Bitcoin hard fork explained! Here’s what you need to know about the Ethereum hard fork, hard fork Bitcoin, & the SegWit2x hard fork.
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A blockchain is a list of digital transactions, information, or data that are grouped together in “blocks” then added to a row of past blocks to form a “chain.” A fork is a divergence in a blockchain’s path, or in other words, when a blockchain splits into two different paths moving forward. A blockchain that forks implies that it’s a permanent divergence into the two different chains, & miners can choose which chain they wanna direct their computing power towards. Forks happen when a group of miners choose to follow a new set of rules & protocol that differ from the already-existing set of rules. Bitcoin Cash, for example, was a hard fork of Bitcoin because it increased block sizes to eight megabytes per block; Bitcoin remains at 1 megabyte per block. There are two types of forks: hard forks & soft forks. A soft fork is when a change in the software protocol has been made in which previously valid blocks are made invalid. It’s considered “backwards-compatible,” since old nodes (or computers mining within the Bitcoin network) are able to consider new transactions to be valid. Soft forks require a majority of miners to upgrade their software in order to enforce the new rules, whereas hard forks require every single miner to upgrade their software. This is how pay to script hash functionality (or P2SH) was made valid on the Bitcoin blockchain. An example of this is the DAO hard fork, which gave birth to Ethereum & Ethereum Classic. The DAO (or decentralized autonomous organization) was a digital group whose infrastructure was built on the Ethereum blockchain. Ethereum Classic was created, which was built on the principle that the blockchain cannot & should not be changed. Ethereum Classic continues to run on this original unforked path, & Ethereum as we know it today is using the newer, upgraded rules in their protocol. One of the most well-known hard forks occurred on the Bitcoin blockchain on August 1st, 2017 when Bitcoin Cash was created. For every Bitcoin you held, you were given an equal amount of Bitcoin Cash at the time of the fork. The fork occurred due to what’s known as the Bitcoin scalability problem, meaning the maximum number of transactions the Bitcoin network was able to process was extremely limited. As a result, the Bitcoin Cash hard fork took place, which increased block sizes from one megabyte to eight megabytes in order to increase the number of transactions the Bitcoin Cash ledger can process. Block 478558 was the last common block between Bitcoin & Bitcoin Cash. Just over 3 weeks after the Bitcoin Cash hard fork, a soft fork on the Bitcoin blockchain occurred on August 24th, 2017 that activated SegWit (short for Segregated Witness). This event increased the block size limit on the Bitcoin blockchain by removing certain parts of a transaction’s information; thus, freeing up more space on each block & allowing more transactions to occur on every block. One such important, upcoming hard fork on the Ethereum blockchain is EtherZero. Like mining, masternodes get paid from block rewards in the form of the respective coin at higher-than-normal yields. These block rewards come from the transaction fees people pay when sending their coins to another wallet. The difference between Ethereum & EtherZero is that EtherZero plans on implementing this masternode system in order to improve & stabilize its own market value. The team--comprised primarily of Dapp developers (or decentralized application developers)--hopes that masternodes will be of more benefit to cash users. They’re setting the initial masternode collateral point at 10,000 EtherZero. 45% of the block rewards will go to the masternodes, 45% to miners, & 10% to self-governing communities responsible for proposing changes that’ll improve the coin’s operations & functionality.