No, we're not talking about cutlery here. The "fork" in question refers to a split in the digital world, particularly for cryptocurrency chains—where one path divides into two or more. However, this concept isn't unique to crypto. In fact, forking code is fundamental to any open-source software.
Essentially, a fork occurs when someone makes a copy of existing software/source code. If you didn't know, cryptocurrencies are also software, and most are open-source. This means practically anyone can fork (copy) them to launch their own projects or implement new features.
That said, this doesn't mean everyone will accept these changes and adopt the forked version. Multiple versions of the same software can coexist independently, each with its own developers, features, and community—even if they share early history.
Why Do Crypto Forks Happen?
Recently, forks have often signaled splits in development teams—whether due to members abandoning the project or "creative differences." While this may still be the case, open-source software is generally expected to allow forks by default to incorporate contributions from others. Such software is typically developed by community volunteers under licenses permitting free use and modification.
Cryptocurrencies usually fall under open-source software. For instance, Bitcoin, Obyte, and Ethereum are open-source, freely usable, and forkable for any purpose—even commercial. On repositories like GitHub, anyone can fork the source code with a button. However, only the community (including wallets and exchanges) decides which version to adopt, often the oldest one maintained by the original team or its successors.
In this way, programmers frequently use forking to test new features and suggest improvements for the original developers to merge into the main "branch" (the legacy or primary version). Conversely, the core team might apply forks to the "live" chain to address security issues or implement tested changes, including tokenomics, consensus algorithms, or scalability enhancements.
Forks can also lead to splits—as seen with Ethereum and Ethereum Classic, Bitcoin and Bitcoin Cash. Founders and developers of these coins had strong ideological differences, prompting them to fork the software and embark on separate paths with new coins and chains.
Soft Forks vs. Hard Forks
There are two main types of forks in cryptocurrency:
- Hard forks: Irreversible chain splits requiring all participants to upgrade their software to stay on the network. These often result in new, independent cryptocurrencies with different rules and histories. Participants (miners, validators, nodes, wallets, exchanges) must upgrade; ordinary users might passively benefit from provider updates.
- Soft forks: Backward-compatible upgrades introducing new rules while maintaining compatibility. Unupgraded participants can still interact with the network but may miss new features. Upgraded and non-upgraded nodes coexist on the same network.
Examples of community-splitting hard forks include Ethereum Classic (ETC) and Bitcoin Cash (BCH). Notably, hard forks don’t always create new coins. Bitcoin (BTC) has undergone several hard forks for updates or bug fixes. A famous instance occurred in 2010 when a bug allowed mining 92 billion BTC (far exceeding supply). A hard fork resolved this.
Soft forks also appear in Bitcoin and other blockchains. A popular example is BTC’s Segregated Witness (SegWit), which rearranged block data to save space and improve transactions—applied optionally by nodes.
What Happens to Your Tokens in a Crypto Fork?
Here’s the crucial question with a straightforward answer. In a soft fork, your coins remain unaffected—you might even enjoy new features later. For hard forks, pay attention to these possibilities:
- Provider Restrictions: Your wallet, exchange, or custodian may advise against or prohibit transactions during the fork due to network instability. Waiting it out is standard; trading within hours is often unsafe.
- New Chain Tokens: If the hard fork spawns a new chain, you’ll receive equivalent tokens on it, copied from the original chain’s transaction history and balances. Holding Token A pre-fork grants you Token B post-fork.
Is this free money? Yes and no. If Token A was worth $100 at split, Token B won’t necessarily match that price—it might have none. You get the same quantity but different value, as they’re distinct assets.
Diverging Paths, Diverging Values
When Bitcoin Cash (BCH) forked from Bitcoin (BTC) in 2017, BCH initially traded at ~$300 versus BTC’s ~$4,000 [CMC]. Owning 1 BTC pre-fork meant gaining 1 BCH—but not an extra $4,000. It was more like $300 that week. Hard forks also don’t perpetually clone tokens; duplicates exist only at the fork’s exact moment. No holdings then? No new coins.
The two coins’ paths inevitably diverge. Bitcoin adopted SegWit, while Bitcoin Cash increased block size and faced further splits. Their teams, roadmaps, ideologies, prices, and market caps differ, cultivating separate communities. Users can hold both without choosing—software forks aim to add value, not subtract it, embodying decentralization.
As Linus Nyman and Juho Lindman noted in a paper:
"At the software level, code forking acts as a governance mechanism for sustainability by overcoming planned obsolescence (...) At the community level, forking provides an escape hatch: the right to launch a new version. At the ecosystem level, forks are core to natural selection and innovation catalysts."
Forks may spawn new coins, chains, and versions—but diversity empowers users to decide.
Forks in Obyte
Obyte is a Directed Acyclic Graph (DAG) with a unique consensus system excluding soft forks. Without centralized miners or validators, it relies on Order Providers (OPs)—reputable users/organizations elected by the community to sequence transactions. Thus, all updates undergo community discussion and testing before implementation as hard forks.
Incidentally, anyone can participate in Obyte’s open-source development via GitHub, where forking creates new repositories sharing code with the original. Users fork projects to propose bug fixes, improvements, or spin-offs—embodying open-source collaboration for better, more reliable apps.
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FAQs
1. Do I automatically receive new coins from a hard fork?
Yes, if you hold the original coins at the fork’s snapshot time. Exchanges/wallets must support the new chain for you to access them.
2. Are forked coins as valuable as the original?
Not necessarily. Value depends on adoption, utility, and market demand. Some forks fade; others thrive (e.g., Ethereum Classic).
3. Can I sell forked coins immediately?
Only if exchanges list them. Delays are common until the new chain stabilizes.
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