Jump to content

Bitcoin and the Forks: Should You Invest in ‘New’ Bitcoins?


marrycallahan

Recommended Posts

Bitcoin is the most popular cryptocurrency in existence. This digital asset was first released in 2009 and since then has become a central figure of the billion-dollar cryptocurrency industry. Despite being at the top of crypto charts, Bitcoin is far from perfect and has long needed to undergo changes. Allowing for this, numerous development teams have come up with the idea of originating the fork to introduce a new and improved Bitcoin.

Why does Bitcoin have so many forks?

A primary reason for the emergence of new forks comes from scalability issues and limitations of the initial Bitcoin currency. Bitcoin has a block size that is fixed at 1 MB, and there can only be a set number of Bitcoins ever created and circulated. The cryptocurrency was programmed this way to allow the coins to be released into circulation in an orderly and even fashion. However, for the cryptocurrency that is as popular as Bitcoin, a small block size can be a heavy curse. At peak times, it results in slow transactions and higher fees.

 

Alternatively, forks can also happen when the cryptocurrency users agree on a radical change of the protocol. Prominent members of the crypto community could propose a series of protocol upgrades that would improve the original currencynot everyone may agree with these changes, however. Therefore, a fork is born releasing a new currency that uses the proposed changes and complies with a different protocol.

Backward-compatible upgrade, or soft fork

This type of Bitcoin fork is essentially comparable to a computer software update that is compatible with old versions. We can use the analogy of Microsoft Office. Let's say you are using Microsoft Office 2003 but your friend has sent you a document created in Microsoft Office 2015. You will still be able to open the document in Office 2003, however, you will be prevented from using the additional features available in Office 2015.

 

In the same manner, a soft fork is backward-compatible with previous versions of the Bitcoin cryptocurrency. However, any updates featured in the new protocol will not be available for use in previous versions.

Not backward-compatible upgrade, or hard fork

This type of Bitcoin fork has a fundamental difference from a soft fork. A hard fork is NOT backward compatible with previous versions of the Bitcoin currency. Once a hard fork is created, there is literally no going backthat is it! If you do not choose to take on board the new cryptocurrency then you will not be able to use it at allyou will not be able to access any of the features or interact with the other users on the blockchain.

 

A suitable analogy could be the PlayStation games console. If you have a PS4, you cannot play PS3 games. Moreover, if you have a PS3, you cannot play PS4 games on itthe two are not compatible.

Which Bitcoin Forks are available on the market?

However, in practice, it is not as simple and easy, and there are forks that result in the community split and the birth of a new coin or a spinoff of Bitcoin. You might have noticed that there are multiple Bitcoins in the market - these are all Bitcoin forks, actually. So, let’s finally look at the iterations of Bitcoin available, why they emerged and where they are standing in terms of market cap.

Bitcoin - the original version

Released: 2009

Price: $4,000

Market cap: $69.5 billion

This is the original version of Bitcoin and the most circulated. Bitcoin is generally the currency that most people wish to use or invest in. It acts as a benchmark for other cryptocurrencies and is widely used by merchants and businesses. The core principle behind Bitcoin is to ensure cheap and reliable peer-to-peer transactions with no middlemen involved. Bitcoin is decentralized, borderless, and transparent.

Where to buy (top 5 exchanges): Coinbase, Bitstamp, CEX.IO, Kraken, Binance.

Bitcoin - Cash

Released: 2017

Price: $155

Market cap: $2.7 billion

The most successful Bitcoin fork for today is Bitcoin Cash (BCH). This cryptocurrency is undoubtedly the most popular among other forks due to its unique features and strong backing from the community. BCH was launched in response to Bitcoin’s scalability issues. It has several differences from Bitcoin such as an increased block size of 32MB, adjustable mining difficulty, and a lack of the "replace-by-fee" feature which may cause the inflated transactions fees.

Where to buy (top 5 exchanges): Coinbase, CEX.IO, Binance, Poloniex, Bitfinex.

Bitcoin - Gold

Released: 2017

Price: $17

Market cap: $294 million

This fork was created to address the Bitcoin mining issue and offer better decentralization. Bitcoin mining is largely controlled by several pools, which contradicts the underlying idea of decentralization. Early on, it was possible to mine Bitcoin using a regular PC; now the process requires more power and more advanced hardware sets. Average users cannot afford it and thus have no incentive to mine Bitcoin. Bitcoin Gold uses a different algorithm for minin through which it expects to achieve true decentralization.

Where to buy (top 5 exchanges): CEX.IO, Bitfinex, Binance, KuCoin, HitBTC.

Bitcoin - Diamond

Released: 2017

Price: $0.96

Market cap: $148 million

Bitcoin Diamond was another notable fork aiming to improve the speed and cost of Bitcoin transactions. What’s more, the developers of BCD decided to increase the maximum supply of the coins as well. With Bitcoin, 21 million units can ever be created; with Bitcoin Diamond, however, this number is 10 times bigger - 210 million. The changes also include increasing the block size to 8mb

Where to buy (top 5 exchanges): Binance, Bithumb, OKEx, HitBTC, KuCoin.

Bitcoin - Private

Released: 2018

Price: $1.99

Market cap: $39.9 million

As the name implies, Bitcoin Private’s purpose is to add more privacy to Bitcoin transactions. By its nature, Bitcoin is transparent, meaning that the ledger records all transactions that ever took place within the network. It is done to make the Bitcoin ledger immutable. Bitcoin Private is unique because it combines the elements of Bitcoin and ZClassic. The privacy feature is enabled due to the zk-SNARK technology  used by Bitcoin Private.

Where to buy: HitBTC

 

Hopefully, you are now bursting with the understanding of what Bitcoin forks are and have probably decided on one to invest in. However, the forks are usually met with much controversy in the community, so it would do no harm if you research more about each of them before buying. Remember that a great investor should be well-informed about the market and its risks to make a wise investment decision.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      17,279
    • Total Posts
      81,350
    • Total Members
      65,887
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    40dollarshoes
    Joined 24/01/22 17:02
  • Posts

    • @u0362565 We'll not have a 2008 event for a long-time - there will be big plunges and 25% corrections along the way, they are a given along with a couple of bear market periods - but the ultra long term trend is upwards until the cycle ends in the mid 2030's The market is pre-BUILT - Its working through geometrical ratios - once its hit a key level it will reverse trend - the only problem as traders is we don't know exactly the geometrical shapes the market moves to all the time - I know this is hard to understand and visualise - as it works out and through its next move, trading opps will show up The reason the SP500 has crashed is it hit 1.902% which meant it reached to within 1 point the diagonal of a golden rectangle - once price reaches the geometrical shape its building it turns - I think what will happen is people will attach the reasoning of earnings season to it, but its always after the fact, like generic economic reasoning Yeah the key is working out what type of market you're in fast and when the trend changes, what worked prior, no longer works - the other key is staying solvent long enough to pick up the trades once the prior trend comes back into play as well as trading other markets I wrote a piece the other month on selling the "hooks" - the FTSE100 Index just provided that very short trade opportunity today If unsure, just stay out of the market in cash until things become a bit more clearer - a gann secondary reaction is a indicator to the start of a possible new rally, if that happens at a key retracement level of a bigger move then it could be significant  THT  
    • I'll tell you one thing, I wish I'd learnt how to short a market right now! I assume this movement is somewhat to do with whats happening with Ukraine/Russia. It's crashed through multiple 50% levels so is there a point where you say this method no longer works for the conditions at play. For example you can draw 50% levels to your heart's content extending back in time on daily chart swings. If you see enough movement above the level you may decide to trade at least it would somewhat limit the number of trades you were making. Movement of the market back to the high at least if we believe in what has happened historically is a case of when and not if. What is dangerous in my eyes is moves downward that last a long time, like 2008 where it went on for months. If it's relatively quick down and back it's easier to weather e.g. 2020 crash. I am assuming that we are not on a longer term decline but I haven't polished my crystal ball yet this year so not sure
    • Market data to trade on Tuesday: DAX; MSFT IGTV’s Daniela Sabin Hathorn looks at a chart of the DAX ahead of the latest IFO business climate data out in Germany as the equities selloff continues into the new week. On the corporate calendar, Microsoft (MSFT) will be looking to impress investors with its Q4 earnings after a rather disappointing start to the US earnings season. https://www.ig.com/uk/market-insight-articles/market-data-to-trade-on-tuesday--dax--msft-220124
×
×
  • Create New...