JAKARTA - In the cryptocurrency world, software updates are often made to improve features or address security concerns, similar to updates on other digital devices such as computers or smartphones. However, uniquely in the realm of digital assets such as Bitcoin, this renewal process is not managed by a company, but is done openly by the global community of developers, because Bitcoin is an open-source software.
When developers want to implement changes to the decentralized Bitcoin protocol, they start by creating a copy of the existing Bitcoin program code and modifying it. This modified result is then available for download as a new version, while the old version is still available. Users, including miners and full nodes, have the option to stick to the old version or switch to a new version. This process is called the 'fork'.
Quoted from Pintu Academy, the Education platform for the PINTU application, Fork is divided into two main types: hard fork and soft fork. Hard fork occurs when the changes made are not compatible with the previous version, resulting in two blockchains that cannot communicate with each other. In contrast, soft forks still allow compatibility with previous versions and do not create new blockchains. Soft fork allows for a smoother transition without splitting the community
In the Bitcoin ecosystem, full developers, miners, and nodes play a crucial role in decision making. Developers play a role in updating the code, miners secure the network through the mining process, and full nodes store a complete transaction history. All three must reach an agreement before changes can be applied.
Quoting from Pintu Academy, one of the advantages of hard forks is that users who have cryptocurrencies on the original blockchain will also have the same number on the new blockchain. This is often seen as an opportunity for investors to benefit from the free coins received during the fork. For example, on August 1, 2017, Bitcoin experienced hard forks that generate Bitcoin Cash.
Investors who owned Bitcoin at the time automatically received the equivalent amount of Bitcoin Cash, although the value of these two coins could be very different from time to time.
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