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Natural Cryptocurrency Forks: Reasons, Circumstances And Consequences

18:26 03/10/2018

Reasons why forks may happen

 

If you are familiar with cryptocurrencies then you may have heard that such a phenomenon as a fork does not bode well. Unexpected and uncontrolled forking may bring significant problems to blockchain-based solutions and projects. On the core level, it simply means that several chains with a single split point will exist. For miners and other participants, it means that either transactions will be partially denied later, or two separate chains will appear. Either way, such an outcome is undesirable for a regular user. The time of fork existence depends on circumstances and participants’ behavior. Developers may even roll back the whole system to remove failures that created the need to fork blockchain.

 

How natural is a fork

 

Despite the negative opinion about forks, they are a natural part of blockchain solutions caused by the very core concept of decentralization. Indeed, since data is processed in many places at the same time, conflict situations are quite natural and are to be resolved. This problem was known long before distributed ledger technologies (DLT) were proposed to the world. It comes from databases decentralized data storage. Since DLT is less concentrated, it requires specific rules to prevent divergence.

 

Perhaps, the main question here is how to make a fork of cryptocurrency? The answer depends on a particular solution but, in general, all you have to do is just keep mining. When using consensus rules proposed by Bitcoin you have some chances of forking every second. Sometimes, you can even mine at the time of forking and be unaware of this fact.

 

The concept of a natural crypto fork

 

What’s so dangerous about forks if they are a natural part of the cryptocurrency ecosystem? To answer this question we will explain the genesis of natural forks in detail.

 

Miners are constantly generating new blocks. It is easy to imagine how several correct blocks can be created at the same time on the opposite sides of the network. This is exactly how forks happen. Both blocks will be valid and all participants will accept the one they receive first. (Of course, there may be different rules applied to the block acceptance strategy but we are talking about a standard situation right now). As soon as this happens, two different chains co-exist in the network, and each miner works in one of them but not in both. This process lasts until one of the chains disappears.

Mining at the time of forking

 

This process is simple enough. It is based on the main rule of the blockchain validation as a whole. This rule states that the longest chain is the correct one. Mining performance will be divided into two unequal parts. These two groups will have a different hashrate. A hashrate defines the probability of a new valid block generation. Thus, the more participants mine in a chain, the higher the chance it will be accepted as the longest one (and hence correct). Participants of the shorter chain will join the majority as they will receive correct blocks. As a result, the network will become whole again.

 

Conclusion

 

In this article, we have presented a brief explanation of forks that are created unintentionally. This simple yet potentially harmful process can be handled by developers. Still, it all depends on the platform they choose for their project. Some platforms are fork-resistant by their nature, while others may become resistant. Anyway the fork processing is possible and may be efficient. All possible ways of processing natural forks will be discussed in the next article. 

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