How soft forks might work or fail

What is a soft fork?

A soft fork is a change to network nodes such that they apply stricter rules to blocks that those that are already in effect on the network.

Can a soft fork split the chain?

As soon as a miner produces a block that violates the stricter rules, other miners are presented with a choice, they could either:

  • ignore (orphan) the offending block, means supporting the soft fork
  • build on top of the offending block, means rejecting the soft fork

How splits compete and eventually resolve

Forks that are rooted in a block that is not acceptable by the soft fork will not be automatically resolved by the most total work rule. The reason is that validating nodes that support the soft fork will not even see blocks that are successors of the offending block.

A miner activated soft fork is unlikely

There are powerful arguments against supporting a soft fork by a miner

  1. Avoid operational risk: A miner that does not know or care about the soft fork does not have to upgrade its systems and will reject the soft fork by just doing what it used to do.
  2. Avoid financial risk: Supporting the soft fork means ignoring offending blocks, which comes with the risk that others that did not care to upgrade will build on the ignored block and thereby more likely win the race for most total work in the next round. A miner will therefore support the soft fork only if there are good reasons to assume that most other miner will also do so.
  3. Avoid network disruption: An split is potentially disastrous to the value of the asset produced by the miner.

How a user activated soft fork (UASF) works or fails.

A credible threat such as the one imposed by the famous UASF (BIP148) can push miner instantly to one side and thereby avoid a chaotic resolution of a temporary split. The threat of the first UASF was that validating nodes would stick to the side of the soft fork even if majority of miner would not apply BIP141 (segwit). Miner’s new coins would not had been accepted by UASF nodes if they were mined on the other side of the fork. The first UASF threat worked so well that no miner created a block offending segwit rules, the upgrade was so seamless that some think it was not soft fork (event) at all.

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Tamas Blummer

Tamas Blummer

Independent, Bitcoin Developer since 2012, Former: CLA @ Digital Asset Holdings, VP @ CoinTerra, CEO @ Bits of Proof, Engineer, Financial Risk Manager.