Mapping the Major Bitcoin Forks

The emergence of Bitcoin took the world by storm through its simplicity and innovation. Yet, plenty of confusion remains around the term itself.

The Bitcoin blockchain—not to be confused with the bitcoin cryptocurrency—involves a vast global network of computers operating on the same distributed database to process massive volumes of data every second.

These transactions tell the network how to alter this distributed database in real-time, which makes it crucial for everyone to agree on how these changes should be applied. When the community can’t come to a mutual agreement on what changes, or when such rule changes should take effect, it results in a blockchain fork.

Today’s unique subway-style map by Bitcoin Magazine shows the dramatic and major forks that have occurred for Bitcoin. But what exactly is a Blockchain fork?

Types of Blockchain Forks

Forks are common practice in the software industry and happen for one of two reasons:

• Split consensus within the community
  These forks are generally disregarded by the community because they are temporary, except in extreme cases. The longer of the two chains is used to continue building the blockchain.
• Changes to the underlying rules of the blockchain
  A permanent fork which requires an upgrade to the current software in order to continue participating in the network.

There are four major types of forks that can occur:

1. Soft Forks

Soft forks are like gradual software upgrades—bug fixes, security checks, and new features—for those that upgrade right away.

These forks are “backwards compatible” with the older software; users who haven’t upgraded still have access to the network but may not be able to use all functionality in the current version.

2. Hard Forks

Hard forks are like a new OS release—upgrading is mandatory to continue using the software. Because of this, hard forks aren’t compatible with older versions of the network.

Hard forks are a permanent division of the blockchain. As long as enough people support both chains, however, they will both continue to exist.

The three types of hard forks are:

• Planned
  Scheduled upgrades to the network, giving users a chance to prepare. These forks typically involve abandoning the old chain.
• Contentious
  Caused by disagreements in the community, forming a new chain. This usually involves major changes to the code.
• Spin-off Coins
  Changes to Bitcoin’s code that create new coins. Litecoin is an example of this—key changes included reducing mining time from 10 minutes to 2.5 minutes, and increasing the coin supply from 21 million to 84 million.

3. Codebase Forks

Codebase forks copy the Bitcoin code, allowing developers to make minor tweaks without having to develop the entire blockchain code from scratch. Codebase forks can create a new cryptocurrency or cause unintentional blockchain forks.

4. Blockchain Forks

Blockchain forks involve branching or splitting a blockchain’s whole transaction history. Outcomes range from “orphan” blocks to new cryptocurrencies.

Splitting off the Bitcoin network to form a new currency is much like a religious schism—while most of the characteristics and history are preserved, a fork causes the new network to develop a distinct identity.

Summarizing Major Bitcoin Forks

Descriptions of major forks that have occurred in the Bitcoin blockchain:

• Bitcoin / Bitcoin Core
  The first iteration of Bitcoin was launched by Satoshi Nakamoto in 2009. Future generations of Bitcoin (aka Bitcoin 0.1.0) were renamed Bitcoin Core, or Bitcore, as other blockchains and codebases formed.
• BTC1
  A codebase fork of Bitcoin. Developers released a hard fork protocol called Segwit2x, with the intention of having all Bitcoin users eventually migrate to the Segwit2x protocol. However, it failed to gain traction and is now considered defunct.
• Bitcoin ABC
  Also a codebase fork of Bitcoin, Bitcoin ABC was intentionally designed to be incompatible with all Bitcoin iterations at some point. ABC branched off to form Bitcoin Cash in 2017.
• Bitcoin Gold, Bitcoin Diamond, Other Fork Coins
  After the successful yet contentious launch of Bitcoin Cash, other fork coins began to emerge. Unlike the disagreement surrounding Bitcoin Cash, most were simply regarded as a way to create new coins.

Some of the above forks were largely driven by ideology (BTC1), some because of mixed consensus on which direction to take a hard fork (Bitcoin ABC), while others were mainly profit-driven (Bitcoin Clashic)—or a mix of all three.

Where’s the Next Fork in the Road?

Forks are considered an inevitability in the blockchain community. Many believe that forks help ensure that everyone involved—developers, miners, and investors—all have a say when disagreements occur.

Bitcoin has seen its fair share of ups and downs. Crypto investors should be aware that Bitcoin, as both a protocol and a currency, is complex and always evolving. Even among experts, there is disagreement on what constitutes a soft or hard fork, and how certain geopolitical events have played a role in Bitcoin’s evolution.

The Beginning of a Bitcoin Bull Run?

After 15 months of losses and stagnation, Bitcoin has made a miraculous recovery — rising more than 150% from its lowest point in December 2018.

In its heyday, Bitcoin had surpassed $10,000 in early December 2017, before briefly crossing the $20,000 mark for a single day on December 17th. A year later, the digital currency had fallen back to Earth, dropping below $3,200.

Now that the dust of that wild speculative frenzy has settled, Bitcoin is back on the upswing. What could be causing this most recent surge in growth?

We look at four possible explanations for the Bitcoin bull run, as originally outlined by Aaron Hankin at MarketWatch:

Technical Milestones

Bitcoin has seen several technical milestones this year, such as surpassing the psychological barrier of $5,000 in early 2019, breaking the 200-day moving average, and scoring the golden cross (when the 50-day moving average crosses above the 200-day moving average).

Widespread Adoption

Bitcoin is experiencing a steady increase in adoption across several markets. The term Bitcoin has become a household name — even if people don’t understand what it does, they know what it is.

Companies such as Starbucks, Microsoft, and Amazon, and Nordstrom are looking for ways to integrate cryptocurrencies into daily transactions for faster payment clearance, innovative rewards programs, and efficient customer service interactions.

Shifting Sentiments

Bitcoin has possibly seen a shift in public perception. There have been fewer negative articles about Bitcoin and cryptocurrencies, and the news stories that are negative no longer have as big of an impact as they once did.

When Binance announced hackers stole $40 million in bitcoin and when accusations of an $850-million cover-up were leveled against Bitfinex and Tether, the Bitcoin bull run barely flinched and continued to climb.

Wavering Gold Investment

Investor confidence in gold has been more stagnant in recent times. To capitalize on this, Grayscale Investments (of Digital Currency Group) posted a campaign in May 2019 promoting Bitcoin as an ideal alternative to gold because it is borderless, secure, and more efficient for storing value.

Despite the World Gold Council’s response denying those claims, the Grayscale Bitcoin Trust saw OTC Markets Group’s highest trading volumes five days later.

Where to from here?

After a long skid, it appears Bitcoin is showing signs of life again. Bitcoin’s price can be highly volatile, so it remains to be seen whether this is the beginning of a bull run, or whether this is just another bump in the roller coaster ride.

Editor’s note: The price of Bitcoin has fallen to $7,100 at time of publishing and will likely continue to experience extreme volatility. However, even at a price of $7,100, this is still a 120% increase from lows in Dec 2018. As well, an earlier version of this graphic had incorrect dates on the timeline. That has now been corrected.