If you are an admirer of cryptocurrencies, you have probably heard of many terms such as hard fork and soft fork. In the technology world, a fork means an open-source code modification. It appears when blockchains are divided or there are some changes in the rules.
Blockchain is the technology between cryptocurrencies that enables them to work, and it is a decentralized technology which means that is doesn’t need a third party. Because the cryptocurrencies are decentralized, all of the participants have to agree to some rules for validation of the transactions in order for an agreement to be achieved. That’s when the forks came.
Usually, the fork code is similar to the original code, but it has some modifications. Forks are used for implementing important changes or for testing some process. Sometimes, a fork can accidentally appear when the nodes don’t replicate the same information in a blockchain. Most of the forks appear because of a disagreement between the participants.
There are two main blockchain forks: hard fork and soft fork.
A hard fork is a code that makes changes to the protocol, and it makes the older versions of the protocol invalid. It usually appears when older nodes are not able to validate the newer codes, which leads to disagreements. When it comes to Bitcoin, hard fork is necessary to implement for changing parameters (added information, block size, cryptographic puzzle, etc.). If there is a change to any of those parameters, blocks need to be accepted by the new protocol but the older protocol would reject them, and this leads to many issues. This is a situation of a hard fork.
For example, if there is a block of 3MB validated by a newer node and added to the blockchain, but the next block is validated by an older node, it will lead to serious problems. Suddenly there are two blocks, one with newer node and one with older node. As the blockchain grows, the problems will grow too. That’s where the hard fork intervenes.
On the other side, a soft fork is a code that usually appears when the older nodes are not able to follow the new rules. It works with the older nodes too. If some protocol has changes that do not affect the whole structure, the blocks with new nodes will be accepted by the blocks with old nodes. However, in the opposite situation, new nodes will reject the old ones.
For example, in Bitcoin, if the size of the block is reduced from 1MB to 0.5MB, the new nodes will reject the old nodes of 1MB. A similar situation has already happened, when the limit of 1MB for a block was introduced, because Bitcoin didn’t have any limit before that. The soft fork helped the whole structure to be successfully updated.
Because the blockchain technology has a decentralized nature, its participants have to always reach an agreement in order to maintain a proper state of the blockchain. If you are interested in cryptocurrencies and are planning to invest in some of them, you have to know these terms and their meaning because it will make the whole process easier for you.