In the realm of cryptocurrencies, you may have heard of the idea of hard forks, even in the case of Bitcoin, the most popular digital money.
Understanding that cryptocurrencies, like Bitcoin, function on software that is updated by developers is crucial to understanding the idea of a hard fork. These programmers occasionally have to make substantial changes to the software, rendering earlier iterations useless.
A hard fork is a significant alteration to the protocol of a network. All nodes or users must update to the most recent version of the new software following this kind of fork in order to avoid utilising out-of-date or malfunctioning software.
During a hard fork, nodes operating on the latest version of the blockchain no longer accept the old version, leading to a permanent divergence from the previous protocol. This divergence is metaphorically referred to as a fork, drawing a parallel with different paths taken during mountain trekking. One path follows the upgraded blockchain, while the other continues along the old path, which eventually becomes obsolete if all nodes/users abandon it.
Hard forks can occur in any blockchain, which is why various digital currencies similar to Bitcoin have emerged, such as Bitcoin Cash, Bitcoin Gold, and others.
This situation poses a challenge for new cryptocurrency investors who may struggle to distinguish between these different cryptocurrencies, potentially leading them to invest in the wrong one. While some of these hard-forked currencies claim to be superior to Bitcoin or address critical security concerns, introduce new functionalities, or even reverse transactions, they often fail to deliver on these promises.
Therefore, it’s crucial to conduct thorough research before purchasing any coin to ensure you are aware of any past hard forks and which version aligns best with your requirements.