What Is A Blockchain Fork? Soft Vs Hard Forks: Explained

But it is possible that the two blockchains can run parallel to each other indefinitely. Once added, new version of the digital ledger is sent to all nodes. As the digital ledger is held by all nodes, hard fork 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).

These updates, known as blockchain forks, can play an important role moving forward. Forks have to do with those rules, the protocol that sets the operating parameters of a blockchain. Once the proposed changes are implemented, https://www.tokenexus.com/ two versions of the blockchain coexist. Nodes that have adopted the new protocol continue to validate and propagate transactions according to the updated rules, while nodes that have not upgraded remain on the old protocol.

Synthetix Network

The community effectively splits in two and agrees to work and mine on their favoured blockchains separately. When the community agrees on a new direction for the blockchain they’re a part of, a hard fork is planned. In the early days of Bitcoin, it had a scalability problem due to the size cap of each block that was put in place by Satoshi Nakamoto, the pseudonymous founder of Bitcoin. This 1 megabyte cap created some problems, namely the slowing down the speed of the network, limiting the number of transactions on each block and higher transaction fees. But in the case of a hard fork, the old crypto and the new offshoot are NOT interchangable, or fungible. Hence after a hard fork, the original holders don’t lose any of their existing digital coin but instead will get a unit of the new crypto as well.

This change creates a new version of the blockchain that is incompatible with the previous version. With a soft fork, only one blockchain will remain valid as users adopt the update. Whereas with a hard fork, both the old and new blockchains exist side by side, which means that the software must be updated to work by the new rules. Both forks create a split, but a hard fork creates two blockchains and a soft fork is meant to result in one. In the beginning, we discussed that a successful fork must reach consensus in order for it to be implemented.

A Timeline of Bitcoin Hard Forks

In this guide, we explain why a blockchain splits and what it means for your cryptocurrency holdings. The new cryptocurrency may have distinct features, functionalities, or improved scalability compared to the original cryptocurrency. It may also provide an opportunity for developers and users to experiment with different blockchain protocols and governance structures. The first notable Bitcoin fork was Bitcoin XT, launched in 2014 by Mike Hearn. Bitcoin Cash remains the most successful hard fork of the primary cryptocurrency.

Ethereum (ETH) and Ethereum Classic (ETC) have very different protocols, reflecting their divergent ideologies and technical priorities. I’m a technical writer and marketer who has been in crypto since 2017. CASEY NEWTON is an independent journalist who covers social networks and next-generation technology platforms. He is the founder and editor of Platformer, a newsletter about the intersection of technology and democracy. We’ve noticed a lot of the energy and money in Silicon Valley is shifting to totally new ideas — crypto, the metaverse, AI. It feels like a real turning point when the old things are going away and interesting new ones are coming in to replace them.

Most Important Hard Forks

In cases where there a fundamental change or a disagreement occurs, a hard fork is potentially messier as the network may become less secure and more vulnerable to attacks. It also creates the risk of double spending in what is called a “Replay Attack”, where a bad actor can intercept a transaction one fork and repeat it on the other chain, making them both valid. Soft-forks are therefore, backwards-compatible and after the soft fork, still only one blockchain exists as both upgraded and non-upgraded nodes work on the same chain.

• The hard fork also helped DAO token holders get their ether (ETH) funds returned.
• I’m giving a 5 star bc 99% of the time, these guys provide an incredibly thoughtful and balanced approach to covering tech issues, and generally admit to any blind-spots and biases.
• Some of those forks can be planned, and are referred to has Planned Hard Forks, where as sometimes there is no plan in place, and they fall into the Contentious/Unplanned Hard Fork category.
• After a fork, the blockchain diverges into two potential paths forward.
• It also shifted Ethereum from the current PoW (Proof-of-Work) model to the PoS (Proof-of-Stake) system, which makes the blockchain more energy efficient.