Anycoin Direct explains how the 'fork' works

When you think of a fork, the image of piercing a tasty steak probably comes to mind. However, in the crypto world, the terms “soft fork” and “hard fork” refer to two different ways in which a blockchain network can evolve or change. How exactly does this 'fork' fit into the stem? Anycoin Direct explains.

Anycoin Direct is one of the oldest Dutch crypto exchanges that is active throughout Europe. Her goal? Making cryptocurrency accessible to everyone. The company would first like to take you back to the basics: ''A blockchain is a chain of blocks that are connected to each other in a fixed order. It is best to imagine this as blocks that are directly connected to each other with an intermediate line. All these blocks together form the blockchain. Each block contains information that is stored in a distributed database.

A hard fork and a soft fork are therefore two ways to make changes to a blockchain. A hard fork involves major changes and creates two separate blockchains that are not backward compatible. On the other hand, a soft fork is a more subtle tweak that remains compatible with older software, allowing for the addition of security improvements or new features, for example.

New currency

According to Anycoin, the reasons behind forks can be diverse: ''Sometimes communities want to add new features or solve problems. In other cases, there may be disagreement over the direction of the network, which could lead to a hard fork creating a new cryptocurrency.”

An example of this is the Bitcoin protocol, which gave a maximum block size of 1 MB. When an update also made larger blocks possible, miners who had not installed this update could no longer see these blocks. According to protocol, these blocks were therefore impossible. So there were only two options: download the upgrade all together or a hard fork. The latter followed and Bitcoin Cash was born. Bitcoin continued through SegWit and the Lightning Network to address scalability. This battle was so fierce that a name was even coined for it: The Blocksize Wars.

As soon as it becomes clear that a hard fork will take place, according to Anycoin, you will have to be careful when trading such a coin until the hard fork is complete. For example, it may well be that you exchange coins via a transaction with new rules and that those rules will belong to a completely new blockchain, where that particular coin is worth much less.

Want to start trading yourself? View the Anycoin Direct website here.