A hard fork splits a blockchain into two distinct versions due to a change in the network’s code. With a hard split, two distinct blockchain versions are produced. Your nodes won’t be able to recognize transactions done on an outdated blockchain if your blockchain is updated. A hard fork cannot happen until every node approves of it.

Why do blockchain hard forks occur?

A community typically starts a blockchain hard fork to increase a coin’s utility. New features, bugs, or disagreements among bitcoin users over the currency’s future may necessitate the release of new software versions for users. The long-awaited Beacon Chain Ethereum 2.0 hard fork aims to improve Ethereum 2.0 in several ways, including enabling nodes to operate on mobile devices.

Additionally, hard forks might be used to promote a brand-new cryptocurrency. Everybody who had Bitcoin at the time of the airdrop in October 2017 received an identical quantity of Bitcoin Gold. This was done to mark the official beginning of Bitcoin Gold.

Any blockchain, not only the Bitcoin or Ethereum networks, may undergo a hard fork, as the Cardano Mary hard fork did in March 2021.

Also, read – Blockchain Forks: What They Are And Why They Matter

Added justifications for hard forks

In addition to the above-described causes, there are several reasons why hard forks may occur. To recompense consumers in the event of a blockchain network security breach is one of the justifications for a hard split. Attorneys’ transactions after a specific date are invalid in such a situation. This occurs because, after a hack, developers typically act rapidly to patch newly discovered vulnerabilities.

We will go into more detail about this vulnerability in the DAO project code later. This led to the hard split of the Ethereum Classic.

When it comes to a well-known protocol like Bitcoin, several programmers worldwide continually propose new enhancements. There is a comprehensive collection of BIPs for Bitcoin (Bitcoin Improvement Proposals). There is an EIP list for Ethereum (Ethereum Improvement Proposals).

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*Why Do Hard Forks Happen?*
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Things change,
and they often change faster and more frequently in the crypto industry than in other industries due to the fast-moving nature of blockchain innovation. pic.twitter.com/dIIH8mIC4x

— Nikhilshrivas.crypto (@nikhilshrivass) March 28, 2022

Vitalik Buterin, the founder of Ethereum, provided a great illustration of what happens during these forks in 2019.

“We will upgrade the Ethereum ecosystem to a new, more secure version in the next year to two. On top of it, things are coming soon, more rollup developments, more scaling technology developments, improvements to security, including wallets, clients, and a lot of other things, improvements to usability, improvements to privacy.”

Comparing hard forks and soft forks

Let’s first define soft forks before discussing how hard and soft forks differ in the following section of the discussion.

A soft fork makes it feasible to update to the most recent blockchain version without compromising compatibility with earlier versions. Even if they have not yet updated to the newest software, these miners can still take part in validating and confirming transactions.

Because most miners must update, soft forks are more straightforward to implement than hard forks.

The soft fork will hurt you even if you have not updated.

Assume you are a non-upgraded miner who creates a block of 1 megabytes. The most recent version, however, only permits adding blocks up to a maximum size of 8 megabytes, thereby keeping your blocks out of the ecosystem. Still, you can check incoming transactions.

In other words, soft forks compel miners to upgrade their software or risk having some functionalities disabled or restricted.

Illustrations of Hard Forks

If a community chooses a hard fork, there are three possible outcomes.

Following the hard fork, one blockchain continues to dominate, hurting the other blockchains’ community acceptance and value. For instance, many mining pools currently offer Bitcoin Unlimited (BTU) and Bitcoin Classic (BXC). Both blockchains coexist in the same area and have equal value regarding community acceptability and worth.

Although there aren’t many notable examples, Roger Ver’s Bitcoin Cash network, which in 2017 increased the block size to 8 MB, provides a rough estimate (and a 32 MB block size in 2018). It is acceptable to say that the platform has succeeded since that BCH, the digital asset created on it is one of the top 20 most valued cryptocurrencies.

The other hard forks listed here are all under $1, as you can see if you look at them. Both blockchains are used, but one is more popular than the other. One of the two chains takes the lead regarding acceptance and worth. Let’s take a deeper look at the Ethereum Classic since this is where it shines.

Additionally, DAO was developed in April 2016 on the Ethereum blockchain to create a Venture fund with investor direction. A DAO software error was exploited in July 2016 by hackers, who made off with $50 million in ETH. Ethereum split at block 1,920,000 to regain lost assets. The hard fork resulted in the creation of two distinct blockchains and currencies. 

Ethereum is the dominant force in this situation. According to market capitalization, Ethereum Classic is among the top fifty cryptocurrencies. As has already been said, Bitcoin is the most well-known cryptocurrency. In recent years, interest in “digital gold” has only grown. As a result, interest in its past, particularly the use of hard forks, has increased.

Here’s a timeline of Bitcoin’s hard forks over the years.

A planned hard fork of Bitcoin Core called Bitcoin Classic aimed to increase the maximum size of transaction blocks (Bitcoin). The Bitcoin community has not embraced Bitcoin Classic, despite some early promises.

The user can choose more significant block sizes with Bitcoin Unlimited. However, concerns that resource-rich miners would dominate profit-taking have prevented it from taking off.

Bitcoin SV – This currency was produced due to a “civil war” between two Bitcoin cash factions. Businessman Roger Ver and Bitmain CEO Jihan Wu supported keeping the block size at 32 megabytes for Bitcoin ABC (BCH) (Mb). It has been the most prosperous currency to result from the process following the Bitcoin complicated splits. The “Bitcoin Satoshi Vision” variant of Bitcoin SV, which would extend the block size limit to 128 MB, was produced by Craig Wright and Calvin Ayre as a backup solution.

Bitcoin Gold – October 2017. This fork was created in the hopes that graphics cards, rather than expensive ASICs, would make mining more affordable for regular people.

How many suggestions for improving Bitcoin have there been in the last ten years?

What is the answer’s price? Although there were 350 of them, not all of them reached the hard forks. Although blockchain technology is still in its infancy, many more hard forks will likely occur in the future.

The Conclusion

Hard forks are so-called because they force all network nodes to move to a newer version of the blockchain (that support readjusted functionality). On the other hand, a “soft” or “non-hard” fork is a software upgrade compatible with earlier blockchain iterations. Updated miners may still validate transactions.

The growth of networks requires both hard and soft forks. Despite the absence of a central authority, the community may make essential adjustments and changes.

Although we are lucky not to deal with centralized servers, hard forks cannot be avoided. Thanks to hard forks, blockchains and cryptocurrencies can swiftly embrace new features and improvements. Without a centralized server to manage everything, the ecosystem would not have been able to function.