In the context of blockchain, a fork is a technical phenomenon that occurs when a blockchain splits into two separate branches. These two branches share their transaction history up until the point of the split. From there on, they each go independently each in their own direction.
There are many possible reasons for the occurrence of blockchain forks. A fork can be either accidental or intentional. Intentional forks are further categorized as either soft forks or hard forks.
BLOCKCHAIN FORK ESSENTIALS
- A blockchain split that produces two competing branches.
- Can be accidental or intentional.
- Accidental forks are resolved by the blockchain.
- Intentional forks are used to implement new consensus rules.
- Hard forks require nodes to be upgraded to the new consensus rules or to rollback the state.
- Soft forks don’t require nodes to be upgraded to the new consensus rules.
- Some cryptocurrencies, like Bitcoin Cash, are created using hard forks.
Accidental and intentional forks
At any given moment, thousands of miners are competing to create a new block. With so much mining going on at once, two or more miners sometimes mine a new block at the same time. When this happens, an accidental fork is created. The problem is solved when new blocks are added to one of the chains. When that happens, the network continues working on the longer chain and abandons the shorter one.
When an intentional fork is made, the network doesn’t reconverge on a single chain. This type of a fork is used by blockchain developers to implement changes to the protocol. For instance, developers may use an intentional fork to increase block size, reduce block time, or even implement an entirely new consensus algorithm. An intentional fork can be hard or soft. The two differ from each other in terms of compatibility with the other chain and their applications.
Soft forks and hard forks
A hard fork is a fork that introduces new rules and requires the nodes in the network to upgrade their software. Consider a blockchain with a block size limit of 1 MB. If you wanted larger blocks that could store up to 8 MB of data, you would have to implement a new set of rules that would increase the block size limit from 1 MB to 8 MB. This would result in a hard fork.
When a hard fork occurs, the community members (users and miners) must make a decision. They can either update their node and switch to the newly-forked chain, or they can keep running the old software. Either way, they own cryptocurrency on both chains; they have coins on the legacy chain from before and they can claim the new protocol’s cryptocurrency on the new chain.
Once a change is put in place, any nodes that fail to upgrade to the new consensus rules can no longer participate in the consensus mechanism. They are forced onto a separate chain the moment the hard fork takes place. Non-upgraded systems can no longer process the new consensus rules, making a blockchain split by a hard fork forward incompatible with the main chain.
As opposed to hard forks, changes implemented by soft forks make the chains forward compatible. To be forward compatible, blocks created under new rules must also be valid under the old rules (but not the other way around). Due to that, a soft fork does not require nodes to be upgraded. They can keep running the old software version and still participate in the upgraded network as validators of transactions. Soft forks can be activated by users (UASF, or user activated soft fork) or miners (MASF, or miner activated soft forks).
Forks in practice
Blockchain forks occur quite often. In fact, they are one of the ways of creating new cryptocurrencies. Some popular currencies are products of hard forks. An example is Bitcoin Cash, which forked from Bitcoin in August 2017. The Bitcoin Cash fork changed the block size limit from 1 to 8 MB and later to 32 MB.
Another example of a hard fork is Ethereum Classic. This was created in October 2016, when a group of developers rejected new rules that were implemented with a hard fork. Instead, they opted to keep using the old Ethereum blockchain, which was later renamed Ethereum Classic.
Because they have the potential to split the blockchain community into two groups, hard forks normally take a back seat to soft forks in the development process. It was initially thought that Bitcoin’s SegWit protocol would require a hard fork to change the fundamental structure of transactions. However, the developers found a forward-compatible solution and implemented SegWit with a soft fork. To this day, nodes that haven’t been updated to SegWit still participate in the soft-forked Bitcoin network.
Knowing about forks will be useful for anyone who owns cryptocurrencies. In case a cryptocurrency you own is subject to a hard fork, this knowledge will help you decide which branch you should adopt and aid in choosing your wallet provider or cryptocurrency custodian.
FAQs
A fork is a split in the blockchain that happens when the blockchain diverges into two separate branches. There are two different kinds of forks – hard forks and soft forks.
What are forks in a blockchain? ›
FORKS IN BLOCKCHAIN: In simple terms, Forks in blockchain means copying the code and modifying it to create a new software or product. In open-source projects Forks are very common and used widely. So, cryptocurrencies like Ethereum and Bitcoin are decentralized and open software so that anyone can contribute.
What happens if a blockchain forks? ›
A blockchain hard fork is a change in programming that is incompatible with the old programming. This essentially creates a new blockchain and cryptocurrency. Hard forks generally require all nodes or users who wish to stay on the new chain to upgrade to the latest version of the software.
What does forking mean in crypto? ›
A cryptocurrency fork is a blockchain software update that can either implement minor changes to the existing protocol or cause it to split into two separate and incompatible protocols. If the protocol change is significant enough, it can lead to the creation of a new blockchain, plus a new coin.
What is an example of a hard fork in crypto? ›
In 2017, another hard fork was created, and a new cryptocurrency called Bitcoin Cash (BCH 1.31%) was born. In 2018, Bitcoin Cash also had a hard fork, creating Bitcoin Cash ABC (the original version) and a new parallel network called Bitcoin Cash SV (CRYPTO:BSV).
Can anyone fork a blockchain? ›
Soft forks & improvement proposals
The open nature of blockchains extends to their open-source protocols, allowing anyone to suggest a big fix, smaller change or feature upgrade.
What is fork trading? ›
Forks occur when the software of different miners become misaligned. It's up to miners to decide which blockchain to continue using. If there isn't a unanimous decision, then this can result in the creation of two versions of the blockchain. There can be periods of increased price volatility around such events.
How many times has Bitcoin been forked? ›
Both blockchains maintain the same history up to the time of the split (as in who owns how many cryptocurrencies and who has sent who how many), but operate independently. As of late-November 2023, over 100 Bitcoin forks have occurred.
Can money get lost on the blockchain? ›
When Bitcoin is lost, it essentially becomes irretrievable and permanently unspendable. The blockchain records the bitcoin as still existing at a certain address, but without the private key, it cannot be moved or spent. This creates a situation where the bitcoin is still “there,” but effectively gone forever.
Can Bitcoin get stuck in blockchain? ›
However, if there is a sudden spike in network congestion, or if you set a custom fee that is too low, it's possible for your Bitcoin transaction to get stuck. You can confirm if your Bitcoin transaction is stuck by comparing the fee you paid with the current fee rate on a block explorer.
This article will explore the expansive and diverse world of blockchain technology, delving into the over 1,000 distinct blockchains that exist as of 2024, each offering unique functionalities for various industries.
What is the purpose of forking? ›
The Forking Workflow helps a maintainer of a project open up the repository to contributions from any developer without having to manually manage authorization settings for each individual contributor. This gives the maintainer more of a "pull" style workflow.
Is Ethereum a fork of Bitcoin? ›
The Bottom Line. Bitcoin and Ethereum are two blockchains with their own cryptocurrencies, bitcoin and ether. Each was created with different purposes in mind to address separate issues, but they also have many similarities.
Is a hard fork good or bad? ›
Is a Hard Fork Good or Bad? It depends. Hard forks can bring beneficial updates or resolve key issues but can also lead to community splits and instability in the short term.
Who decides hard fork? ›
Hard forks refers to a rule change that comes with wide-ranging implications on the entire protocol of the blockchain network. A fork can be started by the developers of the blockchain or by community members.
What is a soft fork in blockchain? ›
A soft fork is a backward-compatible change to the blockchain protocol that allows new rules to be introduced without requiring all users to upgrade their software.
What is a block fork? ›
Block or brick forks are specifically used for picking up bundles of cinder block or brick. These forks are typically purchased in quantities of 4 or 6, depending on the machine.
What is the use of chain fork? ›
Chain forks can be used in many ways. As shown below the chain fork lifts a completely wrecked truck -no axles or tires -and the under reach functions as a tow bar. The other picture shows a dump truck lifted from the rear where no easily accessible lift point was available.
What is a fork in programming? ›
A fork is a new repository that shares code and visibility settings with the original “upstream” repository. Forks are often used to iterate on ideas or changes before they are proposed back to the upstream repository, such as in open source projects or when a user does not have write access to the upstream repository.
