Cryptocurrencies like Bitcoin and Ethereum are powered by decentralized, open-source software called a blockchain. A fork happens whenever a community makes a change to the blockchain’s protocol, or basic set of rules. Cryptocurrencies like Bitcoin and Ethereum are powered by decentralized, open software that anyone can contribute to called a blockchain. They’re called blockchains because they’re literally made up of blocks of data – picture a really long train – that can be traced all the way back to the first-ever transaction on the network. And because they are open source, they rely on their communities to maintain and develop their underlying code. A fork happens whenever a community makes a change to the blockchain’s protocol, or basic set of rules. When this happens, the chain splits — producing a second blockchain that shares all of its history with the original, but is headed off in a new direction.
Most digital currencies have independent development teams responsible for changes and improvements to the network, much in the same way that changes to internet protocols allow web browsing to become better over time. So sometimes a fork happens to make a cryptocurrency more secure or add other features. But it’s also possible for the developers of a new cryptocurrency to use a fork to create entire new coins and ecosystems.
Just like all software needs upgrades, blockchains are updated for a variety of reasons: