Blockchain technology underpins decentralized, open-source digital currencies like Bitcoin (BTC) and Ethereum (ETH). A fork is a modification to the protocol that governs a blockchain. A blockchain fork is a significant network upgrade that can be either radical or modest, and it can be started by developers or community members.Node operators, or the devices linked to the blockchain that support transaction validation, must update to the most recent protocol version. Each node maintains a copy of the blockchain and makes sure that new transactions do not go against its historical records.A hard fork is a significant update that can render earlier transactions and blocks legitimate or invalid and necessitates an upgrade by all validators on the network. It is not retroactively compatible. An upgrade to the software that is backward-compatible and has validators in an earlier version of the chain that see the new version as valid is known as a soft fork.A hard fork effectively results in a permanent chain separation because the previous version is no longer compatible with the new one. Due to their shared history, holders of tokens on the previous chain are also given tokens on the current one. There are various reasons why hard forks can occur. Let's see what distinguishes a hard fork from a soft fork and what is more optimal to a blockchain with <a href="https://www.builder.news/" alt="Builder.news" title="Builder.news" target="_blank" rel="nofollow" class="">Builder.news</a>!<h2>What is a hard fork?&nbsp;</h2>It's critical to first comprehend blockchain technology to understand what a hard fork is. In essence, a blockchain is a chain of data blocks that serves as a digital ledger, with each new block becoming genuine only after its predecessor has been verified by the network validators. Data on the blockchain may be tracked back to the network's very first transaction. Because of this, the first block on the Bitcoin blockchain is still visible.A hard fork is effectively a permanent divergence from the most recent version of a blockchain. This results in the blockchain being split into two separate networks that operate independently of one another since some nodes can no longer reach a consensus.To put it simply, this results in a fork on the blockchain where one path continues to follow its present set of rules while the second way adopts a new set of rules. As a result of a hard fork, the previous version no longer recognizes the new one as legitimate.Due to the frequent chain splits, hard forks are frequently perceived as dangerous. The network itself becomes less secure and more open to attacks if there is a division between the miners who protect the network and the nodes who aid in transaction validation.A 51% attack, which happens when a cabal of miners manages to control more than 51% of the processing power that protects a network and uses it to change the blockchain's history, is a frequent approach to carry out a harmful activity against a blockchain. Several hard forked networks have experienced numerous 51% attacks when malicious players double-spent the same funds. In these attacks, malicious actors restructure blocks to enable double-spending by taking advantage of the network's higher computing power.Replay attacks are another weakness that hard forks may have. When a malicious party intercepts a transaction on a branched network and duplicates the data on the other chain, this is known as a replay attack. Both transactions become valid in hard forks without replay attack security, allowing one person to move another user's funds without having control over them.<h3>Reason for hard forks happening</h3>Why do hard forks occur at all if they can significantly lower a blockchain's security? The solution is easy: Hard forks are network changes that are required as blockchain technology develops further. A hard fork can occur for a variety of reasons, not all of which are bad, some of the positive affection are to:<ul><li>Add functionality&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Correct security risks&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Resolve a disagreement within a cryptocurrency community&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Reverse transactions on the blockchain</li></ul>However, accidental hard forks can also occur. These situations frequently have a quick resolution, and people who were no longer in agreement with the main blockchain return to it after recognizing what had happened. Similar to soft forks, hard forks typically enable individuals who break consensus to rejoin the main chain by adding functionality and improving the network.<h3>Examples of hard forks</h3>The DAO hackThe decentralized autonomous organization (DAO), which was introduced on the Ethereum network in 2016, was related to another significant historical hard fork. Before the initial coin offering (ICO) boom of 2017, the DAO raised $150 million in ETH at the time in one of the first crypto crowdfunding campaigns. It was essentially a precursor to the decentralized governance models that DeFi protocols employ, in which token holders decide the protocol's direction.<img src="https://cdn.builder.news/news/11edc95dc54b94fd91de028438497b73.jpg" alt="The DAO hack" title="The DAO hack" width="600" height="279" class="lykafe0">The DAO was compromised for $60 million worth of ETH from 11,000 investors shortly after launch. Over 14% of all circulating Ether was invested in the DAO at the time when Ethereum was trading for less than $10, and the attack severely damaged trust in the network.The Ethereum community got into a discussion over how to respond to the attack as everyone was trying to figure it out. Initially, Vitalik Buterin, the creator of Ethereum, suggested a soft fork that would ban the attacker's address and stop them from transferring assets.The attacker—or a person impersonating them—replied to the community by asserting that the money had been acquired "legally" and in compliance with the terms of the smart contract. They allegedly threatened legal action against anyone who attempted to take the money. Emotions increased when the attacker threatened to bribe ETH miners with the money to foil attempts at soft forks.Once more, there was a discussion before a hard fork was suggested. When the hard fork was finally put into action, it changed the history of the Ethereum network to what it was prior to the DAO assault and redistributed the stolen cash to a smart contract where investors could withdraw their money.Bitcoin Cash SV vs Bitcoin Cash ABCIn August 2017, the Bitcoin blockchain underwent a hard fork that produced Bitcoin Cash. Later, as disputes arose among factions within the community, Bitcoin Cash split into two networks. There was Bitcoin Cash ABC (BCHA), a development team working to advance the underlying technology, on the other side. On the opposing side, there was a group called Bitcoin Cash SV (BSV) that was working to increase the block size from 32 MB to 128 MB with the help of self-declared "Satoshi Nakamoto" Craig Wright.The blockchain split in two at block 556,767, sparking competition for the BCH ticker symbol. Each side's miners used every resource at their disposal to gain a hash-rate advantage over the other. Many advocated for a 51% attack on the opposing network to rearrange its blocks and force its supporters to switch allegiance.Bitcoin exchanges and other companies declared that they will give the winning blockchain's BCH ticker credit. Some mining pools committed all of their resources to the hash wars, which ultimately resulted in Bitcoin Cash ABC controlling the bulk of the hash rate and thwarting any efforts at a 51% attack. Then, when the rival network chose to use BSV as its ticker, it claimed the BCH ticker on exchanges and other services.<img src="https://cdn.builder.news/news/11edc95dc54b9f3c91de028438497b73.jpg" alt="The evolution of Bitcoin Cash forks" title="The evolution of Bitcoin Cash forks" width="600" height="139" class="lykafe1">The evolution of Bitcoin Cash forks<h2>What is a soft fork?</h2>A soft fork is a rule adjustment that is forward-compatible as opposed to a hard fork, which is a blockchain upgrade that is backward incompatible. Since the split is a forward-compatible change, the old blockchain will continue to accept blocks from the new advanced blockchain platform even though the rules have changed as a result of the new upgrade.Generally speaking, a soft fork persuades the legacy blockchain network to accept the modified rules, enabling the simultaneous acceptance of both the upgraded and legacy blocks of transactions.A soft fork, as opposed to a hard fork, maintains the previous blockchain by maintaining two lanes with distinct rules and standards. A successful example of a soft split is the 2015 Segregated Witness (SegWit) Bitcoin protocol upgrade.The Bitcoin system was a little more expensive ($30 per transaction) and time-consuming before the SegWit upgrade. According to the SegWit upgrade's creators, signature data also takes up about 65 percent of a transactional block. SegWit, therefore, argued for an increase in the effective block size from 1MB to 4MB.This enhancement aimed to separate or remove signature information from transactional data records on each blockchain block, freeing more room for more transactions to occur in each block. With the execution of a soft split, the prior Bitcoin network was prepared to accept brand-new 4MB and 1MB blocks concurrently.Using a clever technical strategy, the soft fork enabled the old nodes to validate the new blocks without breaking the old ones, allowing both parties to participate in the network.<h3>Examples of soft forks</h3>SegWit&nbsp;The proponents of the "SegWit" concept held that Bitcoin's block size didn't need to be raised indefinitely. They believed that this would lead to scaling problems because each node would require a substantial amount of hardware. They also supported the one-megabyte block size limit that Satoshi Nakamoto added to Bitcoin in 2010.&nbsp;SegWit is the outcome of this group's efforts to find a solution to increase the number of transactions per block while maintaining the maximum block size in order to stay true to Nakamoto's original intentions. While we will go into greater detail on SegWit in a different article, this protocol update involves eliminating (segregating) the "witness" data from the list of inputs that were required to verify transaction legitimacy but were not required to ascertain transaction effects. The SegWit blockchain is therefore a soft fork of the original Bitcoin blockchain.&nbsp;The opposing side, which favored scaling Bitcoin, disagreed. Advocates of this movement disagreed with the block size restriction and thought SegWit was overly complex. When Bitcoin was averaging seven transactions per second, how could it possibly become the dominating money of the future? Why not simply increase the block size and give the network additional capacity? The end outcome was what is known as a "contentious" fork because the factions were unable to come to an agreement on how to proceed.&nbsp;<img src="https://cdn.builder.news/news/11edc95dc54ba47791de028438497b73.jpg" alt="How Segwit soft fork happens" title="How Segwit soft fork happens" width="600" height="631" class="lykafe2">How Segwit soft fork happens (Source: bitpanda)<h2>Difference between hard forks and soft forks</h2>The software powering a cryptocurrency can be updated in other ways other through hard forks. Contrarily, soft forks are viewed as a more secure option that is backward compatible, ensuring that nodes that do not update to newer versions will still regard the chain as valid.A soft fork can be used to offer new features and capabilities without altering the requirements that a blockchain must adhere to. To incorporate new features at the programming level, soft forks are frequently employed.To better appreciate the distinction between hard forks and soft forks, consider how an operating system upgrade works on a computer or a mobile device. All of the device's applications will continue to function with the upgraded operating system after the upgrade. In this case, a hard fork would mean switching entirely to a new operating system.<table><tbody><tr><td data-colwidth="125" style="background-color: #f9cf2e;">Characteristics</td><td style="background-color: #f9cf2e;">Hard Forks</td><td style="background-color: #f9cf2e;">Soft Forks</td></tr><tr><td data-colwidth="125" style="background-color: [object Object];">Authority level</td><td style="background-color: [object Object];">They often make a change to the original protocol, thus requiring a stronger consensus of nodes and miners.</td><td style="background-color: [object Object];">The changes are made on the network level and can occur even when a small section of developers wants to add small upgrades.</td></tr><tr><td data-colwidth="125" style="background-color: [object Object];">Split in the chain</td><td style="background-color: [object Object];">The original chain splits into two.</td><td style="background-color: [object Object];">There is no splitting as the original chain moves forward with minor upgrades.</td></tr><tr><td data-colwidth="125" style="background-color: [object Object];">Need for upgradation</td><td style="background-color: [object Object];">All the users on the network need to agree to the new chain to use it.</td><td style="background-color: [object Object];">Only the ones that use upgrades need to upgrade their network.</td></tr><tr><td data-colwidth="125" style="background-color: [object Object];">Vulnerability</td><td style="background-color: [object Object];">It is not backward compatible. Hence hackers can take the majority consensus by manipulation and create a hard fork.</td><td style="background-color: [object Object];">It is backward-compatible, so attackers can reinstate earlier models by manipulating the nodes.</td></tr><tr><td data-colwidth="125" style="background-color: [object Object];">Power Requirements</td><td style="background-color: [object Object];">Hard forks require high computational power since a new side chain generates out of the original one.</td><td style="background-color: [object Object];">Generally, 51% hash power is required for a soft fork.</td></tr></tbody></table><h3>What is more optimal?</h3>Hard and soft forks, according to cryptocurrency exchanges and other business networks, serve different goals. Intelligent and well-planned hard forks may lead to software changes that everyone can agree on, even though controversial ones can split the community.Soft forks are used in place of hard ones because they are kinder and more diplomatic. There is no need to worry about fragmentation if the improvements are written so that they do not conflict with existing regulations.It is obvious that a lot of effort needs to be done to ensure a seamless transfer of blockchain maintenance and updates, regardless of the split method employed. Hard forks are preferred by the majority of blockchain miners and traders because they lessen the risk of approving or mining incorrect blocks.Hard forks ensure that blockchain users, including miners and traders, are not left behind or duped, especially while they are in use. However, hard forks use a lot of computational power and are thought to be detrimental to the development of digital currencies.In spite of the growing uncertainties, soft forks offer a vastly faster alternative to blockchain software updates without using up additional processing power. Soft forks are frequently commended for their capacity to introduce improvements without producing a division in society.Bottom linesEvery blockchain network, like any program or piece of software, needs updates in order to continue serving ever-larger goals. We can implement decentralized software updates without a centralized authority's involvement thanks to hard forks and soft forks. Networks wouldn't be able to adopt new features without forks, which would force the deployment of a centralized system for ultimate control.<div class="pr-block-special">Disclaimer: This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

In a soft fork, changes to the blockchain's rules are more modest and backward compatible, whereas a hard fork involves considerable modifications. Let’s discover the difference between the two!

Distinguish hard fork and soft fork for a better understanding