What’s in a fork? Let’s dive in and find out.
If all you know about forks is that you can use them to eat with then you need to read this article about how investors can benefit from forks, and what exactly they are.
What is a fork?
Essentially a fork is a cryptocurrency that is created from the existing blockchain of another cryptocurrency. Forks happen when someone wants to create a new cryptocurrency using existing blockchain technology. They also happen when there is disagreement on how a cryptocurrency should evolve. For example, Bitcoin Cash forked off the Bitcoin blockchain when there was debate over whether the size of blocks should be increased.
A new cryptocurrency is born
When a consensus could not be reached, a group of users forked off the blockchain and created a cryptocurrency with larger blocks, leading to faster transactions. Bitcoin Cash was created to exist side by side with Bitcoin as its ‘silver’ as it was better for smaller transactions. So, a fork can be a way of improving on an existing cryptocurrency. This is called a soft fork r it could be a way to create a whole new cryptocurrency, as is the case with Litecoin. Litecoin forked off the Bitcoin blockchain and had become successful in its own right. It even has its own fork, Litecoin Cash.
Why investors are interested in them
Many new cryptocurrencies are created by forks. It is a way to get in early on what could be a rapidly growing cryptocurrency. Especially if the fork makes significant improvements on the original. Forks create growth in the entire cryptocurrency industry which is good for investors as it keeps interest in cryptocurrency alive.
Why they are good for investors
As strange as this may sound, cryptocurrency forks increase the value of the currency they fork off from. Don’t’ believe us? Consider this: Bitcoins forks in August and October 2017 added around 15% to its value. Litecoins fork in February 2018 boosted its value by nearly a third. This means that if you own a cryptocurrency that forks you could be in for a nice rise in the value of your assets.
Forks have outperformed the top cryptocurrency by 5% since the beginning of this year
When a currency is hard forked something called an airdrop happens, this is when owners of the original currency get the new currency “free” in the equivalent amount to the stake they have in the original. A lot of money can be made if the fork succeeds and goes on to big things. It’s basically free money. Forks are also the way to get in on the next big cryptocurrency.
Keep an eye out for potential forks, just before a fork is when it’s an opportune time to buy into cryptocurrency, as you will both get airdropped coins, and will benefit from the bump in value that accompanies a fork.
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