Let's take a moment to discuss the world of forks—no, not the utensil, but Bitcoin forks. What are they? Why do they occur? What happens after a fork? The harsh reality is that blockchain projects—yes, even Bitcoin—can have their fair share of shifts, turns, and disagreements. Forks help point out the adaptability of decentralized networks, revealing their inherent flexibility.
Let's take a closer look at the world of forks and what they have to do with Bitcoin.
Think of a fork as a split in the road. It's a path by which the original blockchain code can break off, potentially leading to two paths. Often, a fork will result in a new cryptocurrency, but sometimes, it can simply be a new feature or functionality in the blockchain.
As we'll discuss, Bitcoin has gone through several forks, both hard forks and soft forks. Bitcoin forks are probably the most well-known crypto splits, so let's take a closer look at how each of these forks came into existence.
A hard fork most often occurs when disagreements within a project cannot be resolved. As a result, a new network comes into existence with new rules on a new blockchain. More often than not, a hard fork creates a new cryptocurrency, albeit with a shared history of the original crypto.
The two most famous Bitcoin hard forks are Bitcoin Cash and Bitcoin SV.
The Bitcoin Cash fork came to fruition due to disagreements regarding how Bitcoin should scale. Bitcoin Cash wanted to develop on-chain scaling applications to help make Bitcoin a currency everyday people could use for their daily transactions. The driving force behind this fork was the block size limit.
Bitcoin purists believed the block size should always be 1 MB. Bitcoin Cash felt that increasing the block size limits would create space for more transactions while facilitating growth and scalability. Doing so would also decrease fees and confirmation times. Unfortunately, the two sides couldn't come to an agreement, and Bitcoin experienced its first fork in August 2017.
Drama within the Bitcoin blockchain continued as talks of another split culminated in the branching off of Bitcoin BSV (Bitcoin Satoshi Vision) in November 2018. The team named their project BSV because they believe their vision of Bitcoin most closely aligns with what Satoshi Nakamoto—the creator of Bitcoin—originally intended.
Similar to Bitcoin Cash, BSV took aggressive steps to adjust the block size of its blockchain. Initially, BSV moved to a 128 MB block but eventually decided to eliminate the block cap completely. The project now focuses on restoring features associated with the original Bitcoin protocol while continuing to scale its network to allow for continued growth.
While hard forks impact the blockchain moving forward, soft forks are changes or upgrades that are backward-compatible. This means that a permanent split of the blockchain doesn't occur as they do with a hard fork. Usually, soft forks are new features, protocols, bug fixes, or improvements to functionality on the blockchain.
Let's take a look at a few of the more prominent soft Bitcoin forks.
Segregated Witness, or SegWit, was introduced to the Bitcoin blockchain in 2017. This soft fork was a long-discussed issue before it was finally implemented. SegWit's intent was, and still is, to separate the transaction witness information from the data stored within the transaction. A byproduct of the SegWit soft fork was an increase in the size of a block within the Bitcoin blockchain, thereby creating additional space for the number of transactions per block.
Another well-known and one of the most recent Bitcoin forks is Taproot. This fork occurred in November 2021 and provided a number of improvements to the Bitcoin blockchain. Not only did the Taproot fork improve scalability, but it also added smart-contract functionality to the network while increasing privacy.
A big part of the Taproot upgrade was adding Schnorr signatures, a feature that minimizes the size of the Bitcoin transaction, allowing for more transactions per block.
Bitcoin forks can be confusing, but that doesn't mean they are inherently bad things. As you can see, the intention behind these forks is to provide a better overall experience for users. Whether it's increasing the block cap or minimizing the transaction size, those involved with Bitcoin want to improve the network.
With a better understanding of how dedicated the Bitcoin blockchain is to creating a positive experience for everyone involved, maybe it's time to get out and add some Bitcoin to your wallet. The good news is that there are thousands of Bitcoin Depot ATMs available to do just that. Find one near you to get started today!