What is a fork?
Bitcoin is an open-source software, so anybody can copy, change, and use it at their own discretion. Modification of the source code is called “fork”.
In other words, any fork is a change of rules by which blocks in blockchain are validated.
What types of forks there are?
There are two main types of forks: softforks and hardforks. These are “soft” and “hard” modifications of the source code, respectively.
What is softfork?
In the case of a softfork there’s no need to update client software for the rules to apply. If some of the nodes refuse to go in line with the new rules, they’ll still be able to interact with the rest of the nodes.
What is a hardfork?
In the case of a hardfork the new rules are contradictory to the old to the extent of not understanding each other. It is like if the old nodes were speaking English, and the new ones — Chinese. Hardfork implies changes in the actual consensus mechanism. Thus the blocks that are valid for one-half of the network nodes are not valid for the other. In this case, the whole network splits in two separate parts that won’t be able to interact ever again.
How does it work for cryptocurrencies?
For cryptocurrencies, a fork can imply changes in the rules due to updates in the protocol. In other words, to make Bitcoin better and safer you need forks anyway.
What happens after a hardfork
In case of a hardfork one of the remaining branches can die out, but it can go on as well. It depends on the hash power in each of the branches. The one with the most power has the most chances. One of the most notable examples of such a scenario is the 2016’s hardfork of Ethereum: the new chain continued under a new name (ETH), while the original chain remained active as well and is known as Ethereum Classic (ETC).
Are other cryptocurrencies forks of Bitcoin?
The term “fork” also refers to a clone of an existing cryptocurrency. You can copy Bitcoin’s source code to your computer, change the name, emission rules and compile it. Then you should mine several million coins and invite your friends to play a fun game of economics. Sometimes such clones become serious projects.
What is altcoin?
Altcoin is any crypto, except for Bitcoin. Strictly speaking, a clone of an existing cryptocurrency without significant technical changes shouldn’t be considered an altcoin. Altcoins and forks are somewhat vague concepts that can be applied to the same project regardless of the accuracy of this definition.
Are all cryptocurrency projects forks or altcoins?
No, not all of them. There are so-called “colored coins”, metacoins and other complex tokens. Technically, they aren’t forks or altcoins.
What’s the difference?
It would be right to use the term altcoins for cryptocurrencies that are substantially different from others. Dash, Ethereum, MaidSafe, and NXT are altcoins. Forks, on the other hand, are projects such as Dogecoin (fork of Litecoin), Expanse (fork of Ethereum), Stellar (fork of Ripple).