Bitcoin is the leading Crypto Currency that emerged as an alternative to fiat currency. Bitcoin is accepted worldwide and is independent of any financial institution or country. Bitcoin is based on Block Chain technology and is generated after verifications from the network.
Bitcoin network is a distributed, decentralized, peer-to-peer ledger system. In the Bitcoin network, all users share the common ledger and any transaction is updated with all the users. This reduces the chance of errors in the transactions. After successful confirmations, a block is generated which is called Bitcoin. Bitcoin relies on the Cryptographic hash function which is secure and encrypted.
Bitcoin is also mined by the miners using hardware and software set up. Every transaction has the transaction id, hash of the previous block, and the message. To prove the transaction, several algorithms process mathematical calculations and solve the hash of the block which cannot be altered. Based on the Proof of Work, the transactions are verified. To solve for a block and add it to the block chain, two weeks time is estimated.
When two or more miners confirm the block at the same time, a new fork of the block chain is created. The longer side of the fork with more users is trusted by the network.
Bitcoin network runs on a common consensus agreed by all the users. When the users feel the need for a change, they will propose a fork with the changes at a future agreed block. During and after the fork, the network users may see fluctuations. Bitcoin software is highly secure and encrypted ensuring the anonymity and privacy of the users and transactions.
In the Bitcoin network, as a result of consensus rule change, new Crypto Currency are formed. The users form new currencies and the network is split based on the updates on the block size, smart contracts, zero-knowledge-proof, lightning network, and other changes. The forks are usually two types:
Here are some major forks to the Bitcoin network since its inception in 2009. More forks are expected in the future.
Bitcoin XT, Bitcoin Unlimited, Bitcoin Classic, Bitcoin Cash, SegWit, Bitcoin Gold, SegWit2X, Protest fork, and so on introduce new Crypto Currency to the network. The original Bitcoin remains strong and is the major determining factor for the pricing of the remaining Crypto.
Bitcoin is bought or sold through many exchanges and wallets. During the software updates and forks, most exchanges see huge traffic spikes. Unexpected amount of requests tend to crash the exchanges. It is common for the exchanges to ban any selling or buying during Bitcoin forks.
Bitcoin exchanges, Over-The-Counter markets, and futures trading are some popular methods to acquire Bitcoin. Exchanges process orders and the algorithms are required to scale during peak user requests.
When forks are announced at a pre-set block, the exchanges see rapid buying and selling. Some exchanges do crash and some are unable to handle the fork. Every exchange lists the forks, the Crypto Currency, and the Initial Coin Offerings they support.
Exchanges supporting Bitcoin forks include:
Exchanges charge fees for processing user requests. The charge may be higher for a Bitcoin fork due to the amount of changes involved. Also, exchange algorithms take weeks to incorporate the Bitcoin forks. The forks are monitored by the developers, miners, exchanges, and users because they have the capability of crashing the chain or varying the price of Bitcoin.
Wallets supporting Bitcoin forks by charging lower fees include:
Bitcoin users, networks, exchanges, and wallets undergo rapid fluctuations during Bitcoin forks. The price falls rapidly preceeding the days up to the day of fork. Once the fork is established, the value of Bitcoin increases. Users tend to get panic and short sell Bitcoin before and after a fork, which may result in huge fluctuations.
Since Bitcoin is a relatively new concept, users get confused often during the Bitcoin forks. Bitcoin software is open source and is freely available on Github. Any body can download the software and customize for their needs and contribute to the chain. There is a huge scope due to the security and privacy involved. The forks are common and more Bitcoin forks are expected in the future.
Every Bitcoin fork brings changes to the network and to the Crypto world. New features and security are updated for the users and exchanges. Users play a major role in accepting or rejecting a fork. Bitcoin Fork Exchanges must comply with the rapidly changing software and innovate methods to incorporate the forks.