What is a Blockchain Hard Fork?
Fork is a technical term to say that there is a new version of a Blockchain. One of the basic principles of a Blockchain is its immutability: it cannot be modified. However, like any software there may be a need to fix a bug or add new features. In these two cases, we must proceed with the creation of a new Blockchain which is subject to new rules. In general, we keep the old data, which means that there is nothing for us, users, to do. Miners, platforms and wallets, on the other hand, must upgrade their tools.
Soft Fork: when a fork is accepted by the community
When everyone agrees on the content of the update: miners, wallets, exchanges, users then we assume that the old chain is abandoned. As soon as the fork is carried out, its value is considered to be 0. We do not waste time distinguishing the two chains. This is what usually happens for ethereum blockchain forks.
Details of forks;
Hard Fork: when there is disagreement on the update
It can sometimes happen that the community is divided because its members do not share the same vision. We therefore see the appearance of two autonomous Blockchains and therefore of two corners. The value is “doubled” but in general one or the other of the chains tends to be worth 0. We can see this phoneme with ETH and ethereum or with the many versions of Bitcoin!
Opportunistic Fork: When Someone Duplicates a Blockchain
There is one last type of Fork. The latter is often more of a marketing operation than anything else. This is a developer or an organization that will copy and duplicate a Blockchain while keeping the history. Concretely, as a user you find yourself with new coins which can have a quotation. However, they tend to be worth 0. We have seen this with Bitcoin Gold or Bitcoin Diamond.
The Risk of Accessing Forked Blockchains
When someone duplicates a Blockchain keeping its history you have access to a similar number of coins. It can be tempting to access them to sell them but hold back… at least at first because you will connect to the wallet of this new channel with the same private key as for the main channel. If the wallet of the new chain contains a virus or its creators steal your private key they can also steal your coins on the main chain!
Good practice is therefore to move your coins from the main chain to a new private key BEFORE accessing the coins of the new chain.
How do hard forks and soft forks work?
As you know, no group completely controls a block torpedo. Any user on the network can participate, provided they follow a defined mechanism called the compatibility algorithm. However, what happens if this algorithm needs to be modified?
The consensus algorithm that underpins a blockchain is the basis of a decentralized network for keeping a public ledger of transactions without involving a third party;
- A fork is the result of a change in the blockchain’s consensus protocol;
- A hard fork occurs if a new blockchain permanently separates from the original blockchain. All network users must then update their software to continue participating;
- The Bitcoin Cash fork of the original Bitcoin blockchain is the best-known example of a hard fork;
- A soft fork is a divergence that occurs when a few miners continue to follow the old version of a blockchain while others opt for the new version;
- SegWit was a soft fork of the Bitcoin blockchain that illustrates how a soft fork can be successfully implemented, while keeping the state of the network intact.
Difference between hard fork and soft fork
The main difference between a hard fork and a soft fork is the need to update node software in order to continue participating in the network. The nodes of the new version of the blockchain accept the rules of the old for a given time, in addition to the new rules, and the network keeps the old version while the new is created.
The main difference between a hard fork and a soft fork essentially lies in the progression of the protocol change.
After implementing a soft fork, users who have perfect copies of the blockchain can follow both the old and new rules up to a specified point, and will make the blockchain “backwards compatible”. The miners, who are also the key to the success of the softwoods, decide how long this period will last. The result is a valid new block, where most miners only need to upgrade their software.
Some argue that tight forages are critical to the continued predictability and stability of the network, which are critical to the acceptance of cryptocurrencies for day-to-day financial transactions. Power issues related to difficult contentious issues can confuse users and lead to loss of funds if users send money to the wrong network. On the other hand, the fork allows a torpedo to self-control and adds other features, such as measurement functions for existing cryptocurrencies, which are also required for authentication. Overall, the difficulty is more in anticipation of the event than in the execution
Distribution of a new crypto following a hard fork
When a hardfork occurs, a new cryptocurrency is distributed to the community. The creation of a new blockchain which was based on an old one allows members of the latter to receive free cryptos from the new blockchain created.
There are 2 different main methods to receive the new cryptocurrency:
- Receive it by airdrop
- Give your private key to the new network
If you want to know about details then click on the highlighted link and continue to read.
All in all, hard forks are inevitable aspects of cryptocurrencies these days. Some are legit, others are sometimes scams. In any case, we must respect the opinion of the community. Since it’s an open source and decentralized system, it’s something we can’t argue against.