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Bitcoin is the most popular cryptocurrency in existence. This digital asset was released for the first time in 2009 and has since become the hub of the billion dollar cryptocurrency industry. Despite being on top of the cryptographic graphicsBitcoin is far from being perfect and has long had to undergo changes. For this reason, numerous development teams have had the idea of creating the fork to introduce a new and improved Bitcoin.
Why Bitcoin has so many forks?
A major reason for the emergence of new forks stems from problems with scalability and limitations of the initial Bitcoin currency. Bitcoin has a block size that is set at 1MB, and there can not be an established number of Bitcoins ever created and circulated. The cryptocurrency was programmed in this way to allow the circulation of coins in circulation in an orderly and uniform manner. However, for such a popular cryptocurrency as Bitcoin, a small block size can be a heavy curse. At peak times, slow transactions and higher commissions occur.
Alternatively, the forks can also occur when cryptocurrency users agree on a radical modification of the protocol. Leading members of the crypto community may propose a series of protocol updates that would improve the original currency. Not everyone can agree with these changes, however. Therefore, a fork is created that releases a new currency that uses the proposed changes and conforms to a different protocol.
Upgrade compatible with previous versions or soft fork
This type of Bitcoin fork is essentially comparable to a computer software update compatible with older versions. We can use the Microsoft Office analogy. Suppose you are using Microsoft Office 2003 but your friend has sent you a document created in Microsoft Office 2015. You will still be able to open the document in Office 2003, however, you will be prevented from using the additional features available in Office 2015.
Similarly, a soft fork is backwards compatible with previous versions of Bitcoin cryptocurrency. However, any updates in the new protocol will not be available for use in previous versions.
Update not compatible with previous versions or fixed fork
This type of Bitcoin fork has a fundamental difference compared to a soft fork. A hard fork is not backwards compatible with previous versions of the Bitcoin currency. Once a rigid fork is created, there is literally the opposite: it is so. If you do not choose to accept the new cryptocurrency, you will not be able to use it at all. You will not be able to access any features or interact with other users on the blockchain.
A suitable analogy could be the PlayStation games console. If you have a PS4, you can not play PS3 games. Also, if you have a PS3, you can not play PS4 games. The two are not compatible.
What Bitcoin forks are available on the market?
However, in practice, it is not so simple and easy, and there are forks that result in a division of the community and the birth of a new currency or a spin-off of Bitcoin. You may have noticed that there are more Bitcoins on the market. These are all Bitcoin forks, actually. So, let's finally examine the available Bitcoin iterations, because they have emerged and at what point they are terms of market capitalization.
Bitcoin: the original version
Released: 2009
Approximate price: $ 4,000
Market cap: $ 69.5 billion
This is the original version of Bitcoin and the most widespread. Bitcoin is generally the currency that most people want to use or invest. It acts as a point of reference for other cryptocurrencies and is widely used by traders and businesses. The fundamental principle of Bitcoin is to ensure economic and reliable peer-to-peer transactions without intermediaries involved. Bitcoin is decentralized, borderless and transparent.
Where to buy (first 5 exchanges): Coinbase, Bitstamp, CEX.IO, Kraken, Binance
Bitcoin – Cash
Released: 2017
Approx price: $ 155
Market cap: $ 2.7 billion
Bitcoin Cash (BCH) is the most successful Bitcoin fork today. This cryptocurrency is undoubtedly the most popular among the other forks thanks to its unique features and strong community support. BCH was launched in response to Bitcoin scalability issues. It has different differences from Bitcoin as a larger block size of 32 MB, adjustable mining difficulties and the lack of "replace by rate" function that can cause commissions on inflated transactions.
Where to buy (first 5 exchanges): Coinbase, CEX.IO, Binance, Poloniex, Bitfinex
Bitcoin – Gold
Released: 2017
Approximate price: $ 17
Market cap: $ 294 million
This fork was created to solve the Bitcoin mining problem and offer better decentralization. Bitcoin extraction is largely controlled by multiple pools, which contradicts the idea behind decentralization. At the beginning it was possible to extract Bitcoin using a normal PC; now the process requires more power and more advanced hardware sets. Average users can not afford it and therefore have no incentive to extract Bitcoin. Bitcoin Gold uses a different algorithm for mining through which he expects to achieve true decentralization.
Where to buy (first 5 exchanges): CEX.IO, Bitfinex, Binance, KuCoin, HitBTC
Bitcoin – Diamond
Released: 2017
Approximate price: $ 0.96
Market cap: $ 148 million
Bitcoin Diamond was another notable fork with the goal of improving the speed and cost of Bitcoin transactions. In addition, the BCD developers have decided to increase the maximum amount of coins as well. With Bitcoin, 21 million units can be created; with Bitcoin Diamond, however, this number is 10 times larger – 210 million. The changes also include the increase of the block size to 8 MB.
Where to buy (first 5 exchanges): Binance, Bithumb, OKEx, HitBTC, KuCoin
Bitcoin: private
Released: 2018
Approximate price: $ 1.99
Market cap: 39.9 million dollars
As the name suggests, the purpose of Bitcoin Private is to add more privacy to Bitcoin transactions. By its nature, Bitcoin is transparent, which means that the ledger records all transactions that have ever taken place on the network. It is done to make the Bitcoin register immutable. Bitcoin Private is unique because it combines the elements of Bitcoin and ZClassic. The privacy features of Bitcoin Private are enabled through zk-SNARK technology.
Where to buy: HitBTC
I hope you are now understanding what Bitcoin forks are and maybe you have decided to invest in one. However, forks usually encounter much controversy in the community. So it would not hurt to research more on each of them before buying. Remember that a large investor should be well informed about the market and its risks in order to make a wise investment decision.
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Disclaimer: The opinions of our guest writers are exclusively their own and do not reflect the views of The Daily Hodl. These opinions expressed are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and operations are at your own risk and any losses you may incur are your responsibility. The Daily Hodl does not recommend the purchase or sale of any cryptocurrency or digital assets, nor The Daily Hodl is an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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