To the layman, hard forks and soft forks may seem like some strange cutlery.However, in cryptocurrency parlance, forks refer to splits in a blockchain.Network developers often undertake voluntary software or protocol updates on their blockchains for various reasons.These updates can be of two kinds – hard fork and soft fork.
Soft forks are minor changes made to the blockchain.These changes do not disrupt the functional continuity of the blockchain’s previous version.This means that, non-upgraded users can still interact with non-upgraded users.Soft forks are backwards compatible.
On the other hand, hard forks are substantial changes made to the blockchain.
These changes result in a discontinuity or disruption of the blockchain’s previous version.With a hard fork, non-upgraded users will not be able to interact with upgraded users.As such, hard forks are backwards incompatible.
The concept of changing the underlying rules or protocols of a software by the community is a common trait of open-sourced software.However, the concept of hard forks and soft forks is exclusive to blockchain technology.
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Who can make changes in a blockchain network?
Before we dive deeper into the concepts of hard and soft forks, we must first understand who can make the changes in a decentralised blockchain.As various blockchains operate differently, we will take the example of Bitcoin and its governance.
and its governance.
Developers
Individuals responsible for developing the code of the blockchain network are known as developers.
They define the logic and establish the rules for a blockchain network.But as blockchains are open-source software, anyone can make changes in the code of a network and become a developer.
Miners
Individuals who verify transactions and add them to the blockchain are known as miners.In the Bitcoin blockchain, miners dedicate their computing power to solve complex mathematical puzzles to verify and validate transactions.They are rewarded for every block they add to the network.Currently, this reward is 6.25 BTC.
Node operators
Individuals who keep a copy of the blockchain for security and verification of transactions are known as node operators.Many consider node operators as the backbone of a blockchain network as they are the ones that make the network decentralised.
Keep in mind these categories can overlap with each other.
For example, a miner can also be a node validator and a developer.And none of the entities mentioned above has significant power over each other.All of them have a function to play in the network.
Still, one can also argue that without node operators, the network cannot be truly decentralised, so their importance might supersede the importance of developers.This is because users and operators of the network can ignore the changes made by developers.
Hard forks vs soft forks
Let us look at the differences between hard and soft forks.
Hard forks
When there is a hard fork in a blockchain, the new version is substantially different and incompatible with the previous version.It is a permanent divergence from the last version of the software.It is a permanent divergence because the nodes in the new iteration cannot communicate and reach a consensus with the nodes of the previous version.You can think of the two versions almost like two different networks that run separately.
The new version of the blockchain works with new rules created by the fork, and the old version still runs off the old rules before the fork.
The only thing common between the two networks is their shared history.Suppose you held 5 BTC before a hard fork in the network, then you would end up owning 5 BTC on both the newer version and the older version of the blockchain.
Hard forks usually happen when a particular part of the community wants to introduce a new feature in the blockchain, while the other part does not want to.There could be various reasons to introduce new changes, such as scalability, increased security and so on.
One of the most famous examples of a hard fork was the Bitcoin network’s 2017 fragmentation into two separate chains: Bitcoin (BTC), and a new one, Bitcoin Cash (BCH).
The fork occurred because some people in the community wanted to address Bitcoin’s scaling problem.The proponents of the hard fork wished to increase the block size, while the others were opposed to it.
Soft forks
Unlike hard forks, nodes of the newer blockchain version can still communicate with the nodes of the older version.The rules introduced in a soft fork do not conflict with the older rules.Soft forks are also often used to implement new features at a programming level that won’t be visible to network users.
The communication between the new nodes created by the soft fork is seamless with the old nodes.The new nodes simply filter out the information of the old nodes that is not necessary to the operation of the new nodes.
An example of a soft fork would be the Segregated Witness fork for Bitcoin after the BTC and BCH hard fork.It also addressed the scalability of Bitcoin without creating a hard fork.SegWit was an update that just changed the format of blocks and transactions in a way that allowed old nodes to still validate blocks and transactions; they just wouldn’t understand them.
(Edited by : Priyanka Deshpande)
First Published: IST.
