Bitcoin is open source. That means the code is available in a human-readable format. A good programmer, or team of programmers can study it and see exactly how it works. Most commercial software is not open source. It is only available to you in machine-readable format, so you don’t know precisely how it works.
Openness is another reason to believe in the efficacy of crypto currencies.
Being open means people are free to copy the code and re-release it. Usually they do this with modifications. This is called “cloning”. Litecoin is an early clone of Bitcoin. It is actually “the” early clone of Bitcoin. Karbowanec is a clone of Monero. (I’ll discuss these crypto currencies in the next newsletter, and others too.)
Incidentally, economist Tyler Cowen of the Marginal Revolution, who has a lot of good essays on various topics, used Bitcoin’s clonability to write this idiotic prediction of how subsequently cheaper clones would inevitably drive the price down to nothing. It’s not worth reading. It’s only worth observing that the old school has consistently been wrong about crypto currencies.
If you want specifics, Cowen, seemed to assume that one coin can be a drop-in replacement for another paying no attention to importance of the communities, teams, and nuances of each. This is so far off the mark. It’s like arguing that restaurants will all go out of business because subsequently less expensive restaurants are able to open next door.
Anyway. That’s a clone.
A fork is a little different.
A crypto currency is not the just the code that runs it. It’s also the ledger, ie the Blockchain, ie the history of all the transactions.
A fork to a crypto currency happens when part of a community adopts a change that isn’t backwards compatible, and the rest of the community remains on the old version. So when the change happens, the ledger splits in two. Each has the same history, but going forward, each will track its own transactions. Everybody who had the currency before the fork now has both currencies.
Separating them out is a bit of a pain, but we should consider ourselves lucky to have such problems.
Forks are usually the subject of enormous public debate, sometimes bitter, sometimes not. They are preceded by a lot of communication to the community, and they happen at a specific block number in the currency’s blockchain.
Some people have pointed to the debates as evidence of the instability of the crypto community, but I complete disagree. This is what right looks like. Better open debate, even if hostile, than closed, super secretive Federal Reserve Board meetings.
Let a thousand currencies blooms, and if you don’t like it, fork it.