November 19, 2020

A History of Bitcoin Hard Forks

A History of Bitcoin Hard Forks

A fork is a modification of cryptocurrency. Actually, this is a copy of cryptocurrency with new features or even a new coin. This is a branch of basic cryptocurrency. Every one of these branches can be developed independently of the basic cryptocurrency.

If we talk about Bitcoin forks, the basic asset is Bitcoin and all other coins are called “forks”. However, most forks aren’t really new in comparison to Bitcoin. The difference can only be in the speed of the emission of hashing algorithms. This is the main criteria that defines any fork.

A History of Bitcoin Hard Forks

What is the hashing algorithm?

We can explain the principles of hashing using the mobile phone +1 (202) 739-3128. We can add up all numbers this way.

1+2+0+2+7+3+9+3+7+2+8=37 => 3+7=10 => 1+0=1

We can do this operation with any other phone number in different international formats. The process of summing is hashing, the method of summing is called “hashing function”. The final number is the hash.

Continuing the comparison with the phone number, we have these properties of the hash:

  1. We can’t detect the source phone number even if we know the hash.
  2. If we know the summary number, we can’t try different combinations and make the phone number suitable for it.
  3. The smallest change in the phone number can radically affect the hash.

The hashing algorithm for Bitcoin was SHA-256. It was created in 2008. In 2014, the number of hashing algorithms was increased to four. Now, let’s get back to the Bitcoin forks.

A History of Bitcoin Hard Forks

Litecoin

This is one of the most known Bitcoin forks. It was created to make mining more available for people when the GPU had started to be used for this process. Litecoin was created as a cryptocurrency made for CPU mining. Yet, the universal rule of any cryptocurrency is increasing the difficulty of this process. This did not pass Litecoin. For some time, this cryptocurrency stayed the easiest cryptocurrency for mining and it was enough to have GPU at the time when ASIC mining became very popular.

There are some features of Litecoin that make this cryptocurrency different from Bitcoin:

  1. Proof of work based on scrypt cryptographic function. That’s why Litecoin is easier for mining and doesn’t require such powerful equipment. At the same time, it allows miners to reach a very big hashrate. That’s why Litecoin is harder to mine now. This situation arose in 2012 and continues to be that way now.
  2. Faster block generation. Litecoin blockchain is different from Bitcoin because it generates blocks every 2,5 minutes. It is 4 times faster than Bitcoin. It means that members of the system (for example, coin sellers) get faster confirmation. Don’t forget that you need more blocks to reach such a high speed of confirmations as Bitcoin. Six Litecoin blocks and six Bitcoin blocks are different because the second are more difficult. Unfortunately, it increases the number of hashes used because some blocks will be empty.
  3. Larger number of Litecoins. The speed of inflation was set by developers. According to it, the size of the block becomes 2 times smaller every 840 thousand blocks. Due to this fact, the total number of Litecoins can’t be more than 84 million.
  4. Different addresses. The first letter of Bitcoin addresses is L. Yet, the principle of address generation is the same for both Litecoin and Bitcoin.
  5. Two blocks had been mined before other people started mining.

These are the main differences between Bitcoin and Litecoin. Let’s describe other forks.

Peercoin

Also, you can see this cryptocurrency known as PPCoin or PPC. There are two ways how this cryptocurrency is generated. The first is creating new coins using special equipment. The second is using existing coins. It allows this cryptocurrency to be protected from hacker attacks. This advantage is the main one in comparison to Bitcoin.

This cryptocurrency also uses the SHA-256 cryptographic algorithm. Like other cryptocurrencies, this coin can be changed to fiat money and can be traded on different online exchanges.

There are a lot of advantages that Peercoin has.

  1. Save power. You don’t need to have very powerful equipment if you want to mine this coin.
  2. The creators are sure that the technical aspects of this cryptocurrency make this coin safer than Bitcoin that can die if a group of dishonest people starts collaborating. If some users control half of the Bitcoins, they can hack the protection and can spend one Bitcoin two times.
  3. Low commissions for operations.

However, there is one disadvantage of this fork – not a full decentralization of this cryptocurrency. To avoid repeated emission, all new cryptocurrency has to be checked at the control point.

Bitcoin Cash

This is one of the most known Bitcoin forks at this moment. It is a very interesting fact. This fork occurred in 2017, but backward compatibility was decreased later, in 2018. In that time, the size of the block was increased to 2 GB. Naturally, Bitcoin and Bitcoin Cash are competitors. The same first word in the heading can confuse beginners, and they can think that Bitcoin Cash is a kind of Bitcoin. However, this cryptocurrency is less popular than Bitcoin. This connection with the original coin isn’t good for creators of this coin because every copy is worse than the original coin.

To sum up, there are a lot of different Bitcoin forks and we just name a few of them.