Blockchain forks represent a fundamental split within a blockchain network. As open-source software, blockchain code is freely accessible, allowing anyone to propose improvements or modify the protocol. This flexibility is a cornerstone of cryptocurrency innovation, enabling software updates and experimental changes.
Forks occur when miners' software versions become misaligned. Miners then decide which blockchain version to continue supporting. Without consensus, this can lead to two distinct blockchain iterations, often accompanied by heightened price volatility.
How Do Forks Work?
Forks function by altering a blockchain’s software protocol, frequently resulting in new cryptocurrency creation. There are two primary methods:
Creating a New Token from Scratch
- Involves copying and modifying existing code (e.g., Litecoin’s derivation from Bitcoin).
- Requires building a new network and convincing users to adopt the currency.
Forking an Existing Blockchain
- Modifies an existing chain instead of starting anew (e.g., Bitcoin Cash’s split from Bitcoin).
- Produces two blockchain versions post-split.
Hard Fork vs. Soft Fork
| Type | Description | Example |
|----------------|---------------------------------------------------------------------------------|---------------------------|
| Hard Fork | A radical protocol change requiring all users to upgrade; non-upgraded nodes become invalid. Permanent divergence. | Bitcoin Cash (from Bitcoin) |
| Soft Fork | Backward-compatible upgrade; older nodes still validate new blocks (with limitations). Requires majority miner adoption. | Bitcoin’s BIP 66 upgrade |
Soft forks are commonly used for incremental updates, while hard forks create entirely separate chains.
Our Blockchain Fork Policy
- Price Determination: Based on the majority-consensus blockchain post-fork.
New Cryptocurrency Handling:
- May credit accounts with the new asset or apply cash adjustments.
- Reserves the right to void non-viable currencies.
Client Responsibilities:
- Monitor trades and margin requirements during volatile periods.
- Stay informed about upcoming forks (though we provide notifications).
⚠️ Note: Trading may suspend if reliable market prices are unavailable.
FAQ
Q: Can a fork create two functional cryptocurrencies?
A: Yes (e.g., Bitcoin and Bitcoin Cash). Exchanges may list both if viable.
Q: Who decides which fork to follow?
A: We align with the majority-consensus chain but retain final discretion.
Q: What happens if a forked currency fails?
A: Non-traded or unviable forks may be removed from accounts.
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Q: How do forks affect my existing holdings?
A: You may receive new tokens or equivalent value, depending on the fork’s outcome.
Q: Are soft forks safer than hard forks?
A: Yes—they maintain backward compatibility and minimize network disruption.
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