What is a Blockchain Fork?
As technology and user needs continue to evolve over time, both users and developers of cryptocurrencies recognize the necessity of making changes in existing software in order to implement new features or to improve overall usability. When these changes in a cryptocurrency protocol occur, the resulting product is known as a fork. To get a better understanding of what forks are, how they function, and the different types of forks that can be observed when changes are made, here is a brief, comprehensive guide on the nature of forks.
What Is a Fork?
To put it simply, a fork occurs when developers decide to make changes to the blockchain protocol of a cryptocurrency. The result of the change in the code produces two separate blockchains and cryptocurrencies. Depending on the reasons behind the change, users may have access to both versions produced by the fork or they may only have access to the forked, upgraded blockchain that was designed to build upon the previous blockchain protocol. These two separate possibilities are known as hard forks and soft forks, which are driven by several factors.
Soft forks occur when minor upgrades are made to the current blockchain protocol. These updates invalidate previous transactions and blocks and give the ability for old nodes to recognize and validate blocks and transactions utilizing the new rules. Should the majority of users and miners adopt the new rules, the previous set of rules will become obsolete and the fork with the newer rules will become dominant. If the majority of users and miners should not adopt these new rules, the old blockchain protocol will continue to function as is.
Whereas a soft fork results in a temporary split that requires users to adopt one or the other form of the blockchain, a hard fork is a major update that splits the blockchain into two separate yet usable blockchains. The original blockchain protocol using the old rules will continue to operate as intended while the fork using new rules will operate as a separate yet similar entity. This fork is implemented when major features or changes are required in the current protocol. There are several reasons as to why a hard fork might occur, some of the most notable being…
- Developers had planned to fork the assets from the beginning due to necessary updates that would improve the blockchain protocol. Previous blockchains that are forked in this instance are often abandoned as the new blockchain protocol features the desired aspects that the developers and the user base require.
- There is a split within a community that causes some of the users to fork the blockchain protocol and come up with a new protocol that meets their needs. This is known as a contentious hard fork and a great example of this would be the Bitcoin Cash fork.
- Something known as a spin-off coin is produced, which is essentially a fork of the original source code of a cryptocurrency. For example, Litecoin built itself (forked itself) from Bitcoin’s original code.
Forks are essential to the continual development of blockchain protocols and their related cryptocurrencies. Without forks, most crypto assets would never be able to improve, leaving them vulnerable to becoming obsolete — although some self-amending blockchains have recently been developed, such as Tezos. As the cryptocurrency industry continues to grow, forks will play a significant role in the process and this guide will give you a better grasp on the application of forks and the driving forces behind their usage.