‘Fork’ in the tech world basically means to duplicate or clone. So, a Blockchain fork is a copy of the code that runs a Blockchain in order to perform several tweaks, changes, or upgrades.
When a Blockchain’s code is forked, two versions of the same code are created and changes are made on the new one. If the change is backwards compatible, it is a soft fork, otherwise, it is a hard fork. A hard fork forces everyone on the network to upgrade to the latest version (some may not). If those existing on the previous network are enough, two Blockchains are created (having different native tokens).
3 famous cryptocurrency hard forks you should know
Bitcoin Cash Hard Fork (2017)
Bitcoin Cash is a Blockchain that emerged in August 2017 from a fork of Bitcoin. The Bitcoin Blockchain is governed by miners (also referred to as nodes) and they decide by voting on changes proposed by developers.
In 2017, Bitcoin was gaining more popularity, hence resulting in increased traffic and congestion on the Blockchain. A block size at the time was limited to just 1MB, this made transactions take longer time to settle and gas fees went up.
Some people proposed the increment of the block size to enable processing of more transactions in lesser time while paying lower fees too. Since this decision had to be voted upon, everyone didn’t go with it. Those that went with the Bitcoin fork with a higher block size eventually named the Blockchain Bitcoin Cash.
Bitcoin Cash went on to do well as it stayed on top 20 cryptocurrencies for a while before the rise of newer Blockchains especially layer-1s.
Ethereum Classic (2016)
Ethereum Classic is another example of a hard fork but this is from Ethereum. There was a smart contract hack on the Blochchain and the Ethereum community proposed a hard fork to reverse the transaction that stole the funds. Majority of people (97%) voted for this decision and went with the version that reversed the transaction. The remaining 3% stayed and continued with the previous Blockchain where the stolen funds remain stolen.
The smaller Blochchain was renamed Ethereum Classic and uses ETC as its native token while the majority maintained Ethereum as the name of the blockchain and uses Ether (ETH) as its native token.
ETC also did well and remained in top 30 tokens by market cap before the advent of DeFi and Layer-1 blockchains.
Terra Luna (2022)
Anybody active in the crypto space in 2022 most definitely know about the exploit and eventual fall of one of the previously top ten Blockchains in the industry.
Like most of other forks, Terra was exploited and it’s token LUNA went diving down to almost 0. The Blockchain also has a stablecoin which doesn’t appear stable after the exploit as it also lost it’s peg to the dollar and couldn’t regain it.
A proposal was passed by the community and Terra was forked consequently creating a new Blokchain (and a new LUNA token) but without the stablecoin.
The fork created was done and the new token remained LUNA while the old Blockchain was renamed Terra Classic and the token Luna Classic (LUNC). Both tokens are currently not doing well. Apart from the old token falling to almost zero, the new token has also divided by 10 from its all-time-high just about a month ago. At the time of ths writing, it is trading at $1.92 with an ATH of $18.87 according to CoinGecko.