Glossary

Justin Sun

NFT: Non-Fungible Token

Off-Chain Blockchain Analysis

USD Coin (USDC)

Hard Fork

Cryptocurrencies are based on decentralized software called blockchain. Just like any software, blockchain needs constant updates to fix issues or increase performance. In crypto, these updates are called “forks.” All distributed nodes in the blockchain network need to follow a protocol, or the same set of rules, to reach a consensus.

Hard fork introduces changes to the protocol, making previous transactions and blocks valid or invalid. It means only updated nodes will be able to process transactions or add new blocks to the blockchain. In fact, a hard fork can change or improve an existing protocol or create a new blockchain.

Types of Hard Fork

A hard fork can either be planned or controversial. A planned hard fork is implemented to add new features, fix security vulnerabilities, and improve the blockchain. In a planned hard fork, all nodes will upgrade to new software versions to follow the new rules. All new transactions and blocks will process on the new blockchain, leaving the old blockchain behind.

A controversial hard fork originates as a result of disagreement within the community regarding the protocol changes. As a result, the blockchain splits into two chains with different protocols and cryptocurrencies. Ethereum and Ethereum Classic is the most suitable example of a controversial hard fork.

Both blockchains will have their own community, and the developers will progress in the best of their interests. Forks are integral to the development of blockchain and its cryptocurrency.

Does Hard Fork Impact Price?

A hard fork introduces critical changes to the blockchain, improving the fundamentals of a cryptocurrency. This results in an increase in the cryptocurrency’s price. Generally, it happens due to the anticipation of more use cases, features, and better security of the cryptocurrency in the future.

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About author
Disclaimer

Varinder has 10 years of experience in the Fintech sector, with over 5 years dedicated to blockchain, crypto, and Web3 developments. Being a technology enthusiast and analytical thinker, he has shared his knowledge of disruptive technologies in over 5000+ news, articles, and papers. With CoinGape Media, Varinder believes in the huge potential of these innovative future technologies. He is currently covering all the latest updates and developments in the crypto industry.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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