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Bitcoin Forks and SegWit
Bitcoin forks are defined as changes in the bitcoin network protocol. Forks are generally required to add new features to the blockchain and reverse the effects of hacking.
In this article, we will discuss bitcoin forks and segregated witnesses, i.e., SegWit. Let's first discuss the Bitcoin fork.
In digital currency software, a "fork" is a term used for a change in the software that creates two different paths on the blockchain. Both of these paths have a shared history.
A bitcoin fork can be temporary or permanent. There are many reasons why a fork happens in the blockchain.
Bitcoin forks are of two types:
- Soft forks
- Hard forks
Now, let's move on to a more in-depth discussion of the aforementioned two types of forks, beginning with "soft forks."
Soft forks are minor changes made to the blockchain. These forks do not disturb the functionality of the previous version of the blockchain, and hence nodes of the newer version of the blockchain can still interact with nodes of the older version.
In a soft fork, new rules are added that do not clash with the older ones. A soft fork is backward-compatible. To comply with the new rules, most miners must upgrade.
At the programming level, soft forks are frequently used to implement new features that won't be visible to the network users.
Soft forks can be used to add new types of transactions. To add new transactions, it only requires that the participants and the miners understand the new transactions.
In the blockchain, a hard fork makes a very prominent change in the blockchain protocol. As a result, two branches are formed. One branch follows the previous version, and the other follows the newer one.
The hard fork makes a change that forces everyone to upgrade the software. Unlike Soft Fork, it is not backward-compatible with the older version of the software. To recognize new blocks, users need to upgrade their software.
SegWit (Segregated Witness)
Segregated Witness (SegWit) refers to a change in the format of transactions in bitcoin.
This fork was developed to reduce the size of transactions so more can take place at one time. This increases block capacity and decreases transaction time.
SegWit was also intended to speed up the validation process as more transactions are stored in one block. Segregated witness is more of a software upgrade, i.e., a soft fork, but it may have prompted some of the bitcoin hard forks.
The main purpose of SegWit is to prevent transaction malleability in bitcoin.
It also solves the blockchain size limitation issue, which reduced bitcoin transaction speed.
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