Scenario 1: Planned improvement with full agreement
The entire community is on board with the changes and updates their software. If this happens, the fork isn’t really a fork, as the entire network follows the same path. The old network dies out; end of story.
This scenario is likely to play out when the change fixes critical bugs, or when the improvement is considered beneficial to most of the community. One such example is a planned upgrade by the EOS protocol in 2019. But not all forks happen so smoothly.
Scenario 2: disagreement and contentious break
The community is divided and unable to agree on a change or improvement proposal, If there is enough momentum (and enough people on each side), then the network splits at the moment the change is implemented.
This is exactly what happened in 2017 when Bitcoin split, leading to the birth of Bitcoin Cash.
At the time, with Bitcoin experiencing major transaction congestion, the community was torn about how to solve the problem. This heated debate raged for months, leading to a break in the community into two factions. Human tribalism at its earnest.
Unhappy with the majority solution proposed by the Bitcoin Core team, one faction (which included several miners and notable community members) simply forked the code with their own change – and a new currency was born.
The rift effectively cloned the amount of bitcoin in circulation into the new network on a 1:1 ratio, This means that if you had 10 bitcoin before the split, you would still have the same 10 bitcoin (BTC) plus 10 bitcoin cash (BCH).
Even though the initial value of one bitcoin cash was only a fraction of that of a bitcoin, the combined price of one BTC and one BCH was greater than the previous price of the original.
This outcome was seen by many as having created “free money”. Inspired by this, a myriad other projects have since followed this path – to varying degrees of success.
Scenario 3: planned divergence
Sometimes the fork is planned from the start to become an entirely new cryptocurrency. Like an amicable divorce, each cryptocurrency goes their separate way and, from then on, evolve in a completely independent manner – with different features, goals or ideals.
It’s worth noting that, after the success of Bitcoin Cash, hard-forking became a strategy to bootstrap new networks. While some of the forks were legitimate and remain active today, some of them were merely experimental, or simply opportunistic, only ever intended to capitalise on the idea of “free money”.
Here are some examples of Bitcoin forks that, for one reason or another, have been stagnated, or never even launched.
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