Crypto Academy

Soft/Hard Fork

Soft/Hard Fork

6 min reading

Discover what forks mean, its types, when and why they usually happen.

what's hard vs soft fork

Soft/Hard Fork

The terms soft fork and hard fork are frequent occurrences in the crypto-sphere. In this article, we will try to explain what are the hard fork and soft fork, and what is the difference between these two concepts. 

What is a fork?                  

Altcoins emerged in 2011, disrupting the primacy of the first cryptocurrency – Bitcoin. The roots of most Altcoins grow precisely from Bitcoin, and fork is the cause of this process. Put differently, any fork is a rules change in which a block in the Blockchain is taken in genuine (valid). Therefore, users vote for a fork by downloading new software.

Types of forks

There are two main types of Forks: soft forks and hard forks (“soft” modification and “hard” modification.) A soft fork is a modification of a software protocol that is combined with a previous version. Namely, it’s a soft form of the rule change where corner pieces of the old Blockchain version can fully interact with corner pieces of the new version. Bitcoin soft fork is a hot topic in the cryptocurrency industry. Unlike hard fork, which requires (almost) all nodes to update and agree on a new version, this kind of fork only requires the fraction support of miners updating their software. 

Hard fork is a radical switch to a new protocol that is incompatible with the previous version or a complete Blockchain separation into two independent branches. The blocks that are genuine in the new version are completely unsupported by the old one. The most popular hard fork in the cryptocurrency sphere was the hard fork of ether. This cryptocurrency split into two camps: Ethereum and Ethereum Classic. In a hard fork, all nodes and miners switch to the latest protocol software version, in case they want to move to a new bifurcated chain. It creates the fork in Blockchain. Consequently, there are two ways: the way leading to a new improved Blockchain and the way following the old rules. Hard fork usually happens only when there is sufficient support from the miners’ community. When a miners majority agrees to upgrade or fork, the blockchain’s developers start working on code updating. As a rule, the number of agreements should not be less than 95 percent.

Why Hard Fork is held

A hard fork can be initiated by members of the development team or miners. The main thing is to assemble a large group of people who are capable of modifying the source protocol. Unbundling is impossible without qualified Blockchain engineers. The purpose of major update conducting is to fix flaws that hinder the Blockchain Network operation. Individual groups within the community may propose different solutions to the problem, and if they fail to reach a consensus, a split or fork occurs.

Famous hard forks

When asked what a bitcoin fork is, many people remember Bitcoin Cash (BCH). The asset emerged in 2017 as a result of a hard fork on the bitcoin blockchain. The cryptocurrency still exists successfully to this day. Bitcoin and Bitcoin Cash share a common history up to blockchain 478,558. Bitcoin Cash came about as a result of a disagreement in the community over the true concept of the cryptocurrency laid out by bitcoin creator Satoshi Nakamoto. The main bone of contention was block size and the implementation of Segregated Witness. 

Another famous example involves Ethereum (ETH), a successful branch of the cryptocurrency now known as Ethereum Classic (ETC). It was created after the hacking of the Decentralised Autonomous Organisation (DAO) and the theft of $50 million in ETH. The Ethereum community mulled over how to deal with the aftermath, and most decided to hold a hard fork on a block of 1,920,000. This is how the Ethereum fork came about.

How does this work in cryptocurrencies?

In cryptocurrencies cases, a Fork refers to a change in the operating rules that involves introducing amendments to the protocol. In other words, it’s necessary to implement serious changes in operation to make bitcoin (or any other crypto) better and more secure. The system improving in the term of technical operation and eliminating some vulnerabilities is the main goal of hard and soft forks. For instance, such issues as transaction speed or network scalability problems can be handled by forks.

The crypto-currencies versions, created by forks, are believed to be more advanced in technical terms. These technical processes are called to facilitate and improve the system operating, as was said before. In some cases, there is a conflict between developers. Some think the system should remain unchanged, the others insist on a technical conversion. Such changes took place in the communities of Bitcoin and Ethereum (the world’s second most popular cryptocurrency).

However, as the Blockchain industry evolves, major code updates are essential. If updates are done well and meaningfully, the cryptocurrency will benefit and the risks are not as high as they seem. But, be careful and look at the situation objectively. Good luck!