Chain Split

Understanding Chain Splits

Chain splits occur when developers duplicate the codebase of an existing project and start their own independent development based on it. This results in the separation of one or more distinct projects from the original “parent” project.

Cryptocurrency forks, also known as chain splits, are coins that have copied their codebase from another, older cryptocurrency and continue to develop independently from the parent coin.

Since many cryptocurrencies, especially in the early years of the industry, were released as open-source projects, forking a project is often relatively easy, even for developers without the skills to create their own coin from scratch. As a result, some of the largest cryptocurrencies today are forks or even forks of forks of different parent projects.

Chain splits can occur for various reasons. In some cases, developers believe that a cryptocurrency is generally good but could benefit from specific technical adjustments. This was the case with Litecoin (LTC), which split from Bitcoin (BTC) to enable faster block generation time, increased total supply of coins, and a different hashing algorithm.

Other times, chain splits may arise from ideological differences. For example, Bitcoin Cash (BCH) was forked from Bitcoin due to differing opinions on how to scale the coin for a larger user base. Ethereum Classic (ETC) also split from Ethereum (ETH) over a disagreement about whether cryptocurrency developers should have the ability to modify data recorded on the blockchain in order to return stolen coins to their original owners.

Occasionally, a crypto fork can be a simple joke, like Dogecoin (DOGE), a fork of Litecoin that was inspired by an internet meme and at one point reached a market capitalization exceeding $2 billion.