What is a Fork in Cryptocurrency

what is a fork in cryptocurrency

Have you heard the term and wondered what is a fork in cryptocurrency? In certain occasions, cryptocurrency users will hear this term and even see it in action. Let me give you a little background and explain exactly what a fork is.  

Cryptocurrency uses computer-generated code to create a form of digital money, known as a cryptocurrency. It is a term developed based on the fact that its coins themselves are encrypted sections of the blockchain.

The blockchain contains all bitcoin transactions. This allows each user to verify the validity of each operation using his/her computer. Each transaction must carry digital signatures and send addresses to be considered authentic.

Any user can add a new page to the ledger when they find the solution to the algorithm, contained with the coin’s programming code.

When Does a Fork Occur?

A fork occurs when two miners find the solution within a short period. Then, both of them will send their data to the ledger to be verified.

As the process continues, the system will split into two, one half of the network will predict the next block to come, but the other half will be anticipating a different one.

The chance of finding two consecutive blocks within two seconds is quite minimal, and almost always gets resolved quickly.

What Causes a Fork?

Forks can occur from two different events:

  1. Accidental forks arise if coin updates are not truly compatible. People using different versions of the software create two separate ledgers, one from the older version, and one from the newer.

  2. Hard forks happen if the developers of different cryptocoins choose to make changes in the way their coins are programmed. These changes will make the two versions incompatible. When the adjustments are made, all the users of that currency must renew all applications to continue the usage of that coin type correctly.

Often, the solution to the problem is given by the side of the network which finds the next block, and this blockchain becomes more complicated.

The other part of the system will then make its blocks redundant and adopt the two blocks of the more extended half of the blockchain.

The incorrect block will be stored in a pool as an orphan block. That is called blockchain reconvergence.

Are Forks Bad?

Only one of the two different blockchains existing can be the right one. Consequently, coin transactions located on the “corrupt” blockchain could ultimately go to waste.

Therefore, people are warned not to make any trades during a fork event until that fork can be resolved.

Any potential for lost coins tends to scare users away from using a particular cryptocurrency. Frequent software updates and additional work can cause exchanges, businesses, and users to switch to a more stable coin type.

That makes the coin less accessible and less valuable. In theory, if nobody fixes the fork, it would cause a complete incompatibility and two different versions of one coin, and in the competitive cryptocurrency market, the community would be unlikely to tolerate this.


Forks will happen from time to time. The most recent fork was with coinbase and bitcoin cash. 

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Before you go please give your thoughts on forks in the crypto space and if you think they are good or bad?

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