpower or split in the people that is developing the code in the blcokchain. Split in deveomlopers can result in slow development of the protocols.

Conclusion

Hard forks are a way of expressing dissatisfaction to the current protocol. It shows towards decentralization.

Creating hard forks maybe give some positive results but there will always be a negative result that comes with it.

26 days from now, Bitcoin cash will have its hard fork. What do you think will happen? Who will the majority of the BCH community will support, is it the original coin of the forked coin? Please let me know your thoughts about this by leaving a comment down below.

Thank you for the time reading this article. Have a good day ahead!

Lead image source: https://unsplash.com/photos/62H_swdrc4A

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Avatar for BCH.Serg
3 years ago

Comments

keep it up topics like this are invaluable to newer users we all start somewhere

$ 0.00
3 years ago

Thanks for the encouragement and for the upvote!

$ 0.00
3 years ago

There is a lot of misinformation out there regarding forks, and the definition of the prefixes soft and hard are a bit convoluted. The definitions themselves may even be the product of a disinformation campaign, but it is generally accepted that:

1) A hard fork is a fork where an existing CLIENT will NOT follow the chain if the client is not upgraded to a version supporting the chain. Obviously if the fork affects clients, it will affect miners the same way. Because of this, any miners that don't upgrade are guaranteed to follow a separate chain that doesn't follow the new rules.

2) A soft fork is a fork where an existing CLIENT will follow the chain if the client is not upgraded. Even though clients won't be affected by a soft fork, miners will. Because of this, a miner that continues to mine against an old version might generate blocks that aren't accepted after a soft fork. If this happens, they will either be orphaned by the majority hashpower following the soft fork or, depending on other circumstances which may or may not involve majority hashpower (more on that in my last paragraph), cause a split.

The upcoming BCH fork is a bit confusing, though, because both a hard fork and a soft fork are involved, but the soft fork is actually the reason there will be a split. BCH has been having planned hard forks every 6 months since the first hard fork which was written to split from BTC and reintroduce larger block sizes. The upcoming hard fork in November follows that schedule. The hard fork change is a difficulty algorithm adjustment (DAA). ABC originally unilaterally announced that they would be hard forking to a DAA they "created" called Grasberg (IIRC) while all other node implementations were apparently going to hard fork to a DAA created by a third party called ASERT. If this held true, then there would, in fact, be a hard fork based solely on which client was being used. However, ABC later unilaterally announced that they would be using ASERT after all but also introducing the "IFP" which siphons 8% of block rewards (including transaction fees) away from miners in perpetuity (barring any future change). Interestingly, I have read that Grasberg would have cost miners 8% of the block rewards (excluding transaction fees) for something like 6 years by delaying blocks slightly until they were on the original projected timeline of the original single-chain DAA.

That having been said, with ABC and all other nodes hard forking to ASERT, there would be no split from the hard fork. However, only ABC is introducing the IFP, which is a soft fork. As the majority of hash power APPEARS to be planning to continue mining without the IFP after the hard fork, there likely will be a split (because miners on the new version of ABC will not follow a chain that doesn't include the IFP transaction in every block even if it is longer). On the other hand, IF the majority of hash power was running ABC after this soft fork, then any blocks mined without the IFP transaction would theoretically be orphaned. In that scenario, non-ABC miners COULD choose to mine on a minority chain instead of being constantly orphaned. They would do so by coordinating to permanently invalidate (ignore) a specific block at the root of the IFP soft fork. The functionality which would allow for this has been in place in node software longer than BCH itself has existed.

$ 0.02
3 years ago

thanks for the info! Sir, can you enlighten me more about BCH? I mean, i wanna learn more about crypto if its okay with you. Do you have a blogspot, yt channel?

$ 0.00
3 years ago

I have nothing of the sort. Other than a few posts here, I don't really write, and I'm even less interested in appearing on camera than I am in writing. If you have specific questions that you'd like to ask, I could provide an opinion, but it would be just that. I don't consider myself to be an expert in cryptocurrency. In fact, while I can hold a conversation with experts in a lot of fields so long as we don't get too deep into some complicated theory, I'm really more of a jack-of-all-trades type of guy, and even then, "all-trades" is mostly limited to technologies I have experience with. That having been said, you might find some of what you're looking for in this wall of links: https://read.cash/@tula_s/bitcoin-cash-meta-25d6f35e

$ 0.00
3 years ago

Thank you. Will do visit the link and ask you when i need help witg a thing i can't understand.

$ 0.00
3 years ago

Thanks for the information you provided. Will forking reduce the value of BCH?

$ 0.00
3 years ago

Well, i really can't tell. Will just have to wait on November 15 for the majority of people what bitcoin cash they will adopt. Btw, thanks for your comment.

$ 0.00
3 years ago

Bch will be having hardfork on nov 15. Which side are you?

$ 0.00
3 years ago

I am with Roger Ver. Im against the tax for the miners. Its like they we are mining just to make cash for the developers. Still i need to earn bch so i can get a hold of the new token. ๐Ÿ˜…

$ 0.00
3 years ago

Me too. Their proposal was horrible like 5% will go to the miner.. Oh was that 5% or 10%? ๐Ÿ˜…

$ 0.00
3 years ago

I think 8 percent of the miners rewards will go to a permanent wallet address.

$ 0.00
3 years ago

Oh i was wrong haha..

$ 0.00
3 years ago

Its okay. Im still new in this cryptocurrency so im trying to read a lot to get some valuable informations

$ 0.00
3 years ago

Same here.. I only started just three months ago ๐Ÿ˜…

$ 0.00
3 years ago

Okay. But i think youve dibe writing before. Your articles are well made. Thanks for the upvote!

$ 0.00
3 years ago

Nope.. It's my first time to blog here

$ 0.00
3 years ago

Oh well. Maybe i can become good too at writing after a few months here

$ 0.00
3 years ago

I can tell that you already have a good skills in writing

$ 0.00
3 years ago

thanks for the compliment. Lumalaki ulo ko. Hehe. Sana ganyan maka appreciate si robot

$ 0.00
3 years ago