Hard Fork and its value for the crypto currency. Alexander Sivtsov.
In this article, you will learn more about the concept of hard fork in cryptocurrency. To begin with, we will deal with the very notion of hard fork.
There are two types of fork: soft fork and hard fork.
Soft fork is a change in the current rules of the network, which does not require software updates, but if some of the active nodes of the network do not accept this update, they will still be able to interact with other nodes that will work under the new rules.
Hard fork is a more rigid change in the rules of the system, in which those nodes that do not accept this update no more able to interact with the others, as a result of which the entire network is divided into two independent systems that will never again be able to work as a single unit . Proceeding from the above, the crypto currency is simply decrypted as a partition, as a result of which a new crypto currency may appear.
The main purpose of the fork
The main purpose of the fork, first of all, is the improvement of the system through the introduction of changes in the protocol. Often, this improvement is required to ensure higher security and stability of the system.
Hard fork and cryptocurrency
In the case of hard fork, one of the two networks that have been formed can simply die out if it does not receive enough power, and as a result, some of the network’s majors may simply stop operating. Despite the fact that hard fork is a necessity for improving the system performance, it can negatively influence the decentralization of cryptocurrency management, since updates can often not be accepted by small miners who can not accept them because of the banal lack of processing power. With frequent hard forks, which will require more computational power, there is a possibility that the network will support only the largest miners, which will lead to centralized management of the crypto currency.
BitcoinCash and BitcoinGold
BitcoinCash and BitcoinGold are the hard forks of the world’s most popular cryptocurrency Bitcoin, which has survived as an independent alternative to bitcoin and is also quite popular in the cryptocurrency market. BitcoinCash appeared as a result of Bitcoin’s hard fork on August 1, 2017 and today the market capitalization of the cryptocurrency is more than $ 44.00 billion. BitcoinGold began its existence on October 25, 2017, its capitalization today is more than $ 4 billion. It should be noted that Bitcoin’s hard fork had no negative impact on the cryptocurrency, but only strengthened its popularity in the market, resulting in this year the maximum cost of the crypto currency $ 19,628.869.
It should be noted that hard fork has a very significant influence on the cryptocurrency. Therefore, volatility of the currency may be increased depending on the sentiments of the miners and large investors of the market.