When you type 'Bitcoin' into a search engine, you may come up with a number of different asset forks with this phrase in their name plus the addition of, for example, 'Cash'. Without searching for long, you may find Bitcoin Gold, Diamond, etc. A question mark may appear in your mind – why so many assets with similar nomenclature? The explanation is very simple. They were created after the forks of the network. This article explains how they work and why they exist.
 

Blockchain forks – definition and operation 

Cryptocurrencies are mostly open-source software. This means that the community can access the source code and may suggest changes. If the direction of a network does not correspond to part of the users, a fork of the network through a fork may occur. At this stage, let us establish a short and precise definition of a fork to fully understand the subject of the article.

A fork is an accepted technical change in the protocol, i.e. the set of rules on which a blockchain is based. 

They are divided into soft and hard forks. Soft forks are backwards compatible, meaning that transactions stored in previous blocks are part of the newly created network branch. In the case of hard forks, there is a complete separation. An example of a popular soft fork would be Segregated Witness (SegWit), while a hard fork would be Ethereum Classic. 
 

Why do forks take place? 

Blockchain is a space where the community has the right to propose and vote on its future. Different rules apply here to centralised entities, where the entity's owner or group is responsible for all decision-making. Networks that are widely used have a vast number of users who may be willing to develop blockchain in a specific, democratically voted direction. This aims to solve problems which typically relate to different aspects of the transaction flow or block size. Read the article on the blockchain trilemma to understand the limitations of the network. It is the improvement of the aspects described that usually divide the community regarding a given topic.
 

Case study of a fork – Bitcoin Cash

Bitcoin Cash (BCH) is a cryptocurrency created by the hard fork of Bitcoin that took place on 1 August 2017. It involved restrictions on the increasing number of transactions, resulting in network congestion and high transaction fees. Proposals to address the problem included expanding the block size or changes to the transaction structure. In the end, it was decided to increase the block size to 8 MB, which led to the creation of BCH. The network then split into Bitcoin, which remained unchanged, and a fork of Bitcoin Cash, which started with block number 478,558. BCH continues its growth with the support of a dedicated community.
 

Conclusion – the crypto community is setting the direction for blockchain

A distinguishing feature of blockchain is that the network's future depends on the decisions of the community. Without loyal users, even the strongest projects will stop thriving, so it is in the common interest to maintain the value of the network's assets so that individual decisions meet the expectations of different groups of participants. Forks positively influence the network by allowing it to grow because, in an industry as dynamic as blockchain, projects need to stay abreast of technological solutions in order to be competitive.