A Brief Introduction To Blockchain Forks: Soft And Hard

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As a crypto trader or enthusiast, you probably have come across talks or mentions of the term “fork.” If you’ve found yourself asking what “forks” are you’re not alone. This brief guide on forks should put your questions to rest.

To start with, let’s get a definition of a fork. In simple terms, a blockchain fork happens whenever a community makes a change to the underlying blockchain’s protocol or basic set of rules. This typically causes the chain to develop an offshoot, a second blockchain. This offshoot shares all the history of the original but is headed in a different direction.

Forks are quite common in the blockchain space and can be good or bad depending on what it offers. There are two primary types of blockchain forks: soft and hard forks.

Understanding Soft Forks

A soft fork is, in many ways, similar to a software update as it improves the blockchain and is “backward compatible” with the blocks from the original chain. This means all transactions emanating from the new fork are seen as valid even on the original chain.

Users on the older software version should have no issues with the soft fork as the blocks and transactions from the fork will be acceptable and compatible with the chain.

Understanding Hard Forks

Unlike a soft fork, a hard fork is a more aggressive alteration or change to the blockchain, effectively disabling any possibility of backward compatibility from the chain. The typical rule for hard forks is that old blockchain users cannot use the new chain if they do not upgrade their software. Old users can continue with the old blockchain but would require some sort of soft fork to sustain operations. Also, non-upgraded nodes cannot validate blocks created by newer nodes that operate with a revised set of rules. A hard fork is essentially the literal definition of a fork in the road.

A good example of a hard fork is the Ethereum hard fork, which led to the creation of Ethereum Classic. The original chain was forked, with most users choosing to reverse a hack that occurred in the chain and return the stolen funds to investors. However, based on the principle that “Code is Law,” a fraction of the developers and miners believed The DAO’s investors should bear the cost of investing in a flawed crypto project. However, the majority of developers forged ahead and rolled back the blockchain, thereby creating a bailout for The DAO’s investors. This essentially caused the smaller group to break away from the blockchain due to philosophical differences, creating Ethereum Classic.

Final Word

As mentioned earlier, forks are commonplace in the blockchain space, and it doesn’t necessarily mark the end of a network. If anything, it shows that the developers are strongly devoted to what’s best for the network.

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.