Radical changes made to the cryptocurrency’s blockchain protocol, to update it, are called hard forks. The cryptosphere has seen many of them unfold over the last few years. Earlier, investors—probably with good cause—viewed them as adverse events, because of the volatility caused by the first few hard forks.
However, things have changed. They are now seen as crucial to the evolution of cryptos. Here’s a look at some key hard fork events and how they changed the market for the better.
- Hard fork refers to the radical changes in protocol and sometimes results in a split in blockchain, creating a new coin
- There are two types of hard forks, planned and contentious hard forks. The latter results in a split in the chain
- The First Bitcoin hard fork happened in late 2014, Bitcoin XT, which eventually shut down due to lack of user participation
- Bitcoin Cash was hard forked twice and is still the most popular hard fork in the crypto market
History of Bitcoin Hard Forks
Bitcoin is the most forked coin in the crypto market. It has resulted in the creation of many derivatives. Let’s look at the timeline of some of the major Bitcoin hard fork events.
The first notable hard fork recorded, Bitcoin XT was launched by Mike Hearn in late 2014. This contentious hard fork proposed many new changes to the Bitcoin network, including increasing the ability to process to 24 transactions per second (TPS) (from 7 TPS), and enlarging block size from 1MB to 8 MB.
The project caught the interest of some users in the first few months but later had to be abandoned due to a lack of user interest.
Later, a few contentious hard forks were implemented on the lines of Bitcoin XT, including Bitcoin Classic and Bitcoin Unlimited. Both of them failed to garner any user interest.
Also referred to as SegWit, this was a kind of soft fork that involved making changes to protocol functionality. It has not resulted in the creation of a new coin.
Proposing the fork in late 2015, core developer Pieter Wuille suggested that the Bitcoin transaction format be changed to allow for more transactions to be added within a block. It partially solved the slow transaction speed problem.
The Bitcoin Cash hard fork is considered the mother of all hard forks and was done in response to the SegWit fork. Bitcoin Cash came into being in August 2017, reversing the protocol updates of SegWit, and also increasing the block size from 1MB to 8MB, to improve the scalability of the network and reduce transaction fees.
To date, this hard fork is considered the most successful of all. In the initial days and months, it was listed in the list of top 10 crypto assets by market capitalization.
Bitcoin Gold was another important hard fork that was executed soon after the Bitcoin Cash hard fork in October 2017. It aimed to restore the mining functionality through graphic processing units (GPUs).
Initially, Bitcoin was mineable using CPUs and GPUs, but growing mining difficulties led to the adoption of Application-Specific Integrated Circuits (ASICs). These circuits were developed specifically to mine bitcoins. The setup was expensive and led to the centralization of the mining network.
The hard fork was successful and was even listed as a top crypto asset in the initial days. But it eventually lost steam and failed to reach the level of Bitcoin. As of 9 March 2022, BTG is ranked #113 among crypto assets by market capitalization and is priced a notch above $30.
Bitcoin Cash ABC and Bitcoin SV
If you thought the Bitcoin and Bitcoin Cash hard forks were enough, then you have not heard about the Bitcoin Cash ABC and Bitcoin SV hard forks that occurred in Nov 2018.
For days the development of the second hard fork around Bitcoin Cash kept the market tense and volatile. The hard fork was emerging out as a hash power war.
It all started when Bitcoin Cash developer, Amaury Sechet, suggested a minor protocol update to change transaction ordering. This divided two big crypto personalities, Craig Wright and Roger Ver, who had earlier supported the creation of Bitcoin Cash.
With increasing disagreement on the protocol update, the Bitcoin Cash chain split into two: Bitcoin Cash ABC (led by Ver) and Bitcoin SV (led by Wright).
Bitcoin Cash ABC (core Bitcoin Cash) continued with the necessary protocol upgrade. In the meantime, Bitcoin SV (which stands for Satoshi’s Vision) made necessary changes to the protocol to get it more aligned to Satoshi’s vision, raising the maximum block size limit from 32 MB to 128 MB.
Both coins are still actively traded in the market, but investors have lost confidence in them causing them to slip down the list of crypto assets by market capitalization.
The Taproot upgrade is the most recent hard fork of the Bitcoin network. It is unlike many others in that it is planned. As a result, it had no issues regarding achieving consensus. The upgrade was aimed to improve the scalability, security, privacy, and smart contract functionality of the Bitcoin blockchain.
Other Important Hard Forks
Some major hard fork events that you should be aware of are listed below.
Back in July 2016, due to a hack in its mainnet, Ethereum developers executed a hard fork to plug the vulnerabilities in the blockchain protocol. However, this created an issue with the miners and developers who wanted to stay with the original version of the Ethereum blockchain.
The faction that was against the hard fork, pledged their support for the older chain and continued with the original chain with all older transactional records intact.
London Hard Fork
The London Hard Fork or EIP-1559 was another planned hard fork. The Ethereum network was forked to change the transaction validation process with a view to reducing the transaction processing time and fees.
The hard fork enabled the burning of Ether tokens, which are collected as transaction fees from users, making the coin less inflationary. It was the first in the line of many hard forks making Ethereum a proof-of-stake blockchain network.
Seen before as a negative development, the definition and scope of hard forks have changed over the years. They are now recognized for their ability to give flexibility, to innovate and constantly make changes to the protocol as per the evolving situation after attaining full consensus of the network.
As we say this, we will continue to witness both hard forks and soft forks in the future as well. But only some will make it to the headlines. Hard forks shape the future of crypto-assets and the market.
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Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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