Forks, also known as splits, are important events in blockchain-based systems. This article will cover everything about forks, including what a fork is, what hard and soft forks are, and why they occur.
What is a Fork?
A fork is when a blockchain-based cryptocurrency network splits from its past blocks into two or more different blockchains. This splitting process represents a situation that requires significant changes in the rules or network of the existing blockchain cryptocurrency. A fork gives rise to a new cryptocurrency or network.
Why Do Forks Happen?
Forks can emerge for several different reasons. Here are the most common causes:
Technical Improvements: Forks enable technical improvements to be made in the blockchain network. For example, network updates aiming to solve issues like security, scalability, or transaction speed can be performed through a fork.
Community Splits: Disagreements can occur within the cryptocurrency community about a particular protocol or roadmap. In such a case, groups with differing views might want to separate from the existing blockchains and follow their own path. This kind of fork arises from differences within the network.
Software Changes: Cryptocurrency projects can make significant changes to their software. These changes can resolve incompatibility between the old and new versions by executing a fork. Thus, they can add new features or correct errors.
What is a Hard Fork?
A hard fork, or a harsh split, is a type of fork in a blockchain-based cryptocurrency network where there is no backward compatibility, and a new blockchain is created. Hard forks generally occur in situations that require substantial and crucial changes.
When a hard fork occurs, some or all of the existing blockchain and network rules are altered. These changes result in the creation of a new blockchain and separation from the existing blockchain. The new blockchain is based on new rules that are entirely incompatible with the old blockchain. This results in the emergence of a new cryptocurrency operating on the new blockchain produced as a result of the hard fork.
Forking, or in more technical terms, branching, is a significant event in Blockchain-based systems. It describes the split of a Blockchain-based crypto network into two or more distinct Blockchains. This split usually occurs when there are essential changes needed in the crypto network’s rules or structure, paving the way for a new cryptocurrency or network.
Why Does Fork Happen?
Forks can arise for several reasons. Here are the most common ones:
- Technical Improvements: Forks allow for technical enhancements in the Blockchain network. For instance, network updates for resolving issues such as security, scalability, or transaction speed can be carried out via forks.
- Community Division: Disagreements about a certain protocol or roadmap among the crypto community can occur. In such cases, groups with different perspectives may want to break away from the current Blockchains and forge their own path.
- Software Changes: Cryptocurrency projects can make significant changes to their software. These changes can resolve incompatibility between the old and new versions via a fork. Hence, they can add new features or correct errors.
What is a Hard Fork?
A hard fork, also known as a major split, is a type of fork where backward compatibility is not maintained and a new Blockchain is formed. It typically emerges in situations where substantial and crucial changes are required.
When a hard fork occurs, some or all of the rules in the current Blockchain and network are altered. These modifications lead to the creation of a new Blockchain and separation from the existing Blockchain. The new Blockchain relies on completely new rules that are not fully compatible with the old Blockchain. Consequently, a new cryptocurrency operating on the newly-formed Blockchain emerges as a result of the hard fork.
What is a Soft Fork?
A soft fork, or minor split, is a type of fork where backward compatibility is preserved, and it denotes changes made to the rules on the existing Blockchain. It occurs in a manner that allows nodes and users complying with the new rules to continue transacting on the network.
During a soft fork, some of the existing rules on the Blockchain network are changed or new rules are added. However, these changes preserve backward compatibility, meaning that old nodes and users can still transact validly. A soft fork essentially requires nodes and users wanting to implement the new rules to use updated software.
The fundamental feature of a soft fork is to maintain consensus within the cryptocurrency community. Thus, nodes adhering to new rules accepted by the majority can still transact on the network, while nodes following old rules can also continue compatibly. As a result, soft forks usually lead to less division or disruption on the network, and non-updated nodes can still process valid blocks and transactions.
