What is Crypto Forking and How Does it Work – 2021 Guide

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Searching for the next big thing to invest in can be a tiresome job and an unnecessary one when we look at all the things and all the possibilities that you can place your money and gain profits. Things that happened in 2009 turned the entire investment game, as the invention of digital money changed the world we live in today. At first, many were skeptical, thought of it as a scam but, with time, even the most fierce doubting Thomases realized that cryptocurrencies are the next big thing we all, as investors, think and dream of, and today, cryptos are widely accepted.

Of course, for many, the crypto world is a still relatively or entirely new thing, which is also a reason why there weren’t many of those willing to invest in it at first, but now, the crypto market is reaching new highs in the number of users each day.

In order to participate and to start your crypto adventure, you first need to learn the basics, the terminology, and how the market works. Once you understand how it all works, what to look for, and how to spread and increase your investment portfolio, everything else will become much easier. So let’s first explain the most often used terms that are of great importance.

The terminology

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We will not bother you with the basics but will also not go into plenty of details that would confuse you more than anything else, so let’s talk about the terms that you can practically use and which are of great importance. The halving is something everyone should be familiar with, as this was the main thing that confused so many people at the beginning of this year.

As you may already know, since 2021 started, the value of Bitcoin skyrocketed, it reached new highs and set new records, but at one moment, its value rapidly went down without any evident reason, or at least that’s what many thought so.

Namely, halving occurs after every 210.000 blocks mined, and it essentially means that its production (mining) is cut in half. The influence halving has on the BTC value is vast, as miners are paid by the amount of BTC mined, and when that price is cut in half, it influences the overall value of Bitcoin.

Altcoins

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Another term is altcoin, which is basically used for describing every other crypto besides BTC. As for the influence and connection between Bitcoin and Altcoins, that’s a topic for some other time, but let’s plainly put that most Altcoins are highly dependent on what happens to BTC.

Let’s take Monero as an example as it is the crypto that highly correlates with BTC. On the other hand, we have USD Coin, which acts entirely opposite. No matter how different Monero and USD Coin are, they have one similar characteristic, and they are considered altcoins.

What does HODL mean?

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This one is something you probably heard of before, and it’s used to describe people who tend to keep their cryptos at all costs, waiting for their sudden value growth. We are not here to discuss if keeping cryptos is a good decision or not, and we are here to mention the term that we can find in many crypto articles and magazines. Once we dive into that amazing world, we need to be familiar with many new terms because it can sound too complicated for us if we do not learn the basics on time.

What is forking?

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Many of us are familiar with cryptos and blockchain technology, but there are many terms to explain, and one of them is forking. When we talk about forks in a blockchain network, they represent a split created by changing the code. The code in a blockchain network is available to anyone, and anyone can try to improve it or change it since this network use open-source software.

Since everyone can access the code and try to change it, this network is improving all the time, together with the software it uses. It is a good thing for blockchain technology, and we can expect even more improvements in the future. When two miners or software misalign, it lead to the situation when the forks occur, and a miner needs to choose the blockchain they want to use.

Sometimes it is not easy to make that decision which results in creating two different versions of it. When we have more than one blockchain version, it usually leads to an increased price of the cryptocurrency and higher volatility.

Bitcoin Cash

This one is perhaps the best example of forking, as in 2017, after forking occurred, Bitcoin Cash saw the light of the day. What this basically means is that at some point, a change of the blockchain protocol occurred. That change leads to two paths, the one path with the same rules, or in this case Bitcoin, and a new path with entirely new rules, or in this case BTC Cash.

After reading this, some of you may assume that BTC Cash is Altcoin, and yes, you are right, and good job, as although it is an entirely new coin, it split off from Bitcoin, and it’s closely connected with what happens to BTC and is considered as an Altcoin.

The bottom line

From everything mentioned above, what forking is and how it works should be much clearer and easier to understand. Of course, consulting the experts is always recommended, as they will offer a great insight into details that are of vast importance. So, for those who are still hesitant and are in need of more info, check the-bitcoin-erapro.com/tr as you will get detailed instruction and guidance on how to make the most out of your investment.

In the end, the more time and passion one invests in something, the more gain one can look for, which is why only an informed investment decision is the right decision. Because of that, do not avoid consulting the experts since they can help you a lot.