Forking the Crypto Highways: What? Why? When?
New Technologies and new Eras have several common defining aspects; one is the new language or refined definitions. Forking Crypto is one of them.
Take the era of the 45 music-single where B-Side became a common expression for the song on the flip side of the hit. Sometimes the B-Side became a hit, however, it’s DNA was always predicated based upon its early position relevant to Side-A, the “hit” side.
Crypto (cryptocurrencies) is no different. Language morphs and grows with the times; Cool changes with usage and with age. When new technologies explode onto the scene, old words must take on new meanings or the new age opportunity stagnates. Crypto is no different.
If You Zig, I’ll Zag. What’s that Fork Up Ahead?
Crypto has morphed many words. One of their morphed words is Fork. Fork relates to changes to the underlying blockchain. The Blockchain reflects the genius behind the Distributed Ledger Technology where thousands of unrelated computers all agree that a specific set of positions and transactions are valid and agreed upon. When the Block is settled, there is an algorithm solution that locks in the next building block of a chain of building blocks that documents the entire history of all transactions.
When Change Happens, it’s a Fork
Sometimes the associated Blockchain needs to change. Changes are referred as Forks. There are two types of Forks: Soft and Hard. Soft Forks essentially represent a slight modification to the code that is presented and if accepted by the majority of the Blockchain’s participating members the new software rules guide future building blocks. If a majority never accept the new protocols, the originals Blockchain protocols continue as if there had never been a soft fork. In essence, a Soft Fork is a backward compatible software upgrade that allows the system to continue without significant disruptions.
Hard Forks, on the other hand, are modifications to the software that is only forward compatible. The old code is not used and the new code begins where the old code ended and is unable to allow the old code to be used going forward. For long-time Apple users, a Hard Fork would be like when Apple changed their operating system from Apple Basic to OSX. A completely new platform where old programs were incompatible with the new operating system. Whereas a Soft Fork is the equivalent of an OS update, say from Windows 7 to Windows 8, where the long-term programs continue to work. One challenge with a Hard Fork is that two blocks now exist where one was before. Essentially duplicating the number of coins and moving forward with different protocols and of course different values.
YOUR Crypto Due Diligence: Hard Forks change the platform
Crypto users need to maintain due diligence as it relates to Forks. While Soft Forks might disrupt the speed of processing, Hard Forks change the platform. Bitcoin had the most controversial Fork a few summers ago leading to what is today’s Bitcoin and a second ledger system referred to as Bitcoin Cash. Bitcoin continued to skyrocket and Bitcoin Cash has moved little. Hard Forks have consequences. Accordingly, Crypto participants need to keep abreast of changes and their holdings.
When the Blockchain becomes either at risk of a threat, already compromised, or too big and cumbersome to effectively perform, the community (adopters of the technology) will seek ways to improve the underlying Distributed Ledger. Forks are performed to improve the security, safety, and speed of the Blockchain. Of course, there are oftentimes differing positions as to when and/or if a Fork is necessary. Users need to keep abreast to protect their underlying investments and know what is happening with their assets or possibly experience a financial loss.
Daniel frequently provides Media Content via Workshops, Podcasts and Printed Articles on topics like Bitcoin and Cryptocurrency, Wealth Preservation and Planning, Global Banking and many other high-level financial topics that serve and demonstrate the Value of our Global Network that should be of interest to those who need Private High-Wealth Services.
If you would like Daniel to speak to you or your Professional Group and bring clarity about the new frontier of Cyber Currency, please contact us.
Morris+D’Angelo is the industry leader for many High-Wealth Customers and Organizations.
503.749.6300 – Portland Office
408.292.2892 – San Jose Office