What is a fork?
Bitcoin is open source software, so anyone can duplicate, modify and use it at their discretion. Actually, a modification of the source code is called a fork (literally – “fork”).
In other words, any fork is a change in the rules by which a block in the blockchain is recognized as genuine (valid).
What kind of forks can be?
There are two main types of forks: soft forks and hard forks. The first can be called a “soft” modification of the source code, the second – “hard”.
What is soft fork?
In the case of soft fork, changing the rules does not require updating the client (software) to execute the new rules. If some of the nodes (nodes) in the network do not accept the new rules, such nodes will still be able to interact with nodes that use the new rules.
For better understanding, you can draw an analogy with the languages: if, before the fork, all nodes spoke American English, and the new rules require switching to the British version, then nodes that continue to use the American version will still be able to understand British. At the same time, sites that use British English will easily understand the American version.
Thus, soft fork is a reversible code change that does not violate the consensus on the protocol itself.
What is hard fork?
In the case of a hard fork, the new rules contradict the old ones so much that the nodes that did not accept them do not accept information from the nodes that accepted them. If you follow the same analogy with languages, the old nodes speak English, and the new ones speak Chinese. Hard fork involves changing the consensus mechanism itself, in which case the entire network is divided into two parts that can never again interact. This is because blocks recognized as valid in one part will not be considered as such in another.
How does it work in cryptocurrencies?
In the case of cryptocurrencies, a fork can mean a change in the rules of operation associated with the need to make changes to the protocol. In other words, sometimes, in order to make Bitcoin better and safer, you have to resort to one of the forks. Although in some cases the fork issue is a security issue.
What happens after a hard fork?
In the case of a hard fork, one of the formed branches (chains) of the system can die out, but it can also survive – it depends on how much hash power falls on each of the branches. A branch with a higher capacity is more likely to succeed. As the most obvious example of such a scenario, one can recall the Ethereum hard fork network that happened in the summer of 2016: the new chain continued to exist under the previous name (ETH), but at the same time, the original chain called Ethereum Classic (ETC) was preserved and maintained.
It is believed that most cryptocurrencies are forks of bitcoin?
A fork can really be called a clone of an existing cryptocurrency. For example, right now you can copy the source code of bitcoin to your computer, change the name, emission rules and compile the program. After this, it is necessary to mine (issue) several million coins and invite friends and acquaintances to play an exciting economic game. Sometimes very serious projects emerge from such cloning.
Are all cryptocurrency projects fork or altcoins?
No, far from all. There are so-called “colored coins”, metacoins and many other complex tokens, which in the strict sense of the word are neither forks nor altcoins.
What is altcoin?
Altcoin is any alternative cryptocurrency other than Bitcoin. In the strict sense of the word, a clone of an already existing cryptocurrency, which does not carry any significant technical improvements and desire for a worldwide singularity, cannot be considered altcoin. In practice, altcoin and fork are very vague concepts that can be used in relation to the same project, regardless of the accuracy of this definition.
What is the difference?
It will be more correct to call cryptocurrencies altcoin significantly different from other projects. For example, Dash, Ethereum, MaidSafe, NXT. In turn, it is more correct to call forks such projects as Dogecoin (fork of Litecoin), Expanse (fork of Ethereum), Stellar (fork of Ripple).