Understanding Blockchain Hard Forks

In the ever evolving crypto space, it is important to brush up on the basics. In this article, we take a closer look at what hard forks are, how they work, and how they are utilized to upgrade blockchains.

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@enter.artPUBLISHED 25TH SEPTEMBER 2022

Most cryptocurrencies with the name Bitcoin, such as Bitcoin Cash, Bitcoin SV, Bitcoin Diamond, and so on, are probably familiar to you. You're probably wondering why and how so many cryptocurrencies still bear the name of one of the most popular cryptocurrencies, Bitcoin. These new cryptocurrencies, however, did not show up out of nowhere, but rather as a result of a Hard Fork. This fork is more like a process to upgrade a version of the software, which helps rebuild or improve the performance of a protocol. 

This guide will teach you everything there is to know about blockchain hard forks.

Let's begin by understanding what a fork is.

What is a Fork?

Forks are those upgrades that occur in software to fix an issue or to boost the performance of a blockchain. In a more general sense, a fork is a change in the code or protocol which simply means an old version has been upgraded to a new version following the addition of new rules. These rules could include the size of each block on the blockchain, rewards for miners and so much more.

What exactly is a blockchain hard fork?

A blockchain hard fork is a change in network existing protocol which is used by the software to verify whether or not a transaction is valid. It is an event where the existing blockchain is split to create two distinct blockchains that exist separately.

When a hard fork is completed, nodes of the new version of the blockchain will no longer approve that of the old version. As a result, all nodes or participants are required to upgrade to the most recent version of the blockchain protocol.

Updating a new rule on a node splits the blockchain in such a way that one path adheres to the new and upgraded blockchain, while the other path sticks to the old blockchain. Most of the time, only a few people keep using the old chain after a hard fork, but as time passes, they regard it as obsolete and switch or upgrade to the new chain.

Planned hard fork vs Controversial hard fork 

Depending on the circumstance, hard forks can be planned or controversial.

In the case of a planned hard fork, users voluntarily upgrade their software to follow the new protocols while abandoning the old ones. Those who do not desire to upgrade to the latest version continue to utilize the old chain.

During a controversial hard fork, the blockchain is split into two incompatible blockchains. This is due to opposition within the cryptocurrency community about the upgrade or the new rules. However, after the fork, each blockchain will have its own community, and they can proceed in the best way they see fit.

How Forks Work

Blockchains and cryptocurrencies function identically regardless of the crypto platform on which they are found. As a result, blockchain forks can happen on any cryptocurrency platform, not just Bitcoin or Ethereum. 

Blockchain blocks can be thought of as cryptographic algorithms that carry or move transaction data in the network. In a blockchain, miners create the rules that govern how transactions are moved or stored in the network. However, all of the miners will agree on the new rules and define what constitutes a valid block in the chain. 

In the event that these rules must be changed, the blockchain will be forked to indicate that the rules or protocols have changed. Following that, the developers can update all of the software to incorporate the new rules.

Hard Forks vs Soft Forks

There's no way to discuss hard fork without mentioning soft fork. Hard fork and soft fork are similar considering the fact that both change how the protocol of a blockchain works. But, there are slight differences in the way they perform or execute the protocols' new rules. 

With soft fork, the change in protocol is backward compatible. This means that non-updated versions can still push blocks and transactions but only if they don't violate the new protocol rules. Furthermore, in a soft fork, only one blockchain exists and remains valid.

In the case of a hard fork, the change is incompatible with the old version. Simply put, this means that non-updated versions cannot validate blocks and transactions. However, both the previous and new blockchains exist differently as two incompatible blockchains.

Reasons for a hard fork?

As blockchain technology evolves, upgrades are required to improve network efficiency. However, there are several reasons why developers implement a hard fork.

A hard fork can be implemented when some security risks need to be addressed or when developers decide to change or add new functionality to a cryptocurrency. 

It can be executed when a transaction on the blockchain needs to be reversed due to a hack or for other reasons. Similarly in 2016, the Decentralized Autonomous Organization (DAO) was vulnerable to an attack due to a flaw in the code, resulting in the loss of 3.6 million Ether. After the hack, a hard fork was implemented on the Ethereum blockchain to reverse the transaction and restore the stolen funds.

You may be thinking about how all of this happened.

Following the hack, the hard fork rolled back the Ethereum network’s transaction history to before the attack date and then reallocated the DAO funds to a new smart contract, allowing the original investors to withdraw their funds. This helped investors in reclaiming their ETH funds.

A hard fork can also occur as a result of a disagreement within a cryptocurrency community. However, with the hard fork, this disagreement can be resolved by splitting the blockchain into two distinct versions where each community can manage their own chain.

For example, the Bitcoin hard fork in 2017 came with a proposal to maximize its block size from 1MB to 8MB for improved scalability. Many users objected to the proposal, so Bitcoin was forked to create Bitcoin Cash (BCH). 

Conclusion 

Blockchain as a decentralized and open source network requires the agreement of users on the network to execute a fork. Many software users typically upgrade in order to improve the efficiency of their applications. A fork is a one-of-a-kind process used on a blockchain to update and upgrade protocols, which aids in the efficiency and scalability of this new technology.



This article is written by Vincentia Ahuzi as a part of enter.blog's bounty program. Do you have an interesting topic, series or subject you think would be fitting for enter.blog? 

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