If you are studying or investing in the cryptocurrency market, you have definitely heard of soft forks and hard forks updates of Bitcoin, Ethereum, Litecoin, etc. Have you ever wondered what a fork is? Let me take you through the following article to help you understand!

What is a Fork?

In blockchain, "fork" is the process of changing the underlying protocol or rules of the blockchain. When a software is copied and modified, a fork occurs. When this happens, the blockchain splits and creates a new blockchain, but still retains the same history as the original blockchain. However, the new blockchain will operate according to different rules.

A fork can be intentional or unintentional. When there is a disagreement in the community about how the blockchain should operate, a fork occurs. When a fork happens, the community decides which blockchain to continue using and which blockchain will become the dominant one. With a soft fork, both blockchains can continue to exist.

Forks can be a controversial topic in the blockchain community, and some consider them to be confusing and detrimental.

Purpose of Forks

The purpose of forking the blockchain may vary, but they generally have three basic reasons:

- Blockchain Upgrade: Forks can be used to improve the blockchain, fix security vulnerabilities, add new features, or change the consensus mechanism. For example, the Bitcoin Cash fork in 2017 aimed to increase the block size limit, allowing the blockchain to process more transactions per second.

- Creating New Coins: Forks can also be used to create new cryptocurrencies. This is done by copying the blockchain of an existing cryptocurrency and then changing the protocol.

For example, the Ethereum Classic fork in 2016 happened after the Ethereum community had a disagreement on how to handle the DAO smart contract hack. Or more recently, Ethereum Proof of Work (ETHW) forked from Ethereum because miners disagreed with the proposal to switch to a Proof of Stake (PoS) mechanism.

- Testing New Ideas: Forks can also be used to test new ideas. This is because forks provide a separate environment where new ideas can be explored without affecting the main blockchain.

Forks allow developers to test new changes to the blockchain without affecting the main chain. For example, Bitcoin's SegWit 2x fork in 2017 aimed to test a new way of processing transactions on the Bitcoin blockchain. Example: The Bitcoin SegWit 2x fork in 2017 tested a new method of processing transactions on the Bitcoin blockchain. Advantages: - Improved Security: Forks can be used to fix security vulnerabilities in the blockchain. For example, the goal of the Bitcoin Cash fork was to increase the block size limit, making the blockchain more resistant to attacks. For example, the fork of Bitcoin Cash aimed to increase the block size limit, which would make the blockchain more resistant to attacks. - New Features: Forks can be used to add new features to the blockchain. For example, the Ethereum Classic fork added a new feature called "replay protection" to prevent attackers from stealing funds from Ethereum and Ethereum Classic. For example, the Ethereum Classic fork added a new feature called "replay protection" to prevent attackers from stealing funds from Ethereum and Ethereum Classic. - Enhanced Decentralization: Forks enhance the decentralization of the blockchain by allowing the creation of new blockchains that can be run by different communities. Example: Bitcoin Cash was created and operated by a different group of people using the Bitcoin blockchain. Weaknesses: - Confusion: Forks can cause chain splits, confusion, and user disruptions. - Financial Loss: If users do not upgrade their software to the new version of the blockchain, forks can also result in financial loss. In 2017, some users were unable to access funds on the Bitcoin Cash blockchain because they did not upgrade their software after the fork. Level 1 Heading

Hard fork and Soft fork

What is a hard fork?

A hard fork is a software upgrade that is incompatible with the old version of the blockchain, requiring all nodes to update their software in order to continue participating in the network. This means that nodes running on the new version of the blockchain will not be able to receive transaction data executed on the old version, and vice versa.

During a hard fork, the blockchain splits into two separate versions: one following the new rules and another following the old rules.

For example, Ethereum went through a hard fork in 2016, resulting in the creation of two branches: Ethereum and Ethereum Classic.

What is a soft fork?

A soft fork is a software upgrade that is backward compatible with the old version of the blockchain, allowing old nodes to continue participating in the network without needing to update their software, while updated nodes can still communicate with the old nodes.

A soft fork typically adds a new rule that is not conflicting with the old rules. For example, Bitcoin underwent a soft fork in 2017 to increase the block size limit. In this case, nodes that have not upgraded their software can still continue to participate following the old rules, but cannot participate in the new consensus rules.

Which is better, hard fork or soft fork?

Both hard forks and soft forks are ways to change the blockchain protocol, but they each have their own advantages and disadvantages.

Hard forks are more disruptive than soft forks because they require all users to upgrade their software in order to continue participating in the network. Meanwhile, soft forks are less disruptive than hard forks because they do not require all users to upgrade their software.

The choice between the two types depends on the specific situation. If the goal is to make significant changes to the blockchain protocol, a hard fork may be needed. However, if the goal is to make minor changes or test new ideas, a soft fork may be a better choice. Ultimately, the decision to use a hard fork or a soft fork depends on the developers and the cryptocurrency community.

History of Bitcoin hard forks

Bitcoin XT (2014): Bitcoin XT was a hard fork proposed by Mike Hearn. Its goal was to increase the block size limit from 1 MB to 8 MB. However, this hard fork failed as most miners and users chose to stay on the original Bitcoin blockchain.

Bitcoin Classic (2015): Bitcoin Classic was another hard fork aimed at increasing the block size limit. This fork was more successful than Bitcoin XT but still did not gain support from the majority of users.

Bitcoin Cash (2017): Bitcoin Cash is the most successful Bitcoin hard fork to date. It was created by a group of miners and developers who were unsatisfied with the slow transaction confirmation times and high fees on the Bitcoin network. The block size limit of the Bitcoin Cash blockchain has been increased to 8 MB and several other changes have been implemented.

Bitcoin Satoshi's Vision (2018): Bitcoin Satoshi's Vision is a hard fork of Bitcoin Cash created by a group of miners and developers. Its goal is to increase the block size limit to 128 MB and make some other changes.

Bitcoin Cash SV (2018): Bitcoin Cash SV is another fork of Bitcoin Cash. Through this hard fork, the block size limit of the Bitcoin blockchain has been increased to 1 GB, along with some other changes.

Summary

Hard forks and soft forks are two important factors in ensuring the sustainable success of a blockchain.

They allow us to make changes and upgrades to the blockchain system without the need for third-party intervention. Through this article, we hope readers will have a better understanding of forks, soft forks, and hard forks, so that they can be more adept in the research and investment process.