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Fork Meaning

Sep 18, 2023 | Updated Sep 18, 2023
A fork refers to a change or update to a system’s underlying code or software. Forks in blockchain change the set of rules governing a cryptocurrency’s protocol.

What is a Fork in Crypto?

A crypto fork describes the changes made to a blockchain network. Most blockchain networks are open source, which means they depend on communities to develop, update, and maintain the underlying source code. When a crypto community modifies the blockchain’s code or set of rules governing it, it will either upgrade the existing protocol or split the altered blockchain into a completely separate network. Both of these paths are considered a “fork”. 

Forks occur for various reasons, including:

  • To enhance functionality or introduce new features
  • To address security issues or flaws (or just make the network more secure)
  • To resolve community disputes or disagreements regarding a project’s direction

Crypto forks either upgrade the existing protocol or split it to create an alternate version. The separate blockchain retains the entire transaction history of the original up to a certain time and diverges in a new direction.

However, developers can also fork or copy the code of a protocol and modify it to create entirely new cryptocurrencies and ecosystems.

What are the Different Kinds of Cryptocurrency Forks?

Crypto forks can be categorized into hard forks and soft forks. A soft fork is like a minor software upgrade for the blockchain. The improvements or modifications are integrated into the blockchain without impacting or altering the previous set of rules. This allows users to gradually upgrade to or adopt the new version since they can still interact with the blockchain with the old version.

Hard forks, on the contrary, occur when the upgrades dramatically change the rules that determine how the blockchain functions. It results in a newer version that is no longer compatible with earlier blocks. This causes the blockchain to split into two: the original blockchain, and the new, completely separate version that adheres to the updated rules.

Initial DEX Offering (IDO)

An Initial DEX Offering (IDO) is a crowdfunding method that enables blockchain projects to release their native coins or tokens through a decentralized exchange (DEX).

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Unspent Transaction Output (UTXO)

Unspent Transaction Output (UTXO) refers to the amount of a cryptocurrency that is leftover following a specific transaction.

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