Define:

Cryptocurrencies such as Bitcoin, Ethereum or Cardano are operated by a decentralized open source software called blockchain. Fork occurs when the community makes changes to the blockchain's protocol, or underlying set of rules.

Cryptocurrencies like Bitcoin, Ethereum or Cardano are run by decentralized open software that anyone can contribute to, called blockchain. They are called blockchains because they are made up of blocks of data – which can be imagined as a very long train – allowing tracing back to the first transaction on the network. And because they are open source, they rely on the community to maintain and develop their underlying code.

Forks occur when the community makes changes to the blockchain's protocol, or underlying set of rules. When this happens, the chain splits – creating a second blockchain that shares its entire history with the original blockchain, but goes in a new direction.

why is this important?

Most cryptocurrencies have independent development teams responsible for changing and improving the network, similar to how changes to internet protocols allow web browsing to get better over time. So sometimes forks happen to make cryptocurrencies more secure or add other features.

However, developers of a new cryptocurrency can also use forks to create entirely new coins and ecosystems.

– Soft fork: Soft fork can be considered as a software upgrade for the blockchain. As long as all users adopt it, it will become the new standard set of cryptocurrencies. Soft forks have been used to bring new features or functionality, often at the programming level, to both Bitcoin, Ethereum and Cardano. Since the end result is a single blockchain, changes are backward compatible with blocks before the fork.

– Hard fork: Hard fork occurs when code changes so much that the new version is no longer backward compatible with previous blocks. In this case, the blockchain splits into two: the original blockchain and a new version that follows a new set of rules. This created a completely new cryptocurrency – and was the origin of many famous coins. Cryptocurrencies such as Bitcoin Cash and Bitcoin Gold evolved from the original Bitcoin blockchain through hard forking.

Why does Fork happen?

Like all software that needs upgrades, blockchains are updated for many different reasons:

– Add functions

– Handle security risks

– Resolve disagreements in the community about the direction of cryptocurrency

How are forks continuing to change the crypto landscape?

– The Ethereum and Cardano blockchains are designed to run “smart contracts,” which are pieces of code that automatically perform a set of predetermined actions when certain criteria are met. Smart contract applications include everything from games to logistics tools to DeFi dapps.

– As the platform that runs all these applications, you can think of the Ethereum or Cardano blockchain as similar to a computer's operating system. In that analogy, the different forks of Ethereum – Ethereum, Ethereum Classic, Ethereum 2.0 – are like newer versions of an operating system, adding features or efficiencies that previous versions had. indispensable.

– An older version can continue as a stable, proven platform, while a newer version can give developers completely new ways to interact with it. (Older and newer versions may eventually merge or continue to develop further.)

 – Think of soft fork as a 'software upgrade' (like when your phone asks you to update to the latest OS) and hard fork as a completely new OS (like Linux and Mac OS are evolutions of the old UNIX platform).

Source: Coinbase