Big news this month has been the fork of Bitcoin into Bitcoin Cash.
For many new to the wonderful world of cryptocurrency, they might wonder, “what the heck is a fork?”
In programming terminology, a fork is when the code base moves in two parallel directions. If you’re a programmer, you might recall that the Python computer language forked when Version 3 was released. This led to two versions being updated and on their own development path.
In cryptocurrencies, it’s the same concept. In this case, the cryptocurrency separates into two versions of the blockchain.
A forked path might last for a brief moment, or it might last forever.
The key point to remember here is that the fork creates two different digital currencies.
Reasons To Fork
The first question that usually comes up is, “why?” Why fork a growing currency?
When changes or direction of a cryptocurrency are proposed, each CPU gets a vote in the direction. In some cases, a group will branch off (fork) into a new direction. They no longer are part of the original code (i.e. they are a new currency) but they share that common history.
In 2016 Ethereum had a fork which resulted in Ether (ETH) and Ethereum Classic (ETC.)
Just recently Bitcoin went through a fork on Aug 1, 2017 – creating Bitcoin Cash.
Dangerous or Beneficial?
Whether a fork is good or bad for business depends on the situation and one’s own views. Some will always side with the fork (as they see a benefit) while others find it unnecessary and introducing risk.
In all cases, forks do tend to cause some panic in the market.