Fork (Blockchain)

Understanding Fork (Blockchain)

A “fork” is a term used to describe modifications made to blockchain technology. It happens when the blockchain network divides into two separate versions. Since the blockchain network is open source, anyone can contribute to improving and changing the code, resulting in updates to the blockchain. Forks can also be conducted to introduce new features, fix bugs, or address the consequences of significant hacking incidents, as seen with Ethereum.

Another reason for a fork is when miners’ software updates are not in sync with each other. In such cases, the mining community must decide which direction the blockchain should take. If a consensus cannot be reached or the community fails to agree, two distinct versions of the blockchain will exist side by side.

The extent of changes in the blockchain depends on whether it is a hard fork or a soft fork.

A soft fork involves adding a new rule to the protocol that remains compatible with older rules and is backward compatible. This means that upgraded nodes can still communicate with non-upgraded nodes. In other words, old nodes will still consider new blocks as valid, resulting in a less drastic change.

On the other hand, a hard fork represents a radical change in the network’s protocol, potentially leading to the creation of new digital currencies. For example, when the Bitcoin blockchain split into two, Bitcoin Cash was created. A hard fork occurs when a permanent change is made to the blockchain network. This change is not backward compatible, requiring all nodes or users to upgrade to the new software version, as the older version becomes obsolete. The new version establishes its own transactions and blocks, essentially forming an entirely new blockchain.