When a blockchain splits into two separate paths, both carrying the same transaction history, it is known as a chain fork. This usually occurs due to a disagreement among network participants about the rules governing the network. Each path continues to be extended with new blocks, creating two separate chains that eventually result in two different cryptocurrencies.
Chain forks can be categorized as either soft forks or hard forks based on their impact on the network. Soft forks involve a temporary divergence in the blockchain that eventually merges back into a single chain, while hard forks create a permanent split that leads to the creation of a new, distinct cryptocurrency.
Chain forks can create uncertainty and confusion in the cryptocurrency community as users and miners may have differing opinions on the forked chain’s validity and future potential. It is important for participants to stay informed and be prepared for the potential consequences of a chain fork, such as changes in the value and usability of the affected cryptocurrencies.
