In early 2009, the mysterious cryptocurrency developer (or team of developers) working under the alias Satoshi Nakamoto launched the first software program that implemented the digital currency bitcoin. Since then, bitcoin has not only gained massive appeal around the world, but also to inspire hundreds of other digital currencies.
Many of these cryptocurrencies make use of aspects that were already inherent in Satoshi’s initial program and concept. Others take the bitcoin model and adapt or try to improve it. In some cases, bitcoin has generated variations that are based on the same concept and underlying program but are different from the original. In these situations, the bitcoin blockchain has undergone a process known as fork, through which the blockchain is divided into two distinct entities.
It is through this bifurcation process that various digital currencies with bitcoin-like names have come to be: bitcoin Cash, bitcoin Gold and others. For the casual cryptocurrency investor, it can be difficult to distinguish the difference between these cryptocurrencies and map the various forks in a timeline. Next, we’ll walk through many of the most important forks of the bitcoin blockchain in recent years.
In 2009, shortly after launching bitcoin, Satoshi mined the first block on the bitcoin blockchain. This has been called Genesis Block, as it represented the foundation of cryptocurrency as we know it. Satoshi was able to make numerous changes to the bitcoin network at the beginning of this process; this has become increasingly difficult and the bitcoin user base has grown by a tremendous margin. The fact that no person or group can determine when and how Bitcoin should be upgraded has made the system upgrade process more complex. In the years after the Genesis Block, there have been several hard forks.
During a hard fork, the software that implements bitcoin and its mining procedures is updated; once a user updates their software, that version rejects all transactions from the previous software, effectively creating a new branch of the blockchain. However, those users who retain the old software continue to process transactions, which means that there is a parallel set of transactions taking place across two different chains.
Bitcoin X was one of the first notable hard forks of bitcoin. The software was released by Mike Hearn in late 2014 in order to include several new features he had proposed. While the previous version of bitcoin allowed up to seven transactions per second, bitcoin X aimed at 24 transactions per second. To achieve this, he proposed to increase the block size from 1 megabyte to 8 megabytes.
Bitcoin X was initially successful, with more than 1,000 nodes running its software by the end of the summer of 2015. However, a few months later, the project Lost user interest and was essentially left for dead. Bitcoin X is still technically available, but it is generally seen that it has fallen out of favor.
When bitcoin X declined, some members of the community still wanted block sizes to increase. In response, a group of developers launched Bitcoin Classic in early 2016. Unliket, which proposed to increase the block size to 8 megabytes, Classic intended to increase it to only 2 megabytes. Like Bitcoin classic, bitcoin classic saw initial interest, with approximately 2,000 nodes over several months during 2016. The project also exists today, with some developers strongly supporting Bitcoin Classic. However, the larger cryptocurrency community seems to have generally moved on to other options.
Bitcoin Unlimited is still something of an enigma about two years after its launch. The developers of the project released code but did not specify what kind of fork it would require. Bitcoin Unlimited distinguished itself by allowing miners to decide the size of their blocks, with nodes and miners limiting the size of the blocks they accept, up to 16 megabytes. Despite some lingering interest, Bitcoin Unlimited has failed to gain acceptance to a large extent.
Bitcoin’s lead developer Peter Wuille introduced the idea of Segregated Witness (SegWit) in late 2015. Simply put, SegWit aims to reduce the size of each bitcoin transaction, thus allowing more transactions to be made at once. SegWit was technically a soft fork. However, it may have helped boost the hard forks after it was originally proposed.
In response to SegWit, some bitcoin developers and users decided to initiate a hard fork to avoid the protocol updates it triggered. Bitcoin Cash was the result of this hard fork. It broke away from the main blockchain in August 2017, when bitcoin cash wallets rejected bitcoin transactions and blocks.
Bitcoin Cash remains the most successful hard fork of the primary cryptocurrency. As of this writing, it is the fourth largest digital currency by market capitalization, due in part to the backing of many prominent figures in the cryptocurrency community and many popular exchanges. Bitcoin Cash allows blocks of 8 megabytes and did not adopt the SegWit protocol.
Bitcoin Gold was a hard fork that followed several months after bitcoin cash in October 2017. The creators of this hard fork aimed to restore mining functionality with basic graphics processing units (GPUs), as they felt that mining had become too specialized in terms of equipment and hardware required.
A unique feature of Bitcoin’s hard Gold fork was a “back mine,” a process by which the development team mined 100,000 coins after the fork had taken place. Many of these coins were placed in a special “endowment”, and the developers have indicated that this endowment will be used to grow and finance the bitcoin gold ecosystem, and a portion of those coins will also be reserved as payment for developers.
In general, bitcoin Gold adheres to many of the basic principles of bitcoin. However, it differs in terms of the proof-of-work algorithm it requires from miners.
When SegWit was implemented in August 2017, the developers planned a second component for the protocol update. This addition, known as SegWit2x, would trigger a hard fork that stipulates a block size of 2 megabytes. SegWit2x was scheduled to take place as a hard fork in November 2017. However, several companies and individuals in the bitcoin community who had originally supported the SegWit protocol decided to pull out of the hard fork on the second component. Some of the rollbacks was the result of SegWit2x including opt-in (rather than mandatory) playback protection; this would have had a big impact on the types of transactions that the new fork would have accepted.
8, 2017, the team behind SegWit2x announced that their planned hard fork had been canceled as a result of discrepancies between the project’s previous sponsors.
In just a few years, bitcoin has already generated a huge number of forks. While no one can say for sure, cryptocurrency is likely to continue to experience both soft and hard forks in the future, continually growing the cryptocurrency community while making it increasingly complicated.