With yet another Bitcoin ‘hard fork’ set to happen in the next couple of weeks we thought we’d put up a post explaining what a hard fork is and why they happen.
What is a Hard fork?
A hard fork occurs when the blockchain of a particular Cryptocurrency is drastically updated which means it is no longer compatible with the existing blockchain software. Once this happens it means that blockchain splits with the old version following one set of ‘rules’ and the new version following another.
Does this always lead to a coin split?
Despite popular belief, a hard fork does not always lead to a coin split. If the community agree that the hard fork is best direction to go in then it simply becomes an upgrade to the blockchain which does not cause a split. An example of this is the new upgrade currently being undertaken by Ethereum, known as ‘Metropolis.’ The upgrade is supported by the community and viewed as a good thing so it currently will not result in a split to Ethereum (unlike a previous hard fork which resulted in Ethereum and Ethereum Classic).
When will it lead to a split?
A split occurs when part of the community do not support the ‘upgrade’ or want to stick to the old rules – this is when a new coin is created, which is what has happened with Bitcoin over the past couple of months.
When will Bitcoin’s latest hardfork take place?
Bitcoin’s latest hard fork known as ‘Segwit 2X’ or ‘Bitcoin2X’ is due to take place in the middle of November. It is a controversial hard fork which will cause the introduction of a new coin, just like Bitcoin Cash or Bitcoin Gold. If you currently hold any Bitcoins then make sure you check that your wallet will be providing you with a free Bitcoin2X at the time of the split.
We are not investment or financial advisors and are here to provide news and our opinions. Please be fully informed regarding the risks and costs associated with trading the financial markets and the Cryptocurrency market, it is one of the riskiest investment forms possible.