Panoramic Analysis of Bitcoin Forks: Understand the Motivations and Impacts Behind Them

In today's wave of digital currencies, Bitcoin is undoubtedly the most dazzling star. However, with its widespread application and soaring value, the debate and disagreement surrounding Bitcoin are also deepening. The phenomenon of Bitcoin forks is a concentrated manifestation of this debate. This article will explore the definition, types, impacts and reasons behind Bitcoin forks in depth to reveal this complex but extremely attractive field for you.

Bitcoin forks, in simple terms, are two different chains that appear on the Bitcoin blockchain. This phenomenon is usually caused by different understandings and executions of certain rules in the network, which leads to the birth of two or more versions of Bitcoin. Forks can be divided into two types: soft forks and hard forks. A soft fork is a backward-compatible update, which means that the old version of the node can still communicate with the new version of the node. A hard fork is completely incompatible, which means that the old and new versions of the node cannot coexist, which often means the birth of a new digital currency.

In the history of Bitcoin, the most famous fork is the Bitcoin Cash fork in August 2017. The root cause of this fork is the different views on the issue of Bitcoin expansion. Supporters believe that the Bitcoin block size limit (1MB) makes the transaction speed slow and difficult to meet the growing user demand. Therefore, they proposed a plan to expand the block size to 8MB, which led to the birth of Bitcoin Cash. This case not only shows the differences at the technical level, but also reflects the inherent interest game in the community.

In addition, there are forks such as Bitcoin Gold. It came into being to make the Bitcoin mining process more decentralized and oppose the monopoly of large mining pools in the Bitcoin mining industry at that time. Bitcoin Gold changed the mining algorithm so that ordinary users can also mine with personal computers. Although this change is intended to enhance the fairness of Bitcoin in theory, the actual effect is that some people benefit while others suffer losses, further exacerbating the division of the community.

From a technical point of view, the occurrence of forks is not only the result of differences of opinion within the community, but also a game between technological development and market demand. With the continuous evolution of blockchain technology, users' demand for Bitcoin is also changing. From the initial value storage tool to the current means of payment, and then to the possible smart contract platform in the future, the role of Bitcoin is undergoing profound changes. This makes technical forks inevitable.

At the economic level, the fork phenomenon has also sparked heated discussions. Many investors tend to invest in related currencies on the eve of the fork in the hope of getting double returns after the fork. Although this speculative behavior may bring rich returns in the short term, it may lead to excessive volatility and instability in the long run. As the market performance in early 2018, with the emergence of forked coins such as Bitcoin Cash and Bitcoin Gold, the market once experienced drastic price fluctuations, and many investors suffered heavy losses in blindly following the trend.

At the social level, the phenomenon of Bitcoin forks also reflects the new community governance model brought about by blockchain technology. Bitcoin forks are not only technical issues, but also a collision of values between community members. Behind each fork is a profound discussion on decentralization, transparency and fairness. The debate between supporters and opponents is actually looking for a way out for the future digital currency ecosystem.

It is worth mentioning that the fork phenomenon is not limited to Bitcoin. Ethereum, as another important blockchain platform, has also experienced multiple forks. The most famous one is the Ethereum Classic fork caused by the "DAO incident" in 2016. This incident not only triggered extensive discussions on the technical level, but also challenged the moral and ethical concepts of the entire blockchain community.

In the future development of digital currency, we can foresee that the Bitcoin fork phenomenon will continue. With the advancement of technology and changes in the market, forks will become a normal phenomenon. This not only means the birth of new currencies, but also means a more complex market environment and more diverse investment options. For investors, understanding the motivations and impacts behind the fork will be the key to participating in this field.

In general, Bitcoin forks are not only a technological change, but also a profound change at the economic, social and cultural levels. Behind each fork, there are complex interests and values. In this rapidly changing world of digital currency, maintaining keen insight and clear judgment will be a challenge that every participant must face.

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Nowadays, Bitcoin is developing better and better, and taking advantage of the popularity of Bitcoin during this period, many Bitcoin forks have appeared. Bitcoin has forked many times and there are many forked coins. There are many Bitcoin forks, such as Big Bitcoin, Super Bitcoin, Bitcoin Gold, etc. Many people don’t know how many forked coins there are in total. Today, let’s take stock of the Bitcoin forks.

BCH, the abbreviation of Bitcoin
Cash, is called Bitcoin Cash in Chinese. In addition, BCC is the early name of BCH, which is now deprecated. BCH forked on August 1, 2017, when Bitcoin height was 478559, creating a precedent for Bitcoin forks. As listed in this article, Bitcoin fork events have become more and more sparse and common after BCH.

BCH is BTC’s expansion plan, using 8M large blocks, and does not support SegWit, because the development team believes that SegWit has become irrelevant with such a large block size of 8M. BCH has learned from the lessons of Ethereum fork and added two-way replay protection, so there was no chaos such as asset loss after the fork. Later, other forked coins also followed suit and generally added replay protection.

BCH's mining anti-algorithm and mining machines are the same as BTC. Some mining pools have also added a BTC/BCH automatic switching function, which can automatically switch miners to high-yield currencies. Initially, BCH adopted the emergency difficulty adjustment mechanism (EDA), but later it was found that EDA was not stable enough, and sometimes the mining difficulty was more than 3 times that of BTC. Therefore, BCH implemented a hard fork upgrade on November 13, and has now added the DAA difficulty adjustment mechanism.

From the current situation, BCH is the most successful of several forked currencies of Bitcoin. Its influence continues to expand. It has won the support of many exchanges and wallets, and even some bigwigs in the currency circle believe that BCH is the real Bitcoin. On November 12, 2017, the price of BCH soared wildly, reaching a historical high of US$2,500 at one point, and its market value also reached more than US$30 billion at one point, briefly surpassing Ethereum to become the second largest digital currency. But then the price of BCH fell sharply, and it is currently in a state of ups and downs.

After that, Bitcoin forks began to become "out of control", and a series of forked coins also appeared. Not only that, the naming of these forked coins is almost irregular, just adding some random words you can imagine next to the three words Bitcoin - for example, Bitcoin Candy, Bitcoin Pizza, Bitcoin God, Bitcoin Faith, Bitcoin Diamond, Bitcoin Gold, Bitcoin Atom, etc.

However, most Bitcoin forked coins not only have low popularity and application rates, but also have terrible trading volumes. According to data from the well-known cryptocurrency data website CoinMarketCap, currently only four Bitcoin forked coins have a 24-hour trading volume of more than $100,000, namely Bitcoin Cash, Bitcoin Diamond, Bitcoin Gold and Bitcoin Private.

George Kimionis, CEO of Coinomi, told Bloomberg: "Unfortunately, the vast majority of Bitcoin-based hard fork projects we see today are for the sole purpose of making money. We may realize a few years from now that the price increases of these cryptocurrencies have blinded investors and that they have not made serious contributions to the cryptocurrency ecosystem." If the current trend continues, perhaps we will soon see even stranger Bitcoin forks such as "Bitcoin Butter", "Bitcoin Chicken Nuggets", and "Bitcoin Salad".

With the continuous evolution of the Bitcoin fork phenomenon, we may be able to find a new direction for the future development of digital currency. Whether it is technological innovation or community building, it will become an important force to drive this field forward. In this context, we should not only pay attention to the forks themselves, but also think about the deeper meaning behind them. The future of digital currency may quietly bloom in these forks.