What are hard forks and soft forks?

When you receive a notification on your smartphone about a new app update, you usually don't think twice — you simply click "update." But what if I told you that in the world of cryptocurrencies, things are different?

In open-source cryptocurrencies, everyone can contribute, even without understanding the intricacies of programming. After all, there's no centralized authority that can automatically update and alter the blockchain as it sees fit.

In this article, we'll delve into how cryptocurrency networks modernize without central management, utilizing hardforks and softforks.

Who Makes Decisions in the Blockchain World?

To understand how forks work, we need to grasp who makes decisions in the network.

In the Bitcoin network, three groups of participants stand out: developers, miners, and full node users. Although simplified nodes are widely used, they aren't full-fledged network participants.

Developers: They create and update the code. Any user with coins can propose changes since the source code is public.

Miners: Miners secure the network and add blocks to the blockchain. For example, in the Bitcoin network, they use the Proof of Work algorithm and earn rewards for block creation.

Full Node Users: These participants verify, send, and accept blocks and transactions, as well as store a copy of the blockchain.

Roles often overlap. A developer may be a miner or a full node user. Ultimately, everyone can participate or abstain from participation.

How Are Decisions Made?

Decisions are made by developers and miners. Developers write code, while miners secure the network. However, they can't impose their will. Users can choose software and interact with changes through forks.

Software belongs to everyone. Users can make changes and interact with those who use them. If users lose interest in the network, the value of coins will decrease, affecting miners' and developers' income. But this is a collective effort.

Fork: When Paths Diverge

In the world of cryptocurrencies, a "fork" isn't just a GitHub dispute. It's a significant event that alters the course of the digital financial movement. Let's understand what it is and how it affects us.

What Is a Fork?: A fork is essentially a copy of software with changes. Imagine a team of cryptocurrency website developers disagreeing. Some see it one way, others another. Then each part of the team can create its version of the site, separate from the original.

Both projects go their own way, but their roots remain the same. Like two roads diverging, they may go in different directions, but they share a common beginning.

It's important to remember that forks are only possible in open-source projects. They existed long before cryptocurrencies but became especially important in the world of blockchain.

Hardforks and Softforks: How They Differ

Though the names sound similar, hardforks and softforks are entirely different.

Hardfork: This is a software update that isn't compatible with the previous version. It occurs when new rules contradict old ones. New versions can't interact with previous ones, leading to a split in the blockchain into two networks. An example of such a fork is the emergence of Bitcoin Cash after disagreements in the Bitcoin community.

Softfork: In contrast, a softfork is an update that maintains backward compatibility with the previous version. It allows for the use of new features without requiring all network participants to update. An example could be SegWit, which changed the data structure in the Bitcoin blockchain but didn't lead to a network split.

In both cases, it's important to remember that forks retain a shared history, so users' assets are duplicated in the new network. So if you hold coins before the fork, they will exist in both chains.

Softfork: A Gentle Path to Change

In the world of blockchain and cryptocurrencies, a fork is not just a technical update but also a way to introduce changes to the system. Let's delve into what a softfork is and how it works.

What is a Softfork?

A softfork is a software update with backward compatibility. This means that new nodes can interact with old nodes without any issues. Typically, a softfork occurs when new rules are added that do not contradict the old ones.

For example, the block size can be reduced. Suppose in the Bitcoin network, there is a maximum block size but no minimum. Thus, if a rule is added to make blocks smaller, old nodes will simply reject larger blocks. This does not lead to automatic disconnection from the network. Softfork nodes can continue to interact with nodes from the original blockchain by simply filtering the received information.

An example of a successful softfork is Segregated Witness (SegWit), which occurred in the Bitcoin network. This update changed the format of blocks and transactions but maintained backward compatibility with the previous version. This allowed old nodes to continue functioning while enabling new nodes to utilize new features.

Hardfork or Softfork: Which is Better?

Both types of forks have their goals and applications. A hardfork arises from disagreements and can divide the community, while a softfork allows for system modifications while preserving compatibility.

A softfork represents a more flexible approach. It allows for changes with certain limitations to maintain compatibility with the previous version. In any case, if the update does not lead to a network split, there is no reason to worry.

Conclusion

Forks, whether hardforks or softforks, play an important role in the development of blockchain and cryptocurrencies. They enable changes and updates to the system without relying on centralized governing bodies.

Thanks to forks, blockchains and cryptocurrencies can integrate new features and evolve as needed. These mechanisms help avoid stagnation and ensure the long-term development and evolution of the technology.