What is a “Fork”? — Simple user guide

In the previous article, I’ve mentioned the term “hard fork”. In this article, I will give an explanation of what a fork is, what are the different types of forks and will briefly discuss the recent “hard forks” in Bitcoin and other currencies.

All blockchains are based on some hard-coded pre-determined rules, this is the protocol rules. The protocol rules are used to determine whether a new block is valid or not. In Bitcoin, for example, we have the Proof of Work rules which require the solution to use the SHA256 hashing algorithm.

The most interesting thing about that is there is no one in charge of the rules, every node (participant) in the network is in charge of setting and enforcing the rules he believes in for himself, but no one can force his own rules on someone else.

The incentive to keep on a consistency of the rules is that if someone changes his own rules, no one will acknowledge his blocks as valid so he won’t be able to transact with others. This mechanism, of allowing each user to set his own rules, allows keeping the network completely decentralized without needing to have someone else decide on the rules.

But rules can’t be set in stone, as the technology evolves the rules will need to change. The rule change may be needed to add features, improve the security, or provide more scalability. Therefore, we need to have some option for updating the rules without ruining the entire system.

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In blockchain, the process of changing the protocol rules is called “forking”. This is because when you change the rules, it may cause a split in the chain which looks like a fork.

Bitcoin Forks example

There are 2 types of forks:

1. Soft fork: a soft fork is a rule upgrade which adds rules in addition to the existing ones. In case of the soft fork the non-upgraded nodes will still consider all produced blocks as valid, however, the upgraded nodes will see blocks produced by non-upgraded nodes as invalid (since the older version does not conform to the new rules) and will not include them into their chains. Soft forks are the popular way to do protocol upgrades on blockchains, this because the upgrade does not violate the existing rules which makes it safer to execute, in case the fork is not accepted nodes can keep as usual and just drop the extra rules. The disadvantage of a soft fork is it’s very limited in terms of what improvements can be made, this because they have to keep all old rules unchanged.
2. Hard fork: a hard fork is an upgrade which violates the original protocol rules. In a hard fork, non-upgraded nodes will stop accepting blocks of the upgraded nodes and vice versa. As long as there is at least one non upgraded node, had fork will cause a chain split, where part of the nodes agree on the chain and the other group will agree on another chain. The only thing the chains will share is the mutual history (prior the fork). You can see a chain split as a creation of a new coin with modified rules but with the same history as the original one. It is important to clarify, a hard fork does not aim to create a new coin, a hard fork aims only to improve the original coin. When the majority of nodes decides to accept the new rules the fork can be considered successful. The problem with a hard fork is it requires a high level of caution and a clear majority support in order to succeed. The risk here is in case, not enough nodes accept the change the chains become separate and it will cause interruption to the network as some will consider one coin as valid and others will consider the second as the valid coin.

Mostly at the end of 2017, there was a huge hype over hard forks. Started with Bitcoin Cash, and later on Bitcoin Gold even Bitcoin Diamond, there were lots of new coins claiming to be an improved version of Bitcoin. The main reason for the excitement was that because those coins share the history of Bitcoin, anyone which had Bitcoin received free new coins. This became a real trend when lots of people realized how easy it is to create a “hard fork” and give it the name “Bitcoin [something]”, which is possible because there is no legal protection on the name Bitcoin.

In my opinion, these cannot be called “hard forks”, a hard fork is a rule changing improvement for the protocol. It is not meant to create a new coin rather improve the existing one. This coins used what called “airdrop” (giving away free coins) in order to promote their new (unrelated to Bitcoin) coin. Besides the obvious problems it causes such as confusion in the market or promotion of coins using the name Bitcoin fraudulently, a big problem is that because the new coins share the same private key used for Bitcoin, lots of fraudsters used it to convince people to enter their private keys to a wallet supporting the new coins which in turn sent the private keys to the wallet creator. My personal (non-financial) advise is to stay away from these “forked” coins, they are usually just over-hyped or simply a scam.

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This guest article was written by Ben Kaufman, founder of BitCampus.io

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