What Is A Bitcoin Fork?
A Bitcoin fork is a term used to describe a new project set up by a group or individual that takes the Bitcoin codebase and a copy of the Bitcoin blockchain (a record of previous Bitcoin transactions). These new projects run on their own set of rules different from those that govern Bitcoin, however, because they are derived from the Bitcoin blockchain they can credit holders of Bitcoin with new 'forked' coins on their new blockchain. Meaning a Bitcoin holder will have both their original Bitcoins and 'Forked' coins.
At Forkdrop.io we maintain a complete directory of these forks.
Bitcoin is built on the concept called a blockchain, a hisorical record of all bitcoin transations ever conducted. The idea of a blockchain can be visualised like a textbook with each page performing the role of a block, pages flow one after the other, just like blocks on the blockchain. The main feature of a blockchain is to provide publically verifiable proof, in our book example it would be shown as the writing one page is mathematically validated in combination with the result of the previous page, so that an attempt to rearrange the order of the book, tear out pages or change the text on any existing page would invalidate every subsequent page.
Adding new blocks is a critical process in the system which happens approximately once every 10 minutes. The work is carried out by a Bitcoin miner, a computer connected to the network whose role is to generate new blocks and compete with other miners to be the first to do so. Once a block is submitted the rest of the network has to validate the it before propagating to the blockchain and starting work on the next block.
As per Satoshi's design, to be valid, the block must meet an exactly-known set of criteria. First, it must not violate any of the coin ownership, scarcity, transaction format, script-language execution rules, and double-spend rules of the network. Second, it must have adequate proof-of-work according to the difficulty adjustment algorithm and history of preceding blocks.
If someone tries to propagate an invalid block, the Bitcoin network rejects it and continues on. Also, valid blocks can be discovered, but are beaten in propagation by another blocks, These are called Orphan Blocks if they are not mined upon in favor of another block at the same height.
In the end the blockchain name is given to the longest chain of valid blocks.
The UTXO Set
UTXO set, an acronym meaning
Unspent Transaction Output, is a log containing the current ownership of bitcoin
and associated addresses. As new blocks are mined with a new set of transactions on the Bitcoin network, the UTXO set is modified to incorporate the change of ownership reflected by those transactions.
The UTXO set is fairly small in size as it contains no historical information about which address used to hold Bitcoin as that information is stored in the blockchain itself. For example: if Alice owned BTC in the past but later sold it, she no longer has a corresponding entry in the UTXO set. However, the record of when she received and when she sent it away stays in the full record of the Blockchain. Roughly speaking (and this varies over time), the UTXO set is about 1/60th the information of the full blockchain data.
Bitcoin Fork Projects
On many occasions recently, a group of individuals decided that they would prefer to have a different ruleset for bitcoin for a variety of reasons (often this is described on the project's homepage or project announcement post, which we link to on the main page of Forkdrop.io ). Implied is a declaration of a different ruleset imposed by a different set of code, this is often a change to a different proof of work, consensus algorithm, and/or block size.
According to the Bitcoin blockchain, these rule changes are invalid and mining won't produce a valid block to add to the bitcoin blockchain. Miners and nodes being governed by the rules of the forked project will be able to produce valid blocks, and in turn, they will consider new bitcoin blocks to be invalid and won't add them to their chain. This is where a fork happens and what was the bitcoin blockchain is now split into two separate and incompatible projects.
At this point, the UTXO set is now two different UTXO sets which are updated via different new blocks generated by miners under different rules.
We keep an up-to-date directory of Bitcoin forks on our main page. We also track a slightly different variety of blockchain project called a Bitcoin Airdrop, which we describe in our What Is A Bitcoin Airdrop? guide.
To be sustainable as blockchains, the coins need to be traded for some value such that the miners or validators continue to validate blocks for the mining rewards. Our main page also tracks a list of exchanges that trade some of these coins.
If you have passively held BTC over time, this implies that you might own some of these forked coins. You can find out more on this in our How Do I Figure Out Which Bitcoin Fork Coins I Own? guide.
If you do own some of these forked coins then you will need to follow a procedure to make claim to them. We have an in-depth guide which covers the process for claiming this value while taking precautions for preserving your security and privacy: A Novice's Guide To Claiming Forked Bitcoin Value Securely And Privately