Understanding Blockchain Forks
What is a Blockchain Fork?
A blockchain fork is a split into the blockchain network. As the networks are open-source, the code is freely available for anyone to look at and propose improvements. Now, forks occur when the code doesn’t align among all miners. If the miners cannot form a unanimous decision about it, then it results in two versions of the same blockchain. Also, during this period, there are chances of high volatility in the crypto’s price.
How do forks work?
Forks come into existence when changes get made in the software protocol of the blockchain. It is also one way in which new tokens come into being. You can create new cryptocurrencies from scratch, but you can also fork an existing blockchain for it.
One way to launch new tokens is to copy and paste the existing code and then modify it to launch the new crypto. Although the network will have to be built from scratch. One such example is Litecoin, which started as a clone of Bitcoin. Later, the founders made changes to the code, and it convinced people. And that’s how Litecoin became popular.
The other method is forking. Rather than starting from scratch, in this method, changes are made to the existing blockchain. This results in two versions of the same blockchain. An example of this is Bitcoin Cash, which was formed as a result of a fork of Bitcoin.
Soft Fork vs. Hard Fork
A hard fork is when all users are required to upgrade to the latest version of the software. Nodes that remain on the previous version do not get accepted on the new version. In the case of a hard for, a permanent divergence is created from the previous version. If all the nodes do not unanimously agree on the new version, then two different variants of the same blockchain exist simultaneously. An example of a hard fork is the creation of Bitcoin Cash from Bitcoin.
Unlike hard forks that require all users to agree to the new version, soft forks require only a majority of nodes for it. In a soft fork, the software protocol is changed, due to which previously valid blocks become invalid. The security of the network after a soft fork depends on the number of nodes that accept the new rules. The more the nodes agree with the new rules, the more secure the network becomes.
Final Thoughts
Blockchain forks are splits or divergences created in the blockchain network. There are two types of forks: soft forks and hard forks. Hard forks require all users to agree to the new version, while soft forks just require the majority of nodes to agree to it.
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