A fork, as it relates to blockchain technology, is defined as a software or protocol upgrade which can be backwards-compatible or non-backwards-compatible. Simply put, a fork takes place when a blockchain parts into two sections.
“What happens when a blockchain wanders into two potential paths forward by any chance?”
The above question might sound irregular, but you may hear it anyway. To tackle the issue, this fundamentally causes a fork in a blockchain. In the realm of cryptocurrencies or blockchains, these forks are major of two classes relying upon its tendency of change:
- Soft Fork
- Hard Fork
Before we go deeper into details on the soft fork, hard fork and other strange-used words, I would like to give a clear explanation of each term ensuring that we are having the same understanding.
Blockchain Protocol: The code convention which defines the connection, mining and transaction rules. To be a part of the network, you must comply with the protocol.
Fork: a protocol change which is not the same as the essential one happened when the single blockchain parts into two.
Is It Necessary to Update the Blockchain Consensus Protocols?
Just so you know, the networking field is changing fast, not to mention that updating the protocol could improve and strengthen the network as follows:
- To fix important security threats detected in past adaptation of the software: As cryptocurrencies are a relatively new creation, also new in the market, they might be facing larger issues, for instance, hackers could buy or falsify the data of crypto wallet’s owners without any consent. However, by updating the protocol, it is way harder to steal or counterfeit it.
- To enhance new functionality: The blockchain code is upgraded from year to year. As it is an open-source development, developers are exploring ways to improve multiple technical aspects of the blockchain. For example, some communities are considering ways to validate transactions through distributed consensus different than the “proof-of-work”.
- To reverse transactions: Have you ever transferred a large amount of money into someone’s account by mistake? What will you do in such a tensed situation and will you get your money back? To answer these questions, it took a lot of hard work and might involve higher authority to earn back your money, saying that you need to cooperate with the bank, the beneficiary account’s holder and even worse, get a lawyer to retrieve your money. In the crypto world, you can actually handle this problem. When the community discovers they have a security breach, they can proclaim all the transactions made from the specified date as not existing, simply saying, nothing happened.
Upgrading a blockchain network poses serious challenges. For any protocol change to be invented and deployed, the accompanying issues must be considered:
- Coordination: How do all nodes agree on the adoption of the new regulations?
- Transition Security: Does the transition to the new rules opens up security loopholes or breaks some assumptions?
- Transition Reliability: Is the transition implemented correctly and how likely it to contain error and cause the blockchain to fork?
- Feature Security: Is the upgraded protocol more secure than previous ones?
Now let’s talk about each one in a more detailed way.
What is Soft Fork?
In terms of blockchain technology, a soft fork is a protocol upgrade with backwards-compatibility, where just beforehand valid transactions or blocks ended up invalid. Soft forks are simpler to execute than hard forks since they just involve a greater part of members to overhaul the software. However, soft forks cannot be reversed without a hard fork.
An example of a soft fork would be a new rule modifying the block size, says, a block size has a minimum of 3MB. A new rule up it to 4MB. A greater part of nodes should be upgraded to conform to the new regulation or else, the soft fork fails, and the original chain carries on unaltered.
What is Hard Fork?
A hard fork is defined as a significant change to the protocol ― all valid blocks/transactions in an older version of software become invalid (or vice-versa). Simply put, a hard fork occurs when a blockchain diverges into two paths; one path pursues the new principles updating blockchain and the other way continues along with the older version. If nodes are yet running the older version will end up in a different protocol and unexpected data in comparison to the recent one. In other words, nodes running the past variant software will perceive any new transactions as invalid.
A case of a hard fork would be the usage of another standard permit of block size to be expanded. Say, a new rule allows block size to be increased from 2MB to 4MB, a 3MB block can be approved by the nodes running the new version but rejected by the older one.
Hard Fork & Soft Fork Cases
One well-known instance of a soft fork was the DAO hacking case back in 2016 which resulted in 3.6 million of Ether were drained. In order to prevent hackers from cashing, the crypto community decided to implement a soft fork. Not long after that, the majority had voted for the hard fork as well. Hard forks can have a profound impact on the cryptocurrency and not just because of uncertainty caused. The Bitcoin Cash hard fork is a genuine case of a twist that can occur. The primary cryptocurrency ends up with an equivalent number of forked off coins, given that you had held 10 Bitcoin during the time of the Bitcoin Cash forked, you could also get 10 Bitcoin Cash. Looking for more? Bitcoin Cash has higher transaction speed and less decentralized as opposed to Bitcoin.
What's Your Reaction?
A keen researcher who believes in enriching her knowledge. For Shuhada, the crypto world intrigues her sense and offers plenty of high delicious 'crypto cuisines'.