Learning the friendly way

When learning about paper wallets it's likely that you came across this option nestled safely in the “cold wallet” section in the different types of cryptocurrency wallets. While the popularity of paper wallets has somewhat declined, there are still a strong number of crypto enthusiasts that still appreciate the completely offline storage option. Let's explore what is a paper wallet and whether it's suited to your crypto needs.

What is a paper wallet?

For those needing a recap, a paper wallet is a piece of paper that holds both one’s public and private keys in both alphanumeric form and QR codes. Known as a non-custodial cold storage wallet, paper wallets allow the holders to manage their own private keys and remain entirely offline. A private key is a unique code that grants a user ownership of their wallet and digital funds, akin to a pin code for a bank account.

Creating paper wallets is incredibly simple, and can be completed in a matter of seconds. As a paper wallet "functions" offline, this makes them free from hackers, unlike a software wallet which is operated online. However, the paper wallet still carries its own set of risks in that the piece of paper cannot get damaged or lost.  Many Bitcoin paper wallets have been lost due to the paper fading or the information becoming illegible.

The objective of keeping a paper wallet is to keep the private key safe whether its for a Bitcoin paper wallet or one designed to hold any other cryptocurrency. Each crypto wallet will be designed to store one specific cryptocurrency.

The term Bitcoin wallet is a generic term for any type of crypto wallet, whether a paper wallet, a software wallet or any type of online wallet or hot wallet. The only distinguishing factor is that the digital wallet only holds Bitcoin.

Precautions for using paper wallets

While storing the paper wallet securely in a safe location makes the top of the list here, other precautions to take are listed below:

Quality printer

Always use a good quality printer. Ensure that your paper wallet is printed with a high-quality inkjet printed to ensure that the characters on the paper don’t fade or bleed over time. Should this happen you could lose access to your funds. 

Don’t share private keys

Never share your private keys with anyone. Paper wallets are designed to show the public key QR code on one side and the private key on the other. When sharing your public key with someone be sure not to accidentally share the private key as then they could gain access to your funds. 

Be sure to set up a change address

If you don't set up a change address before sending funds from a paper wallet, the leftover funds will go to waste. A change address is a separate wallet address that picks up the change from a transaction. 

If you have, for example, 100 BTC in your Bitcoin paper wallet and only spend 0.50 BTC, the remaining  99.5 BTC will either be sent to the change address or lost from your own paper wallet entirely. 

Paper wallets are not designed to be used for sending funds, but instead for receiving and storing funds for the long term. Hot wallets (as opposed to paper wallets) are better suited to users looking to frequently send and receive funds. There are plenty of crypto wallets on the market, ensure that you find the most convenient one for you.

Alternatively, funds can be stored in a yield-generating account where your funds can earn interest. Tap offers a wallet of this nature conveniently located on the app, which allows users to hold several crypto and fiat currencies and earn rewards based on each currency. The longer the funds remain there, the higher the yield.

While paper wallets remain offline, there are still risks associated with them. Be sure to adhere to the above precautions in order to keep your funds safe. 

Are paper wallets still relevant?

In the early days of crypto trading, paper wallets were strongly advised due to the offline safety of storing private keys. They began to be popular around the end of 2010 but unfortunately have been on a decline in more recent years as innovation in the industry has picked up momentum. A paper wallet is resistant to online attacks as long as it's made correctly; you can't hack a piece of paper.

In the past, people could create and print paper wallets for their crypto right from their exchange accounts. But now experts believe that hardware wallets are a more secure option, so most major exchanges don't offer this service anymore.

While some die-hard crypto traders still believe in the solid security of paper wallets, there are plenty of more innovative options available on the market today. 

If you have ever researched a new cryptocurrency, you have likely encountered a lengthy PDF filled with technical language, diagrams, and bold claims about innovation. That document is called a white paper, and in crypto, it is often the first and most important source of information about a project.

So, what is crypto white paper exactly? In simple terms, a crypto white paper is a detailed document published by a blockchain project that explains its purpose, technology, economic model, and long-term strategy. It serves as both a technical explanation and a research tool for investors, developers, and the wider community.

Understanding how to read and evaluate a white paper is a key skill in cryptocurrency research. It can help you separate serious projects from hype-driven ventures and make more informed decisions. Let’s dive in and figure out what it is all about!

What Is a Crypto White Paper?

A white paper, in general business and information technology contexts, is a formal document that explains a problem and proposes a solution. Companies often use white papers in marketing, engineering, or finance to present research, methodology, and technical insight.

In the cryptocurrency space, a white paper is a foundational document that outlines how a blockchain project works and why it exists. It is usually published before or during a token launch, sometimes alongside fundraising efforts such as an initial coin offering (ICO).

A crypto white paper typically includes these key elements:

• A clear problem statement
  
  
• A proposed solution using blockchain technology
  
  
• Technical architecture and system design
  
  
• Details about consensus mechanisms, cryptography, and distributed computing
  
  
• Tokenomics, including supply, distribution, and incentives
  
  
• A development roadmap and timeline
  
  
• Information about the founding team
  
  

Unlike a brochure or simple website page, a white paper aims to provide comprehensive detail. It blends technology, business strategy, and economic modeling into a single well-structured document. Because it is self-published by the project team, its credibility depends on the transparency and clarity it provides.

The Bitcoin White Paper: Where It All Started

The concept of a crypto white paper began with Bitcoin.

On October 31, 2008, an individual or group using the name Satoshi Nakamoto published a nine-page document titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” This white paper introduced a new model for digital money that removed the need for a bank or centralized authority.

It described a peer-to-peer network where financial transactions are verified through cryptography and recorded on a distributed ledger. It also proposed a consensus mechanism that prevents double-spending without relying on trust.

Although short, the Bitcoin white paper combined technical precision with a clear use case: electronic cash that operates independently of traditional financial institutions. It set the standard for future blockchain documentation and remains one of the most influential documents in modern finance and technology.

The Ethereum White Paper: Another Milestone

After Bitcoin, other projects built on its ideas while addressing perceived limitations.

In 2014, the Ethereum whitepaper was published by a young developer named Vitalik Buterin and titled “Ethereum whitepaper: A Next Generation Smart Contract & Decentralized Application Platform.”

In the whitepaper, Vitalik outlines how the intentions of the Ethereum platform differ from Bitcoin’s. The whitepaper outlined how the platform would allow developers to create and launch decentralized applications (now commonly known as DApps) and included technological solutions that backed these goals, such as the Ethereum Virtual Machine and smart contracts.

Other Notable Crypto White Papers

Litecoin presented itself as a faster alternative to Bitcoin, adjusting transaction speed and mining parameters. Similarly, XRP focused on cross-border payments and improving efficiency in global finance.

Each of these white papers reflects an evolution in blockchain innovation. They identify specific market problems, propose technical solutions, and refine the structure of crypto documentation.

White Papers vs. Litepapers

Not every project releases a lengthy technical document. Some publish a “litepaper,” which is a shorter and more accessible version of a white paper.

A traditional white paper may span 20 to 100 pages and include detailed engineering explanations, diagrams, and token distribution models. It often targets developers, analysts, and experienced investors.

A litepaper is typically 5 to 10 pages long. It provides a high-level overview of the project’s purpose, utility, and strategy without going deeply into cryptography or distributed computing architecture.

Neither format is inherently better. Complex blockchain infrastructure projects may require extensive technical writing, while simpler applications may communicate effectively with a concise document. Some projects publish both versions to serve different audiences.

What to Look For in a Crypto White Paper

When evaluating a cryptocurrency project, the white paper should be your starting point. However, reading it critically is essential.

First, review the problem statement. Does the project clearly identify a real market need? Strong white papers define a specific issue in finance, technology, or another industry and explain why existing solutions are insufficient.

Next, examine the proposed solution. Does blockchain genuinely improve the process, or is decentralization being used unnecessarily? A credible project demonstrates why distributed computing, cryptography, and tokenization add value.

Technical credibility is another key factor. The document should provide sufficient detail about architecture, consensus mechanisms, and scalability without hiding behind jargon. Diagrams, statistics, and structured explanations often signal thoughtful engineering.

Tokenomics also deserves careful analysis. Look at how tokens are distributed, whether supply is fixed or inflationary, and what incentives drive participation. A clear economic model supports long-term sustainability.

Team transparency is equally important. Are the founders identified? Do they have relevant experience in software development, finance, or entrepreneurship? Finally, watch for red flags. Overly promotional language, guaranteed returns, vague promises, plagiarism, or unrealistic timelines can undermine credibility.

How to Read and Analyze a Crypto White Paper

Approach a white paper as you would any serious research document.

Begin with the abstract or executive summary. This section provides an overview of the project’s purpose and proposed solution. Check the publication date to ensure the information is current, especially in a rapidly evolving market.

As you read, focus on understanding the core concept rather than every technical detail. You do not need advanced knowledge of algorithms or cryptography to grasp whether the project addresses a meaningful problem.

Ask critical questions. Does this project need to exist? Is the solution feasible? Can it compete with established alternatives? What risks might arise from regulation, competition, or technological limitations?

Compare the project with similar initiatives in the blockchain ecosystem. Differentiation matters in a competitive industry shaped by innovation and rapid product development.

Beyond the white paper, conduct broader due diligence. Review the project’s website, examine code repositories if available, analyze community discussions, and research team members’ professional backgrounds. A white paper is a foundation for understanding, not the final word.

Why Crypto White Papers Matter

For investors, a white paper is often the primary research document before committing capital. It provides insight into the project’s structure, goals, and potential risks. It also creates a benchmark: progress can later be compared against the original roadmap and promises.

For the broader crypto ecosystem, white papers encourage transparency and knowledge sharing. They document new approaches to consensus, tokenization, decentralized finance, and application software design. Over time, they contribute to the historical evolution of blockchain innovation.

For project teams, writing a white paper forces strategic planning and clarity. It requires defining objectives, outlining methodology, and articulating value. A well-written document can build confidence within a competitive market.

Despite the rapid growth of blogs, social media, and promotional content, white papers remain relevant. Serious projects continue to treat them as essential documentation.

What Does a Crypto White Paper Look Like?

A typical crypto white paper is a professionally formatted PDF, usually between 10 and 100 pages. It often begins with an introduction and abstract, followed by sections on the problem statement, technical architecture, tokenomics, roadmap, and team.

You may see diagrams illustrating network structure, charts explaining token distribution, and occasionally mathematical formulas or code snippets. References or citations sometimes appear at the end.

Most projects make their white papers available for download on their official website. The layout should appear structured and consistent, reflecting attention to detail and technical writing standards.

Conclusion

A crypto white paper is much more than a marketing document. It is a structured explanation of a blockchain project’s vision, technology, and economic model. If you are exploring cryptocurrency as an opportunity or simply expanding your understanding of the industry, reading white papers is essential. They help you evaluate credibility, assess risk, and compare multiple solutions for different issues.

However, a white paper is only the starting point. Independent, constant research remains necessary in a fast-moving and innovative market. By learning how to interpret these documents carefully, you equip yourself with one of the most valuable tools for decision-making in the crypto sphere.

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You've likely heard the term being thrown around in the cryptosphere. In this piece, we're breaking down what a fiat wallet is, why one might choose to use it, and how to create one should you wish to.

What is a fiat wallet?

A fiat wallet is a place where one can digitally store, send and receive a fiat currency. Very similar to an online bank account, a fiat wallet is simply an account which has a stored value of fiat currencies.

Most crypto exchanges have a fiat wallet feature where they offer fiat wallets alongside crypto wallets to provide users with a more efficient means of buying and selling digital assets. A fiat wallet allows users to bypass delays caused by bank transfers when depositing a fiat currency on an exchange. 

Fiat wallets are also common among fintech products and require e-money licenses in order to operate. In these cases, users will typically gain interest or other benefits from storing their fiat money in these wallets. 

Before we continue, a fiat currency is a government-issued currency such as the US dollar, Euro, British pound and other major global currencies. Fiat currencies are specific to a country or region and are operated by the local central bank in the area.

How does a fiat wallet work?

A fiat wallet, like a crypto wallet, is used to store currency. The money in a fiat wallet, unlike funds held in a cryptocurrency wallet, is merely regular fiat cash, similar to that in your traditional (fiat currency) bank account. 

Users may use a fiat wallet on a crypto exchange to make quick transactions between a fiat currency and a cryptocurrency without having to go through their banks, or on a fintech platform to gain interest. Fiat wallets act as a stepping stone that connects the worlds of conventional finance and cryptocurrency.

An important note regarding a fiat wallet: Fiat wallets are not connected to any blockchains and remain entirely outside of the crypto ecosystem. While they provide easy points from where one can access the crypto world, they are not a necessity. Fiat money holds the same value whether held in cash, in your traditional bank account or in your fiat wallet on an exchange.

Why use a fiat wallet?

To summarize, people using a fiat wallet are doing so for liquidity reasons. It might take several working days to complete a bank transfer without a fiat wallet. In certain cases, this may be an issue for the user if:

• They want to buy or sell cryptocurrencies quickly during periods of steep price changes
• They don't want their portfolio to suffer during periods of volatility 

If the value of a crypto asset drops dramatically overnight, you may have to wait three business days for your fiat money to be deposited onto the platform before you buy the asset. While in normal circumstances this might be acceptable, in this situation you would miss out on an opportunity to acquire it at a good price. If you had a fiat wallet, however, the transaction would be completed quickly and you could benefit from those price drops. 

This is a scenario that many cryptocurrency traders and investors find themselves in from time to time. In the crypto market, speed frequently translates to increased profits while sluggish transactions can be quite expensive.

Is your money safe in a fiat currency wallet?

A fiat wallet is only as secure as the platform on which it is hosted. There is no difference in safety between the cryptocurrency and fiat wallets, their security levels are tied to that of the platform. 

Providers of crypto and fiat wallets employ the most secure security measures to safeguard customer assets. In addition to encrypted data, the crypto and fiat wallet provider will urge customers to utilize multi-factor authentication, which would include using a strong password in combination with another security measure like biometrics or a temporary password.

Store your fiat currencies in fiat wallets on Tap

Should you wish to deposit money into a safe an regulated fiat wallet solution, you can do so using the Tap app. From the home screen, select the Cash wallet option, and select a specific fiat wallet. You can then choose between debit card or bank transfer options, and execute the transaction. 

The funds will clear in your fiat wallet as soon as the bank clears the transaction, after which you are able to use the funds as you please, or store them indefinitely. Users also have the option to transfer funds from their fiat wallet directly to their bank account, simply select this option from the fiat currency you have chosen.

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As you navigate the waters of the cryptocurrency market you're likely to come across a term called "coin burning". In this article, we're exploring the process used to manage the token supply of projects, a means for companies to manually alter the supply (and thereby demand) of a token's circulating supply. While not adopted by every project, coin burning has proven over the years to be successful in increasing the price of a digital currency.

What Is A Coin Burn

Diving right in, a coin burn is the process of removing a certain number of tokens from circulation by sending them to an invalid address, a "black hole" of sorts. This process is written into the project's code and implemented at various increments as outlined in the whitepaper. While Bitcoin doesn't make use of coin burning, many projects on the Ethereum network, particularly ERC-20 tokens, have been known to implement it.

Through the use of a smart contract, also known as a burn function, the network would remove a specified number of tokens from circulation, decreasing the total supply and thereby (hopefully) increasing the demand. Coin burns have been known to lead to an increase in price, as the supply-demand ratio is altered.

An Example Of Coin Burning

A top 10 cryptocurrency project underwent a coin burn last year that is believed to be the biggest layer 1 token burn to date. 88.7 million LUNA, the native coin to the Terra project, were burned in November 2021 following a vote by the community. This was effectively worth $4.5 billion at the time. A few days following the coin burn the LUNA token hit a new record high. 

The burn aimed to remove value from Terra’s community pool, but in reality, it simply moved the value from the pool to the individual holders of the cryptocurrency.

Bitcoin Cash and Stellar are two other high profile cryptocurrencies that have made use of the coin burning initiative. Shiba Inu is another cryptocurrency to have undergone a coin burn, although this wasn't the initial intention of the project. The project's developers gifted half of the SHIB supply to Ethereum creator Vitalik Buterin, who went on to donate 10% and burn the remaining 90%.

How Does Coin Burning Work?

Should a project wish to implement a coin burn they will need to create a smart contract. Smart contracts are digital agreements that execute when certain criteria have been met. Say a project wants to implement a coin burn every 200,000 blocks, they will create the burn function to include this instruction.

When this milestone is achieved, the coins will automatically move from the designated wallet to a wallet address that does not have a private key. Without a private key, these coins can never be recovered. The coins will then be sent from the one wallet address to the other and effectively be removed from circulation. The transaction (burn) will be added to the network's blockchain records and be available to view through the blockchain explorer.

The Downside To Coin Burning

Before you get into a project that undergoes coin burning it is important to note that coin burning does not guarantee an increase in the coin's price. The increase in price will depend on the network, the market climate and the current sentiment. During the Shiba Inu coin burn, while the price rose considerably, it soon returned to a more stable and substantially lower level.

Coin burning can also be used by ill acting developers to deceive the community. Say a project has a total supply of 100 million tokens and allocates 10 million to the platform's developers. They could then burn 40 million tokens, increasing their hold to 60% of the circulating supply on the network.

As with all transactions conducted on the blockchain, all payments are irreversible meaning that once you burn coins they can never be recovered.

What Is Proof Of Burn?

Not to be confused with coin burning, Proof of Burn (PoB) is a consensus mechanism similar to Proof of Work and Proof of Stake. The model utilizes an element of coin burning in its mining practice and is known to use considerably less energy than its PoW counterpart.

The process requires miners to burn tokens in order to participate in the mining process. The more coins burned the more blocks they can create, meaning the more rewards (in the form of transaction fees) they can earn. Miners are still required to use mining hardware. The benefit of this is to provide a less energy-intensive blockchain network that can run optimally through a network of decentralized mining participants.

Understanding Financial Ratios for Traders

Let's face it, the world of finance can be pretty daunting, especially for those just starting out in trading. However, getting a solid grasp of the fundamentals is crucial if you want to make smart decisions, one fundamental aspect that is beneficial to understand is financial ratios.

These ratios provide a window into a company's financial health and performance, giving you valuable insights before considering their securities. In this article, we'll break down what financial ratios are, the different types, and how they can give you a major edge as a trader.

What Exactly is a Financial Ratio?

At its core, a financial ratio is just a mathematical calculation that analyzes the relationship between various financial metrics. The goal is to give you a clear snapshot of how a company is doing financially, to help you decide if their securities are worth a look or not. Ratios allow you to compare companies in the same industry, or analyze how a single company's performance has trended over time.

The Four Main Categories of Ratios

While there are numerous ratios out there, they generally fall into four buckets: liquidity, solvency, profitability, and valuation ratios. Let's go through each one:

Liquidity Ratios

These measure a company's ability to pay off debts coming due in the near term. The current ratio is one of the biggies here - it's current assets divided by current liabilities. A ratio of 2 or above is considered solid, showing the company can cover those immediate obligations.

Solvency Ratios

Unlike liquidity, solvency ratios look at whether a company can sustain itself long-term and pay off debt over a longer period. The debt-to-equity ratio is key - calculated as total debt divided by total equity. A high ratio here could signal the company is a bit too debt-reliant for comfort.

Profitability Ratios

As the name suggests, these gauge how profitable a company's operations truly are. Some heavy hitters include gross profit margin, net profit margin, and return on equity (ROE). By analyzing these against competitors, you can see who's running a tighter, more lucrative ship.

Valuation Ratios

These help assess whether a company's stock is undervalued or overvalued at its current price. The price-to-earnings (P/E) ratio is widely used - it's the stock price divided by earnings per share. A high P/E could mean the stock is pricey relative to earnings.

Why Financial Ratios Matter

There are numerous benefits to using ratios to size up potential securities:

1. They provide a clear, quantifiable way to evaluate a company's financial strengths and weaknesses very quickly. A few key ratios can immediately flag potential red flags.
2. You can compare ratios for companies in the same sector to see who is leading the pack financially and who is lagging behind.
3. Tracking ratios over multiple years allows you to spot positive or negative financial trends that may impact future performance.

How to Apply Ratios

Let's say you're considering buying shares of a company. Analyzing the current ratio and debt-to-equity ratio first can give you a feel for their liquidity and solvency positions. If those check out, you may want to then look at profitability metrics like net margins to gauge how efficiently they can turn revenue into profits.

Ratios can complement other analysis techniques like evaluating fundamentals, studying charts, etc. They can also sometimes forewarn you to steer clear - like if a company continually has plummeting profitability ratios year after year.

Key Ratio Terminology

Here are some common ratio-related terms to know:

Net Income: The bottom line profits after all expenses are deducted from revenues.

Turnover Ratio: Measures how efficiently assets are used to generate sales/revenue.

Liquidity: A company's ability to pay short-term debts and stay operational.

Debt-to-Equity: Compares total debt levels to shareholders' equity to assess financial leverage.

ROI: Tracks how much profit is generated relative to the initial.

Gross Profit Margin: Shows how much profit a company captures from each dollar of sales.

In Conclusion

Wrapping things up, it’s clear that financial ratios are indispensable, whether you’re just dipping your toes into finance or you’ve been around the block a few times. They give us a clear picture of a company’s financial health and performance, helping anyone make smarter decisions.

At the end of the day, knowing your way around financial ratios is crucial for anyone looking to make smart decisions in finance. There are quite a few ratios to get to grips with, but focusing on the key ones in liquidity, solvency, profitability, and valuation can really enhance your understanding and effectiveness.

Both hard and soft forks are fundamental to blockchain development and cryptocurrency evolution. The hard fork is what offers the ability for different cryptocurrencies to split into two and allows them to compete with each other, offering new features or security upgrades that appeal to users looking to buy in a particular niche.

Both soft and hard forks happen whenever a community makes a change to the blockchain’s protocol or basic set of rules. This is different from an update: updates often lead to improvements in the software (for example, adding new features), whereas soft and hard forks can result in changes that may not be compatible with existing code.

Cryptocurrency forks are important because they can be used to change blockchain rules, instead of forcing users to upgrade their software. This allows new cryptocurrency development teams to fix bugs and issues without forcing everyone else onto new software versions. Soft and hard forks enable cryptocurrencies that have diverged from the original codebase to solve problems using a consistent protocol across two branches.

A hard fork creates a new blockchain that shares the same history as another blockchain. The best way to imagine it is like splitting an old road into two new roads, both of which have their own unique set of rules and paths. To understand the term and concept of blockchain forks more accurately, let's look at the difference between a hard fork and a soft fork.

Cryptocurrency forks: Hard Forks and Soft Forks

What Is A Hard Fork?

A hard fork is when a blockchain splits in two and a new cryptocurrency network is created. The hard fork happens when there’s a fundamental change to the blockchain, such as upgrading one of its core technical components (ie: blocksize). This requires everyone who uses that blockchain to upgrade their software or else they will no longer be able to participate on the network. Users can also opt to be a part of both blockchains that result from cryptocurrency forks.

When a hard fork occurs two unique blockchains are created that each have their own cryptocurrencies, and is usually a result of a community split over a decision or vision for the future. A hard fork is a common occurrence in the cryptocurrency industry, with many big cryptocurrencies being the product of a successful hard fork.

An Example of a Hard Fork: the Bitcoin Cash Fork

Bitcoin Cash is a prime example of a hard fork. In 2017, following a disagreement within the Bitcoin community about the future of the original cryptocurrency, a group of developers and miners got together to form a new and improved version known as Bitcoin Cash. The Bitcoin Cash hard fork was implemented and BCH was created, with several new additions to the original blockchain code.

The most significant change to the Bitcoin Cash network was the increase of the block size to 8MB, allowing for faster transaction speeds, more transactions able to get verified at once, and lower transaction fees. The network also increased the difficulty to ensure the security of the network would not be compromised. In March 2022, the block size limit was increased to 32MB.

There have been many Bitcoin forks over the years, with Bitcoin Cash and Litecoin being the two most well-known.

What Is A Soft Fork? 

Soft forks is backward-compatible and require upgrades only if you want to access new features. For example, soft forks that increase transaction speed don’t require everyone to upgrade their software in order to enjoy the new feature.

If you don’t upgrade your software, however, you will not be able to take part in any future transactions using the new feature (ie: faster transaction speeds). Soft forks are a great way for new changes to be implemented without creating an entirely new cryptocurrency.

An Example Of A Soft Fork: The SegWit Upgrade

In 2015, the Bitcoin blockchain underwent a soft fork known as the Segregated Witness (SegWit) Bitcoin protocol update.

Before the SegWit upgrade, Bitcoin's protocol was both more expensive and slower, with transactions costing about $30 each and taking around an hour to complete. The inventors of the SegWit change recognized that signature data accounts for 65% of a transactional block. As a result, SeGWit proposed moving the effective block size from 1MB to 4MB.

The motivation for this increase was to separate or delete the signer data from the transactional data on every block of the blockchain, allowing for greater transaction throughput per block.

With the soft fork, the old Bitcoin blockchain was able to accept both new 4MB and 1MB blocks at the same time. The soft fork enabled the existing nodes to also validate the new blocks via a clever engineering approach that formatted new rules without breaking existing ones.

What To Do When A Fork Is Announced

When it’s announced that a fork is coming, you should first wait for the dust to calm down before making any big decisions, such as buying or selling your tokens. Keep in mind that sometimes forks can be contentious and not everyone will agree on the path forward, meaning that there may be a lot of confusion and volatility in the coming days as people react.

 In Conclusion

A hard fork is when blockchain technology is split into two resulting in two unique blockchain networks with their own cryptocurrencies. A soft fork is when a blockchain simply upgrades or incorporates new features and allows users to decide whether they would like to continue using the old version, or upgrade their software protocol to make use of the new features.

Either way, cryptocurrency forks are a common occurrence in the blockchain space and have been the start of many different networks. The most iconic hard forks include the likes of Litecoin, a hard fork from the Bitcoin network, Ethereum Classic, a hard fork from the Ethereum network, and Bitcoin Cash, a hard fork of the Bitcoin network.

Both soft and hard forks allow innovation within the blockchain space to evolve, making space for new features, more efficient means of executing an action, and other chain improvements. Hard forks in particular have shed light on new innovations without creating a blockchain network from scratch.