Hard Fork (Blockchain)

Understanding Hard Fork (Blockchain)

A hard fork is an event in which a blockchain splits into two separate blockchains that run parallel to each other. These two blockchains have different parameters compared to the previous chain.

During a hard fork, the forward compatibility of crypto-assets is broken. This means that even if the transaction history and parameters were the same before the hard fork, the history of both networks becomes disconnected after the event. Any activity that occurs beyond the fork will not be reflected in the other network. Hard forks can occur accidentally due to bugs or errors in the blockchain, or they can be intentional decisions made by the cryptocurrency community.

Hard forks are significant events that are typically communicated well in advance to a cryptocurrency’s community. They are the subject of extensive discussions and debates within the crypto community as they evaluate the advantages and disadvantages of modifying specific characteristics of a project. These modifications often involve aspects such as block size, rewards, and hard cap.

For example, in 2017, there was a proposal to hard fork Bitcoin and increase its block size from 1 MB to 8 MB to facilitate faster and more transactions. However, this proposal faced strong opposition from the majority of the community. As a result, a portion of the community split and created Bitcoin Cash (BCH). Bitcoin Cash has since undergone its own hard forks, resulting in the creation of Bitcoin Cash ABC (BTCA) and Bitcoin SV (BSV). The most recent hard fork in 2020 led to the emergence of a new chain called Bitcoin Cash Node (BCHN), which replaced BTCA as the “official” BCH.

Ethereum also experienced a well-documented hard fork in 2016 following the DAO’s replay exploit. This hard fork resulted in the original chain operating as Ethereum Classic. In 2020, Ethereum encountered an unexpected but minor hard fork due to the developers’ failure to properly communicate unscheduled upgrades to the community and infrastructure providers. This caused infrastructure provider Infura and others to run outdated and conflicting software.