Hard Fork And Soft Fork Explained

The software revolution has come a long way. Today, an entire crypto industry is based upon sheer technology and advanced computation. Software updates are an integral part of this revolution and so are blockchains as well. All such updates are called “forks”, and to know more about forks, keep reading on:

What is a fork?

A fork, in its literal sense, refers to a split from an origin. Fungible tokens like Bitcoin and Ethereum are powered by blockchain networks, wherein all the transactions involved with the tokens are recorded and secured using cryptographic programs. Blockchains are collectives of data blocks that are managed using protocols.

So, a fork occurs when there is a change in the protocol, i.e., when a software update takes place. It splits the blockchain into two chains, one of which is the updated one with a different set of protocols.

Significance of forks

Blockchains, being open-source technologies, are exposed to cyber threats while they depend on their communities to develop and secure the underlying codes. However, the updation of the to its latest security patch is done to ensure a significant improvement in features as well as deliver better protection from malware and bugs.

So, when a fork happens, it adds more features to a crypto or gives it a new security update code. Sometimes, we can use a fork to create completely new tokens and networks. Even when two miners are using the same block simultaneously, a temporary block happens for ease of operation.

Types of forks

There are broadly two types of forks possible in blockchain technology, and they are:

  • Soft fork – A soft fork acts as a software up-gradation in the blockchain, where new features or functions are added to each node. All the nodes connected to a blockchain must accept a set of new protocols but remain in a single chain. This fork is compatible with older pre-existing blocks and does not make older blocks invalid in the process.

For example, when we receive an OS update notification on our phones, even if we don’t update it immediately, the phone doesn’t stop working. After we update the OS, the apps with an older version still work fine.

  • Hard fork – A hard fork refers to a non-backward compatible up-gradation that makes older blocks and transactions invalid in a blockchain, thus creating a new chain alongside the existing old chain. The hard fork is used to create new tokens or new protocols while letting the older version continue as a separate blockchain.

For example, when WhatsApp messenger asks us to update our current version, it gives us a probation period within which we are supposed to adapt to the new version. After the version expires, our messages do not open, i.e., there is an interruption of the previous version which is taking place.

History of important forks in Bitcoin And Ethereum

Forks are overall the same in all crypto-platforms. So, the forks on a blockchain would not be different from those on cryptos. Bitcoin and Ethereum are examples of the oldest cryptos which underwent hard forks and soft forks in their mining networks.

Bitcoin went through significant hard forks, which resulted in the new blockchains derived from the same name. Bitcoin Gold and Bitcoin Cash are derived from the original Bitcoin blockchain using forking. While Bitcoin Gold focuses on making the blockchain more decentralised and secure, Bitcoin Cash was created to increase transaction speed in the Bitcoin blockchain.

The Ethereum blockchain is primarily funded by its native coin, Ether, but is regulated by smart contracts. These contracts are human-coded protocols fed to the computers to maintain an automatic balance in the blockchain transactions without manually doing them. 

It saw its first fork as the Decentralised Autonomous Organisation (DAO), but it was hacked as the users witnessed a real-time money-draining by an anonymous hacker. After this, the blockchain saw its most significant upgrade on 5th August 2021, which aimed at making “mining” comparatively harder and fee structures more predictable. This was done to undo the error code in DAO and pull all the drained money locked up in a smart contract securely again.

Take away

There could be a possible occurrence of accidental forks. Hard forks and soft forks are important in making changes or bringing new upgrades to a blockchain for better management. Temporary forks can also be used in crowd management and easing network congestion. Apart from the security updates and new product creation, forks can also reverse transactions in case of a fraud or protocol breach. 

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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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