What is soft fork and hard fork in bitcoin

Retrieved 17 June Mastering Bitcoin: Programming the Open Blockchain 2 ed. USA: O' Reilly media, inc.

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Retrieved 7 January Retrieved 20 August PC World. Retrieved 5 January Archived from the original on Retrieved April 28, Retrieved 23 April These forks allow for different buying opportunities for the cryptocurrency. There are many different forks that serve different purposes, and some have maintained value better than others.

Learn more about Bitcoin forks and what they mean for investors. The concept of forks and the technology involved is extremely complex, but the easiest way to think about a Bitcoin fork is that it introduces a new set of rules for Bitcoin to follow. Because a new rule is introduced, the users mining that particular Bitcoin blockchain can choose to follow one set of rules or another, similar to a fork in the road.

Hard Fork (Blockchain)

Fundamentally, these forks arise out of different perspectives on transaction history. This can happen due to delays in the system. As Bitcoin became more and more popular, the blockchain technology it was built on slowed down. This resulted in the entire system becoming unreliable and the transaction fees getting more expensive. Because of this slowdown, Bitcoin needed to create a solution that would scale as more users bought and sold the product.

What Are Bitcoin Forks?

Forks allow for a different development structure and experimentation within the Bitcoin platform, without compromising the original product. The original Bitcoin was developed on 1-megabyte blocks, which was limiting as the cryptocurrency scaled and became more popular. These forks can be developed on larger blocks, and they result in a brand new currency. Buying and selling either original Bitcoin or any of its forks is highly speculative at this point, and you can lose a lot of money quickly. Only spend what you can afford to lose. There are two types of Bitcoin forks—soft forks and hard forks.

A soft fork is a change to the Bitcoin protocol, rather than changing the end product. A fork is a change to the protocol, or a divergence from the previous version of the Blockchain.

What is a Bitcoin hard fork? Simply Explained!

This means that participants that did not upgrade to the new software will still be able to participate in validating and verifying transactions. It is much easier to implement a soft fork as only a majority of participants need to upgrade the software. A point to take note, however, is that the functionality of a non-upgraded participant is affected. An example of a soft fork is when the new rule states that the block size will be changed from the current 1MB 1,KB to KB.

Non-upgraded participants will still continue to see that the incoming new transactions are valid.



The issue is when non-upgraded miners try to mine new blocks, their blocks and thus, efforts will be rejected by the network. Hence, soft forks represent a gradual upgrading mechanism as those who have yet to upgrade their software is incentivized to do so, or risk having reduced functionalities. All participants must upgrade to the new software to continue participating and validating new transactions.

Definition & Examples of Bitcoin Forks

This separation results in a permanent divergence of the Blockchain. As long as there is support in the minority chain — in the form of participants mining in the chain — the two chains will concurrently exist. Ethereum had a hard fork to reverse the effects of a hack that occurred in one of their applications called the Decentralized Autonomous Organization or simply, DAO.

However, a minority portion of the community was philosophically opposed to changing the Blockchain at any costs, to preserve its nature of immutability. Bitcoin Cash is a cryptocurrency that is a fork of Bitcoin. Bitcoin Cash is a spin-off or altcoin that was created in Bitcoin Cash is sometimes also referred to as Bcash.

What is soft fork and hard fork in bitcoin
What is soft fork and hard fork in bitcoin
What is soft fork and hard fork in bitcoin
What is soft fork and hard fork in bitcoin
What is soft fork and hard fork in bitcoin