A Beginner’s Guide to Bitcoin Forks
So, you would like to buy Bitcoin . Fair enough. But which one?
Part of the beauty of Bitcoin’s open-source code is its ability to mutate and adapt according to the needs of its users. Cryptocurrency, in general, is a tinkerer’s paradise, and there is now a plethora of different flavors of Bitcoin to choose from. We’re going to take a brief look at what exactly a fork is, what major Bitcoin forks exist, and how their respective markets stand on the granddaddy of cryptocurrencies.
A Beginner’s Guide to Bitcoin Forks
Basic Principles of Forking
Any fork is simply a derivation of the open-source code which takes it in a new direction. There are two main varieties – both concern the rules governing the new project. In general, the first type of upgrade, which is called a soft fork, tightens the project’s rules, so transactions that were valid prior to the fork are invalid afterwards. A hard fork, on the other hand, loosens the project’s rules. Disallowed transactions may become valid after a hard fork – the reason for this is that hard forks are not backward compatible. If you want to put it in video game terms, hard forks are like new games that won’t run on old consoles. Soft forks, on the other hand, are backward compatible. That might seem a little counterintuitive, given the names, but it makes sense with a little extra thought.
On the Battlefield
Bitcoin has been slogging it out in the crypto arena since 2008, and that’s given developers plenty of time to develop both hard and soft forks of the core Bitcoin code. In fact, as we’ll see, it’s not entirely clear who should hold the title of the “original” Bitcoin. There are several major players kicking around today. Bitcoin has at least 30 different derivatives, and not all of them are good-faith projects – in fact, some are outright scams and not even forks of the original Bitcoin code. Be sure to do your own research and don’t immediately assume that anything with “Bitcoin” in the name is a valid Bitcoin fork or legitimate project.
We’ve presented these in no particular order, to avoid the appearance of favouritism or endorsement.
– Bitcoin Cash – You’ve likely heard the most about Bitcoin Cash. This was the result of an internal fight within the development teams regarding SegWit, a snippet of code that was introduced to partially solve Bitcoin’s scalability issues. The members of the community essentially disagreed on how best to solve Bitcoin’s block size problem. The Bitcoin Cash team took the Bitcoin code and increased the block size from 1 MB to 8 MB. Bitcoin Cash is the most financially successful of the Bitcoin forks, and it’s often the subject of heated online debates as to whether mainstream Bitcoin or Bitcoin Cash is, in fact, the “true” Bitcoin. Both camps have legitimate claims. Mainstream Bitcoin can trace its blockchain’s lineage back to the original genesis blocks. Bitcoin Cash, however, more accurately represents the code as written by founder Satoshi Nakamoto in 2008.
– Bitcoin XT – Former Bitcoin developer Mike Hearn crafted Bitcoin XT in 2014. Hearn’s basic idea for improving Bitcoin’s code revolved around increasing the block size to 8 MB and pushing transaction speeds as high as 24 per second. Bitcoin XT is a dead project as of 2016. It’s notable for being the first major fork from the main Bitcoin code.
– Bitcoin Classic – Bitcoin Classic doubled Bitcoin’s block size to 2 MB when developers built it in February 2016. The developers almost immediately shifted from a set block size to a dynamic, shifting block size. Bitcoin Classic still sees limited trading on some exchanges, but the overall size of the project is just 1/20th of its original size.
– Bitcoin Unlimited – Bitcoin Unlimited was another early fork, which developers created in 2015 to deal with Bitcoin’s block size and transaction speed yet again. Bitcoin Unlimited stands out for its ability to allow miners to vote on new block sizes. This feature quickly transformed into a bug, creating major stability and reliability issues for the coin. Development is now private, and so Bitcoin Unlimited is a rare sight on public exchanges.
– Bitcoin Dark – This project ultimately morphed into the Monero fork Komodo. Bitcoin Dark was an attempt to recapture the glory days of Bitcoin’s usage on the Silk Road black market by focusing on privacy. It is no longer publicly tradable due to its absorption by the Komodo platform. You’re most likely to hear Bitcoin Dark in Komodo forums as the still-cool unofficial name for the Komodo coin.
– Bitcoin Gold – Bitcoin Gold was an attempt to democratize the Bitcoin mining effort via a hard fork of the original code. Specialized machines, known as ASICs (application-specific integrated circuits), now mine Bitcoin, by and large. Bitcoin Gold features a dynamic mining difficulty and a new algorithm that is ASIC resistant.
– Bitcoin Diamond – Bitcoin Diamond is pure, original Bitcoin code with Lightning Network capabilities tacked on after the fact. Bitcoin Diamond’s developers bill it as a faster, cheaper, and just plain better Bitcoin, similar to the Litecoin project. Bitcoin Diamond stands alongside mainstream Bitcoin and Bitcoin Cash as a claimant to the “true” Bitcoin throne, viewing itself as an evolution of the original rather than the fork it actually is.
All in the Name
And that’s just a taste of the various Bitcoins floating around in the cryptosphere. It’s worth repeating that not every coin with “Bitcoin” in the name is a fork of the Bitcoin source code, as the Bitcoin name and the Bitcoin code are both open source. It’s entirely possible for a malicious developer to cook up any old coin, slap “Bitcoin” in front of it, and potentially reap big rewards from unwary investors. Always do your own research and keep a close eye on any project claiming to be a legitimate Bitcoin fork.