Bitcoin forks are like a road that forks in the road and splits into two roads. Each new road may develop in a different direction, and this phenomenon is called "forking" in the Bitcoin world. Bitcoin, as a digital currency, is built on a technology called blockchain. Blockchain is like a public ledger that records all Bitcoin transaction history.
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A fork can occur when members of the Bitcoin community disagree on how to update the Bitcoin software. These updates are usually intended to improve system performance, add new features, or fix known issues. If some people support the update and others do not, the Bitcoin blockchain will split into two paths. Each path will form its own independent chain, one that continues to use the old software rules and the other that runs the new rules.
Forks can be divided into two types:
Soft Fork: This fork is backward compatible, meaning that the new rules will not conflict with the old rules. That is, even if the software is not updated, users of the old version can still continue to use it, but they cannot use some of the features of the new version.
Hard Fork: This fork is not backward compatible, and there is a clear difference between the old and new versions. Once a hard fork occurs, users who disagree with the upgrade will not be able to accept the blocks generated by the new rules, resulting in the generation of a completely new chain. It is like reaching the end of the road and having to choose to turn left or right, and not both.
Historically, Bitcoin has indeed experienced several important forks, each of which has changed the cryptocurrency ecosystem to some extent. The following are several major fork events and their results:
Bitcoin XT: This was the first significant fork attempt in Bitcoin history, occurring in 2015. Bitcoin XT proposes to increase the block size from 1MB to 8MB to increase the network’s processing power. However, this proposal did not gain enough support from miners and ultimately did not become mainstream.
Bitcoin Classic: Bitcoin Classic was launched in 2016, following Bitcoin XT, proposing to increase the block size to 2MB. This version also failed to gain widespread support and was eventually discontinued in 2017.
Bitcoin Cash (BCH): This is one of the most famous Bitcoin hard forks, which took place in August 2017. Bitcoin Cash increased the block size (initially 8MB and later increased further) in order to process more transactions and reduce fees. Bitcoin Cash gained some market acceptance and became one of the main cryptocurrencies.
Bitcoin Gold (BTG): In October 2017, the Bitcoin Gold fork occurred, mainly to change the Bitcoin mining algorithm so that it no longer relies on specialized ASIC mining hardware, allowing more ordinary users to participate in mining. Since its establishment, Bitcoin Gold has maintained a certain presence in the market, but its influence is smaller than that of Bitcoin Cash.
Bitcoin SV (BSV): Based on Bitcoin Cash, Bitcoin SV was created in 2018 due to further disagreements with the Bitcoin Cash community. Bitcoin SV advocates further increasing the block size (up to 128MB) to expand network capacity. Bitcoin SV has also gained support from some markets and communities since its inception.
Among them, Bitcoin SV (BSV) is a Bitcoin fork mainly driven by miners and investors in China. Bitcoin SV was forked from Bitcoin Cash (BCH) in 2018, and its main supporters include Craig Wright (who claims to be Bitcoin founder Satoshi Nakamoto) and Calvin Ayre. This version of the fork has significant support in China, as China is one of the largest cryptocurrency mining centers in the world with a large number of miners and mining pools.
Bitcoin SV advocates maintaining the "original vision" of the Bitcoin protocol, mainly by expanding the block size to 128MB or even larger. This design concept is supported by some Chinese miners who are optimistic about its scalability and potential for large-scale applications. However, Bitcoin SV has relatively little acceptance and influence worldwide, and is often in the spotlight for its controversy with Craig Wright.
Bitcoin SV can be seen as a Bitcoin fork with a significant influence and activity base in China.
Forks are not just technical changes, they also reflect political, economic and even philosophical debates in the Bitcoin community. Each fork attempts to address certain needs in the community, but it can also bring disagreements and confusion. For example, Bitcoin Cash was created by a group of people who wanted to increase the block size to handle more transactions.
The "Bitcoin" mentioned by the mainstream now usually refers to the original Bitcoin chain, that is, the chain that has not undergone a hard fork to change the main rules. Its technical symbol is BTC. This version retains many core attributes and protocol specifications originally set by Bitcoin founder Satoshi Nakamoto, and is the most recognized and largest Bitcoin version in the market.
Although there are multiple versions forked from the original Bitcoin, such as Bitcoin Cash (BCH), Bitcoin Gold (BTG), and Bitcoin SV (BSV), which are considered variants or derivatives of Bitcoin and have their own characteristics and support communities, when people mention "Bitcoin", unless otherwise specified, they usually refer to BTC, the original and most widely accepted version.
Although the status and influence of forked Bitcoin versions, such as Bitcoin Cash (BCH), Bitcoin Gold (BTG) and Bitcoin SV (BSV), in the market may not be as high as that of the original Bitcoin (BTC), this does not mean that they have no practical significance or are only operated by a small number of players. These forked versions each have their own purpose and function, and they provide valuable solutions for certain user groups or scenarios:
Improved transaction efficiency: For example, Bitcoin Cash and Bitcoin SV increased the block size, aiming to process more transactions and reduce transaction fees, which is attractive to users and merchants who need high transaction throughput.
Experimental Innovation: Forks allow developers to experiment with different technical solutions, such as adjusting the mining algorithm (Bitcoin Gold) or increasing the block size (Bitcoin SV), which helps explore different possibilities of cryptocurrency technology.
Community governance: Forks sometimes reflect different philosophies on Bitcoin governance and future direction. These different chains provide diverse options, allowing the community to choose based on different values and technical preferences.
Market differentiation: Although the market value and liquidity of these forked currencies are generally lower than BTC, they still have a certain market share and supporters, indicating that there is a continuous demand and functional positioning in the market.
Therefore, although these forks may have a smaller impact on the entire cryptocurrency ecosystem, they play an important role in specific technological innovations, market segmentation, and user choices. They provide diversified possibilities and a wider range of experimental venues for the development of cryptocurrency.