A Fork In The Road

What is A Crypto Fork?

It is essentially what happens when a consensus can’t be reached about improving a blockchain’s design and function. It is a change in the design of a blockchain creating two paths, one of which nodes and miners need to choose which route to take.

Who is Who in Bitcoin?

There are four main roles in the Bitcoin ecosystem. These aren’t mutually exclusive, and there can be overlap between two or more roles.

Software developers are in charge of creating, maintaining, and upgrading Bitcoin. The reference code, followed by most implementations, is called Bitcoin Core. Any developer is free to contribute and propose changes via a formal process. These Bitcoin Improvement Proposals or BIPs are debated within the community, and must reach an overwhelming majority to be implemented.

Miners are crucial to the system. They are responsible for validating transactions and adding new blocks to the blockchain, getting newly created bitcoin as a reward. Their power is limited, and their decisions are driven by purely economic motive.

Full Node Operator is anyone can run a full node, and some estimates put their numbers at around 50,000 worldwide. Full nodes maintain an updated copy of all transactions that ever took place in Bitcoin - that is, the full blockchain. Full nodes also enable light nodes and arguably the entire Bitcoin network.

Running a full node has the advantage of enabling faster access to blockchain data (since they store the entire history locally). Most exchanges are also running full nodes, which gives them considerable financial weight in making decisions.

Light nodes connect to full nodes in order to send and verify transactions, but they don’t have to store the entire blockchain. Light nodes are mostly Bitcoin wallets or other simple applications. Light nodes make up for the overwhelming majority of regular Bitcoin users. Although they don’t have any direct influence over the network governance.

What Is A Soft Fork?

A soft fork is a code change that doesn’t break the rules of the old version - meaning both the older and newer versions of the software can still recognise and “talk” to each other, running together in the same network without a split.

What Is A Hard Fork?

A hard fork, on the other hand, introduces changes that are incompatible with the previous version. It happens when agreement cannot be reached to implement a change or when a bug has been discovered that necessitates it - Ethereum is a good example..

Anyone running the old software will be unable to remain in the same network, as the new rules won’t be recognised by their version. This doesn’t mean the network will stop working; it just means that from that point onwards, there will be two parallel networks: one following the old rules, and one with the updated software.

Bitcoin Maximalism

Although there’s no formal definition for what a maximalist is, the term is generally used to describe someone who believes Bitcoin is the only true and pure cryptocurrency, and therefore rejects all others. Maximalists refuse to acknowledge the value of other use cases and to hold Bitcoin’s core principles as gospel.

Of course there’s more nuance to this, but that’s an extreme version. The truth is, Bitcoin was designed to be copied, modified, and grown into new experiments, and to evolve into solutions for problems we haven’t even considered yet.

And there’s nothing stopping other types of cryptocurrencies to complement Bitcoin, improving upon it or making up for some of its shortcomings.