Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on reddit

Hard Forks vs. Soft Forks (and how they work with Blockchain)

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on reddit

When getting in started in blockchain, there are so many terms to keep track of.  You’ll need to be aware of terms such as divergence, circulating supply, tokens vs. blocks, nodes, and many others. But one term that is arguably the most important term to know and understand is forking.

Hark Fork and Soft Fork - IIB Council Blockchain Blog

Forking

Forking is a term that refers to a situation where a cryptocurrency or token project needs to make technical updates to its own code.  These updates will either be applied to the backend of a project with no major changes in service, or they will fundamentally change the scope of the original project. 

Forking implies any divergence in Blockchain- temporary or permanent. Very simply, forking is said to happen when a Blockchain splits into two branches. It can happen as a result of a change in consensus algorithm or other software changes. Depending on the nature of change, the fork can be categorized into Hard Fork and Soft Fork.

Hard Fork

A hard fork is a permanent divergence from the previous version of the Blockchain, and nodes running previous versions will no longer be accepted by the newest version. A hard fork is a radical change to the protocol that makes previously valid blocks or transactions invalid. Any transaction on the forked (newer) chain will not be valid on the older chain. All nodes and miners will have to upgrade to the latest version of the protocol software if they wish to be on the new forked chain. This essentially creates a fork in the Blockchain, one path which follows the new, upgraded Blockchain, and one path which continues along the old path.

Hard Fork is usually done only when there is enough support from the mining community. Only when the majority of miners give positive signal towards the upgrade or fork, the developers of the chain starts work on the upgraded code. Typically, the support should come from 90 to 95 percent of the miners.

Hard Fork - IIB Council Blockchain Blog

A good example of a Hard Fork was when Bitcoin Cash came into existence.  Previously Bitcoin was the dominant player in the cryptocurrency game.  But as transaction times slowed and fees started to rise, the future of Bitcoin came into question. 

Bitcoin was starting to become more of a store of value, and less and less an actual usable currency.  This issue led to a political divide inside of the Bitcoin community.  One half of the community wanted Bitcoin to remain unchanged.  They felt that any changes to the Bitcoin platform would deviate from its original vision.  While the other half of the community felt that Bitcoin needed to evolve if it was going to fulfill its dream of becoming the world’s first decentralized currency.

So, fix the debate, the community agreed to have a Hard Fork or splitting Bitcoin into two separate asset classes.  Bitcoin, and Bitcoin cash.  Bitcoin would remain unchanged from its original vision and stay a store of value, while Bitcoin Cash would become much faster and cheaper to use currency.  The result is there are now two completely separate types of Bitcoins you can own.  Each with its own value and its own prices. 

Soft Fork

Soft Fork - IIB Council Blockchain Blog

A soft fork is said to happen when a change to the software protocol keeps it backward compatible. What this means is that the new forked chain will follow the new rules and will also honor the old rules. The original chain will continue to follow the old rules. This kind of fork requires only a majority of the miners upgrading to enforce the new rules, as opposed to a hard fork which requires (almost) all nodes to upgrade and agree on the new version.

New transaction types can often be added as soft forks, requiring only that the participants for e.g. sender and receiver and miners understand the new transaction type. This is done by having the new transaction appear to older clients as a “pay-to-anybody” transaction (of a special form) and getting the miners to agree to reject blocks including this transaction unless the transaction validates under the new rules. A soft fork can also occur at times due to a temporary divergence in the Blockchain when miners using non-upgraded nodes violate a new consensus rule their nodes don’t know about.

Future of Forking in Crypto

Forking isn’t expected to end anytime soon.  As the crypto landscape continues to evolve, we expect to see more and more forking in the future.  This is because the world of crypto is always going to be changing.  For example, Mark Zuckerberg, CEO of Facebook, has announced its own Cryptocurrency project named “Libria.”

While specific details of the project are quite hush hush, it’s safe to assume the new blockchain will recommend major changes for the crypto space.  It’s safe to assume that in order for current coins in the crypto market to play well with Libria, some forks may be necessary for current coins to work with Facebook’s new system. 

Another major reason forking will continue into the future is to help mass adoption.  As we mentioned above, Bitcoin becomes so difficult to use, that Bitcoin cash was needed to help speed up transaction times.  And as mass adoption continues to explode, more and more crypto projects may find themselves with the need to start forking as well.   Forking will allow everything from new protocols, transaction times, keep mining costs down, and many other benefits. 

Conclusion

The cryptocurrency world is constantly evolving, and the best way to stay ahead of knowing the foundations of how space works.  Forking is one of space’s most fundamental issues that come up and have the potential to change the scope of an entire project.  As you continue your journey in the crypto space, you too, might find yourself in position to support (or not support) an upcoming fork.  We hope that if that day comes, you’ll have the knowledge you need to make your decision.

Subscribe to Our blockchain Blog!

Popular Posts

Get Your Free Blockchain Membership

FREE access to premium videos and content to start your blockchain learning journey with IIB Council!

More Bookmark-Worthy Posts

Blockchain in Banking - IIB Council Blockchain Blog
Blockchain Technology

Why the banking industry is so interested in Blockchain (and how it can affect you)

Blockchains gained attention after the launch of the first cryptocurrency, Bitcoin, whose sole purpose was to eliminate the modern incumbent financial intermediaries and facilitate peer-to-peer transactions without the involvement/need of financial institutions.

Read more
Hard Fork or Soft Fork - IIB Council Blockchain Blog - Featured Image
Blockchain Technology

Hard Forks vs. Soft Forks (and how they work with Blockchain)

When getting in started in blockchain, there are so many terms to keep track of.  You’ll need to be aware of terms such as divergence, circulating supply, tokens vs. blocks, nodes, and many others. But one term that is arguably the most important term to know and understand is forking.

Read more
Blockchain in Healthcare Industry Featured Image - IIB Council Blockchain Blog
Blockchain Technology

Blockchain and Healthcare (and why this is a game changer)

At the very heart of blockchain technology is a belief that people should control their own assets.  Whether it is their money, their entertainment, or even their personal medical data, people should get full control of their data.

Read more
Shopping Basket

Before you go...

Get a copy of the latest Blockchain Career Guide

X