What does Fork Mean?
How many types of Forks in are there in Cryptocurrency? What’s the difference between
Soft Fork and Hard Fork? If you are also looking answers for all these
questions, then you’ve come to the right place.
Each software requires
updates to keep them up to date with the changing dynamics and to enhance their
offering. In the dictionary of Crypto, it is termed as “forks”. As you have
heard already, what is the Difference
between soft fork and hard fork. If put in simple words, the only difference between the two
forks is that Soft Fork also supports the prior version of the software whereas
Hard Fork is a permanent alteration which is not compatible with the earlier
version.
What
Is Fork And How Many Types Are There?
The crypto
community is one big family, and each member of the chain is known as a node.
To co-exist, each node needs to align by a bunch of rules called “protocols”.
The basic rules of the protocol are decided by its creator. The blockchain
size, the mining rewards, etc., are selected for the community, and they all
then work together.
So, Fork is a sort of
upgrade or update in the program code of the blockchain that modifies the
working principle of the intact blockchain. Now, there are two Forks, one of
which can be reversed, i.e. Soft Fork and the other is backward-incompatible,
i.e. hard Fork.
A soft fork indicates the
minuscule modifications made to the chain, whereas as the name goes, hard fork
changes are usually more substantial and radical
Contrary to popular belief, a
forking is possible in all blockchain-based platform and not just bitcoin. This
is by virtue of the fact that all cryptocurrencies are primarily based on the
blockchain technology only. Each particular block can be perceived as a crypto
key which helps in pushing the block memory further forward.
Now, let’s know both the
forks separately with past examples in the crypto industry.
1. What is Soft Fork In Crypto?
The backward-compatible upgrade to the protocol is called Soft
Fork, which signifies that even after the Fork that resulted in the formation
of a new chain, the earlier nodes can still process transactions. However, the
older blocks should follow the new rules.
For instance, if
according to the Fork, the block size of more than 3MB could no longer be
processed, previous nodes would still be able to push blocks that are less than
3MB in size. Since the earlier nodes were not as capable as the latest, it
encourages it to update to the new protocol. But if a user is not interested in
using the advanced version, he can still continue using the previous version
but without the latest features.
To perform a Soft Fork,
the approval of the majority of members in the chain is required.
Some of the examples of
Soft Fork that happened in the crypto industry in the past are BIP (Bitcoin
Improvement Proposal) and P2SH.
2. Hard Fork/Hard Fork In Bitcoin
Hard Fork is rather complicated than a soft fork as it
implements significant alterations to the protocol. These changes are so
extreme that it results in two distinct cryptocurrencies, one of which stays
unchanged and the other is an entirely new altered version. After the division,
the transactions occurring the former blockchain would not be identified by the
new chain. This is why Hard Fork is followed by many controversies and
uncertainty in the community.
Hard Fork forces the
community to pick sides which is one of the reasons that it is implemented very
rarely. However, if done correctly, it can result in an efficient upgraded
network with enhanced immunity.
One of the
well-recognized examples of the Hard Fork in Bitcoin is Bitcoin Cash, (the split between Bitcoin and
Bitcoin Cash) and the split between Ethereum Classic and Ethereum, i.e. Ethereum Classic Hard
Fork.
Types Of Hard Fork
While mostly, Hard Forks brings controversies, it can also be
planned by the consent of the majority of members and developers in the
community. Hard Forks are of various types among which the two most popular are Contentious Hard Fork
and Planned Hard Fork.
1. Planned Hard
Fork: The Fork
which has been prepared from the very starting of the project and is agreed
upon by the majority of developers with the consent of the community is called
planned hard Fork. Planned Hard Fork brings in a much better version of the
existing coin with enhanced chain abilities and features. In 2017, Monero went
through a hard fork which brought aRing Confidential Transactions (RingCT), a
new privacy feature to the chain.
Some other examples of
planned hard Fork happened previously in the crypto industry includes Ethereum
Byzantium and Segregated Witnesses (Segwit).
2. Contentious Hard
Fork: A contentious
hard fork occurs when there is conflict within the space regarding the Fork
that results in two different chains, one unchanged and another, the better
version of the original. One of the major Hard Fork of Bitcoin performed in the past is
Bitcoin Cash. Crypto community had faced such controversies in the history
regarding extending the block size of Bitcoin to 8MB from 1MB, which was deemed
to make the transactions faster. Eventually, the disagreement emerged as the
hard Fork of the chain.
Both Bitcoin Cash Hard Fork and Ethereum Classic were
controversial hard forks. In the case of Ethereum Classic Hard Fork, most of the member, including
their core developers, were in favour of hard Fork due to which they kept the
original ETH name and symbol. However, other members who didn’t agree upon the
Fork are now called Ethereum Classic (ETC).
Conclusion:
Cryptocurrency forks, whether soft Fork or
hard Fork, planned or Contentious is a topic of discussion. Forking can also
also be seen as one of the core value of any-open source Cryptocurrency because
it further enhances the security of the blockchain. Fork also provides the investors
as well as miners with a voice in case of disagreement with the developers of
the coin.
There is much excitement among the people who are expecting the milestone for the price of Bitcoin reaching the target of $50,000 in the coming year, i.e. 2021. The impatience seems to have gripped them so much that they want it to happen more sooner. The recent tweet of Kelvin Koh, who is now the current partner at The Spartan Group is very much sure about the Bitcoin to make a big move after analyzing its current movement from $7K to $9K.
