What is fork in Cryptocurrencies? How many types of fork are there?

To understand fork one has to understand the decentralized nodes in the network all depend on consensus. A uniform consensus which is followed in nodes and mining nodes ensure the integrity transactions and therefore blocks in blockchain. What if one wants to update the consensus? How does one go about adding new features in the consensus model?

�Fork� in blockchain is different from the ones in the software development. In software development, �fork� happens when developers choose different plan or roadmap and start competing to the roadmap they were following. In cryptocurrencies �fork� has it�s own meaning and there are three types of forks � Forks due to technical inconsistencies, hard fork and soft fork.

In bitcoin, for example which has a decentralized data structure, there are times when different nodes at different locations have different perspectives of blockchain. Each node according to Proof of Work consensus system chooses longest chain or greatest cumulative work chain. At times blockchain at different node locations have almost same length but different blockchain data. It is resolved by eventual reconvergence as more and more blocks are added to one of the forks so the blockchain having longest chain is selected as the main chain and data in second longest chain is eventually reintegrated to the main blockchain. This type of forks naturally occur as temporary inconsistencies between versions of the blockchain, which are resolved by eventual reconvergence as more blocks are added to one of the forks.

To update the consensus system, the rules have to change to accommodate new features, improvements, take out bugs, upgrading consensus system is difficult and requires coordination between the participants.

There are two types of forks when the consensus rules changes � hard fork and soft fork.

Hard fork occurs for two reasons � due to a bug or a deliberate change in the implementation of the consensus rules results in the network diverging into following two chains. This is called a hard fork, because after the fork the network does not reconverge onto a single chain. In short, hard forks occur when part of the network is operating under a different set of consensus rules than the rest of the network. Hard fork requires four stages to be executed and completed. They are software fork, network fork, mining fork, and chain fork. An example of hardfork is the creation of Bitcoin Cash on 1 August 2017 and Bitcoin Gold created on 24 October 2017 where they hard forked from main bitcoin network.

Soft fork occurs when the change is implemented in such a way that a node which has not been updated or not modified under the new consensus can still see the transaction or block as valid under the previous rules. In short, a soft fork is a forward-compatible change to the consensus rules that allows unupgraded clients to continue to operate in consensus with the new rules. Example for soft fork is Segwit which is change to the structure of a transaction, which moves the unlocking script (witness) from inside the transaction to an external data structure (segregating it). (Segwit is different from Segwit2x which was supposed to be a hard fork and did not take place.)

The difference between hard fork and soft fork is that soft fork is forward compatible where transactions and blocks created in the new consensus rules works under the old consensus rules, if it doesn�t the old nodes reject the transactions, it becomes a hard fork. Secondly, soft forks can only limit or constrain what the consensus can do and not add more features in conflict or vastly different from old consensus as hard forks. Further the major difference is in soft forks does not force an upgrade and allows non-upgraded forks to function unlike hard forks where a separate network with new rules are formed and transactions from new consensus are rejected by old nodes.

The Risks And Benefits Of Investing In Cryptocurrency

Should you put money into cryptocurrency as opposed to traditional forms of investments? What are the risks and the benefits of this type of emerging investment tool?

There are questions that investors ask when they first hear about cryptocurrency. A fear of the unknown is one concern. Are cryptocurrencies here for the long haul? Excuse the pun, but it�s essentially asking if we can trust the new kid on the block � -chain?

The best way to figure out whether or not you should add cryptocurrency to your investment portfolio is to get answers to some frequently asked questions by new investors:

This is a digital currency, and it can also be called a virtual currency. While Bitcoin was first created by Satoshi Nakamoto (a pseudonym for a person or group) in 2009, there

are now numerous types of competing cryptocurrencies like PPCoin, Litecoin, Namecoin, Ethereum, Zcash (ZEC), Dash, Ripple, and Monero. The current market value of the Bitcoin blockchain, as of July 27, 2017, was just over $41 billion. A blockchain is a digital ledger that chronologically and publicly records cryptocurrency. Meaning Bitcoin, as of late July 2017, trades at $2,500+ per uni.