Cryptocurrency forks can happen in a number of different ways.
You’ll come across hard forks (whereby the forked blockchain is not backward compatible), soft forks (which are typically software upgrades and are backward compatible), and code base forks (wherein a coin’s code is copied and provides the basis for a new currency).
Today, we’re going to look at some of Bitcoin’s most noteworthy hard forks and source code forks.
1. Litecoin (October 2011)
Litecoin was one of the first widely successful Bitcoin forks. The brainchild of former Google employee Charlie Lee, Litecoin used Bitcoin’s source code as the basis for the project but created an entirely new blockchain upon launch.
The two coins have a lot of similar features, but there are some core differences.
For example, Litecoin cut Bitcoin’s average transaction processing time from 10 minutes to 2.5 minutes. Litecoin also has a higher coin limit (84 million vs. 21 million) and uses a different mining algorithm (Scrypt vs. SHA-256). Litecoin’s Scrypt algorithm puts more of an emphasis on RAM rather than CPUs.
2. Bitcoin Cash (August 2017)
Bitcoin Cash is probably the most controversial Bitcoin fork. Whereas Litecoin merely used Bitcoin’s source code as the basis for the project, the birth of Bitcoin Cash came about following a split in the Bitcoin community and blockchain itself was hard forked.
The new coin supposedly solved some of Bitcoin’s problems. Most notably, it favors people who want to use the currency as a payment tool rather than an investment tool by increasing the block size to 8MB.
Sadly, further controversy wasn’t far away. In November 2018, Bitcoin Cash itself forked over further disagreements about block size. Check out Joe’s article about the Bitcoin Cash hash war to learn more.
3. Zcash (October 2016)
Like Litecoin, Zcash was a source code fork and there was an entirely new blockchain.
The developer’s principal reason for creating Zcash was to launch a more privacy-focused coin. It saw the first widespread use of a zero-knowledge cryptographic technique called zkSNARKS. zkSNARKS lets nodes verify the correctness of computations without executing them.
Bitcoin and Zcash both have a 21 million coin limit.
If you’d like an alternative to Zcash, we have explained everything you need to know about Monero—the other major privacy coin—in a separate article.
4. Bitcoin Gold (October 2017)
Bitcoin Gold was a hard fork that happened in October 2017. As is often the case with hard forks, the developers felt there was a core issue with Bitcoin that need to be rectified. In the case of Bitcoin Gold, the intention was to decentralize Bitcoin mining again.
The core team wanted people with simple GPUs to be able to get involved again; Bitcoin now requires high-powered (and very expensive) ASIC chipsets if you want to mine serious amounts. It means anyone with a simple off-the-shelf computer can start mining Bitcoin Gold and be moderately successful.
Ironically, the mining issue came back to haunt the coin in mid-2018 when it suffered from a 51 percent attack. Around $18 million of Bitcoin Gold was stolen from exchanges.
Learn more in our explanation of 51 percent attacks.
5. Bitcoin SV (November 2018)
Earlier, we mentioned that Bitcoin Cash forked for a second time in November 2018. The result of that fork was the launch of Bitcoin SV.
The coin’s first few months of existence have not exactly been plain sailing.
Firstly, critics have accused its founder, Craig Wright, of inflating the market cap artificially by purchasing Bitcoin SV above market value.
Secondly, only 4.2 million of the 17 million possible coins have been claimed by entitled Bitcoin Cash owners.
And finally, some leading exchanges—including Poloniex—have encountered difficulties in processing Bitcoin SV transactions.
6. Dash (January 2014)
Dash is a source code fork, but it has a slightly curious history.
When it first launched in early 2014, it used a fork of Litecoin v0.8.6.2 (which, remember, was a fork of Bitcoin). One year later, it reverted to Bitcoin 0.9.3’s source code.
At the time, core developer Evan Duffield said the decision was taken so that Dash could “take advantage of nearly two years of development to the Bitcoin core client.”
From a technical standpoint, Dash once again builds on some of Bitcoin’s perceived weaknesses. It offers instant transactions, stakeholder governance, incentivized full nodes, protocol-level privacy support, and a higher transaction capacity on the blockchain.
7. SegWit2x (November 2017)
The fork that never happened. SegWit2x was a proposed hard fork that was supposed to occur in late 2017, only to be canceled in the final days before the fork took place.
The problem revolved around a lack of consensus, and specifically, the developers’ decision not to implement mandatory replay protection. Without the protection, people could have lost assets if money was accidentally sent to the wrong chain during the crossover.
Many in the Bitcoin community lamented the failure of SegWit2x; it would have helped one of Bitcoin’s key issues—the small transactions-per-second (TPS) capacity. Bitcoin has 7 TPS, whereas Visa can handle up to 24,000 TPS.
8. Bitcoin Pizza (December 2017)
There are hundreds of Bitcoin forks that you don’t need to know about; they are probably doomed to long-term failure due to a lack of interest, miners, and acceptance.
Of all those forks, however, there’s one that stands out for its name alone—Bitcoin Pizza. The coin is named after the events of 22 May 2010, when a programmer called Laszlo Hanyecz bought two large pizzas from Papa Johns for 10,000 Bitcoin. At today’s exchange rate, that’s $3.5 million USD.
On a technical level, Bitcoin Pizza was the first Bitcoin fork to use Directed Acyclic Graph (DAG) technology. DAGs don’t rely on miners confirming transactions; the blockchain is “block-less”.
At the moment, the coin is using a forked Bitcoin blockchain. But when the new pre-mined DAG BPA blockchain is ready, a migration will occur.
Share Your Favorite Bitcoin Forks
We’ve introduced you to eight important Bitcoin forks, but there are several more examples out there.Make sure you share your favorite Bitcoin forks in the comments section below.
And if you like to learn more, check out our article on the principles behind hard forks and soft forks.