The other type of fork stemming from intention forks is soft forks. Hard and soft forks are similar in that when a blockchain rule is changed, the old version remains in the network while the new one is also present – both creating a split. Wright’s version of the protocol proposed to increase the blocksize by hundreds of times, allowing cheaper transactions and more throughput for decentralized applications. Put simply, blockchain forks can help cryptocurrencies provide more flexibility. Plus, they allow the implementation of patches for security, usability, scalability and so forth.
- Sometimes, hard forks are controversial in the community involved in a blockchain; at other times, they are necessary for a blockchain to progress.
- This is how several blockchains and cryptocurrencies, such as Bitcoin Cash and Ethereum Classic, started.
- I’m a technical writer and marketer who has been in crypto since 2017.
- A hard fork is when a new blockchain version emerges that is incompatible with the original version.
- On the other hand, nodes in hard forks will stop processing the blocks following the addition of new rules whereas soft forks allow upgraded nodes to still communicate with the non-upgraded nodes.
Soft fork vs. hard fork
What you typically see in a soft fork is the addition of a new rule that doesn’t clash with the older rules. When you’re prompted to update your digital banking app on your smartphone, you probably don’t even think twice. It’s a necessary process, after all – if you don’t install the latest version of the software, you run the risk of being denied access to its services.
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While this sometimes occurs, in other instances, many nodes using the new software may choose to return to the old rules. The technology was developed to allow a secure way for two parties to deal directly with each other without the need for a third party in between to intermediate. As there isn’t a centralized party, such as a bank or financial institution, that keeps the sole copy of the hard fork ledger, you will also hear that blockchains are known as distributed ledgers. Once added, new version of the digital ledger is sent to all nodes. As the digital ledger is held by all nodes, it makes it very difficult to tamper with the blockchain and even harder to go back. Each one of these users, called a node, stores a copy of the blockchain database (also called a digital ledger).
Why Do Hard Forks Happen?
If you created a 2MB block that was otherwise valid, other nodes would still reject it. In bitcoin, old-version miners would realize their blocks were getting rejected and would be forced to upgrade. Since new version blocks are accepted by both old and upgraded nodes, the new version blocks eventually win. A https://www.tokenexus.com/ is when a new blockchain version emerges that is incompatible with the original version. It is not always an adverse event; in fact, many blockchains have undergone hard forks to implement necessary changes. Though it garnered significant attention from the start, Ethereum’s biggest moment came in April 2016, with a radical experiment called the Distributed Autonomous Organization, or the DAO.
However, some miners kept mining the old chain, which was picked up by OTC desks and given a price discovery order book. Poloniex listed this currency also, and some of the Ethereum community decided to keep this version and created Ethereum Classic. This contrasts with a soft fork, where the blockchain simply modifies its rules—no splitting required.
Forks are typically conducted in order to add new features to a blockchain. Bitcoin has undergone many different forks since it was first introduced in 2009. It is through this forking process that various digital currencies have been created.
- For example, back in 2017 the Bitcoin underwent a blockchain fork introducing SegWit to the network.
- They may also be created by a faction of the crypto community that wants to take a different direction with the blockchain.
- A majority of cryptocurrency forks occur due to disagreements over embedded characteristics, as we’ll explore below.
- In the Bitcoin network, for example, they do so via Proof of Work.
- Hard forks are a change in programming that results in a blockchain split.