Cryptocurrency experts and enthusiasts are familiar with the terms hard forks and airdrops, but only a few know the difference between these two. You can visit Quantum Ai to learn all about the mechanism of bitcoin trading. Cryptocurrency hard forks and airdrops significantly impact the spot value of a coin.
Every cryptocurrency user might have noticed an increment in the number of tokens in their wallet, which people call an airdrop. On the contrary, hard forks are one of the prominent reasons that can cause an airdrop to create awareness among the cryptocurrency community members about the new flanged version of a digital coin. These two terms resemble one another in many ways, but that does not mean hard forks and airdrops are similar.
There are prominent distinctions that lie between these two. For example, hard forks result in the branches of a blockchain; on the other hand, airdrop does not necessarily split the electronic ledger. The above-listed portion explains some massive differences between airdrops and hard forks.
- A hard fork is a cryptocurrency ecosystem that results in different parts of the blockchain. The primary reason why the splits in blockchain occur is that some developers or a group of miners decide to make some changes in the source code of the existing blockchain. Many people alter the source code of an existing blockchain to create their cryptocurrency. But a hard fork is accepted by a large part of the community.
- The protocols on both parts of the blockchain are utterly different, which changes the mining dynamics and system of the blockchain.
- Airdrop is one of the primary reasons people confront an increment in the number of cryptocurrencies in their wallets.
- Many developers of different cryptocurrency models use airdrops to create awareness among users regarding the new flanged result of hard forks.
Cryptocurrency hard forks!
The only reason cryptocurrency hard forks are an exceedingly important part of this community is that it leads two branches of the blockchain. The more a cryptocurrency will undergo hard forks, and the more blockchain will split into different parts. For example, bitcoin, a popular cryptocurrency, has been forked numerous times, and due to the massive number of hard forks, there are many parts of bitcoin’s blockchain.
A hard fork is not an independent decision as developers and miners of a cryptocurrency community collectively form decisions on hard forks. A hard fork is necessary when developers want to expand their cryptocurrency model in different directions.
Due to hard forks, the two models of a particular cryptocurrency do not resemble each other numerous ways. For example, bitcoin cash and original bitcoin cannot be the same. Halving and forks have accounted for a crucial moment in the cryptocurrency community, whether hard or soft. Hard forks have always led to numerous speculation in the industry. Cryptocurrencies named after bitcoin have such an immense reputation in the marketplace because bitcoin has hard forks.
People usually refer to airdrop as a jackpot in the cryptocurrency community. This is because due to an airdrop, the number of digital tokens present in the wallet of a few specific individuals increases automatically, making an airdrop resemble a hard fork.
Some of the prominent reasons why a cryptocurrency network decides to airdrop free tokens in the wallet of users include initial coin offerings, hard forks, and freebies to increase the awareness of a token. For example, once a cryptocurrency has been hard forked to make people familiar with the new model of that particular coin, the developer team decides to airdrop that currency into the wallet of some users.
Airdrop might sound very exciting to cryptocurrency users, but it is not very good for the ecosystem of digital currency marketable. Only a few people decide to hold the cryptocurrencies they availed from airdrops, as others try to sell off the tokens immediately after they get them. If people sell off a cryptocurrency in massive amounts, its spot value declines.
The above-listed portion explains a detailed overview of cryptocurrency hard forks. Although Bitcoin XT was the first one and bitcoin cash is the most successful, bitcoin gold is also trendy.