1. What is a fork?
Bitcoin is open-source software, so anyone can duplicate, modify, and use it as they see fit. The actual modification of the source code is called a fork (literally “fork”).
In other words, any fork is a change in the rules by which a block in the blockchain is recognized as genuine (valid).
2. What kind of forks are there?
There are two main types of forks: softforks and hardforks. The first can be called a “soft” modification of the source code, the second a “hard” modification.
3. What is a softfork?
In case of a softfork, changing the rules does not require updating the client (software) to execute the new rules. If some nodes (nodes) in the network will not accept the new rules, such nodes will still be able to communicate with nodes that use the new rules.
For a better understanding, we can make an analogy with languages: if before the fork all nodes were speaking American English, and the new rules require switching to the British version, the nodes that continue to use the American version will still be able to understand the British version. At the same time, nodes that use British English will find it easy to understand the American version.
Thus, softforcing is a reversible code change that does not break the consensus of the protocol itself.
4. What is a hardfork?
In the case of a hardfork, the new rules contradict the old rules to such an extent that the nodes that did not accept them do not accept information from the nodes that did. To follow the same analogy with languages, the old nodes speak English and the new nodes speak Chinese. A hardfork involves changing the consensus mechanism itself, in which case the entire network is split into two parts that can never communicate again. This happens because blocks recognized as valid in one part will not be considered as such in the other part.
5. How does this work in cryptocurrencies?
In the case of cryptocurrencies, a fork can refer to a change in the rules of operation associated with the need to make changes to the protocol. In other words, sometimes to make bitcoin better and safer, one has to resort to one type of fork. Although in some cases the issue of fork is a security issue.
6. What happens after a hardfork?
In the case of a hardfork, one of the resulting branches (chains) of the system may die out, but it may also persist – it depends on how much hash power each branch has. The branch with the higher power has a better chance of success. As the most obvious example of such a scenario, we can recall the Ethereum network’s summer 2016 hardforward: the new chain continued to exist under its former name (ETH), but at the same time the original chain, named Ethereum Classic (ETC), was preserved and maintained.
7. Is there an opinion that most cryptocurrencies are forks of bitcoin?
A fork can indeed be called a clone of an already existing cryptocurrency. For example, you can copy right now bitcoin source code to your computer, change its name and emission rules and compile the program. After that, you have to make sure to mine (emit) a few million coins and invite your friends and acquaintances to play an exciting economic game. Sometimes very serious projects emerge from such cloning.
8. Are all cryptocurrency projects forks or altcoins?
No, not all. There are so-called “colored coins,” metacoins, and many other complex tokens that are neither forks nor altcoins in the strict sense of the word.
9. What is an altcoin?
An altcoin is any alternative cryptocurrency other than bitcoin. In the strict sense of the word, an altcoin cannot be considered a clone of an existing cryptocurrency that does not carry any significant technical improvements and aspirations for a worldwide singularity. In practice, altcoin and fork are very fuzzy terms that can be used in relation to the same project regardless of the accuracy of this definition.
10. What is the difference?
It would be more correct to refer to cryptocurrencies that are significantly different from other projects as altcoins. For example, Dash, Ethereum, MaidSafe, NXT. In turn, it is more correct to call forks such projects as Dogecoin (Litecoin fork), Expanse (Ethereum fork), Stellar (Ripple fork).