Fork: Divergence in Blockchain Rules, Divided into Soft Fork and Hard Fork
I. What is a Blockchain Fork?
In the blockchain network of cryptocurrencies, a “fork” essentially refers to a phenomenon where the network branches off after a divergence in blockchain rules. As a decentralized distributed ledger, blockchain operates based on rules jointly followed by all nodes in the network (such as transaction verification and block size limits). When the community or development team has different opinions on existing rules—for example, proposing to modify block capacity to improve transaction efficiency or adjusting verification mechanisms to fix security vulnerabilities—if a unified consensus cannot be reached, some nodes will continue to record transactions according to the new rules, while others will stick to the old rules. The originally unified blockchain will then “fork” into two independent chains, which is the core logic of a blockchain fork.
A fork is not a “malfunction” of the cryptocurrency network; instead, it is a natural phenomenon under the decentralized nature of blockchains, used to address rule iterations and opinion divergences. It is common in mainstream cryptocurrency networks such as Bitcoin and Ethereum, and different types of forks have significant differences in their impact on the circulation, value, and users of cryptocurrencies.
II. Soft Fork: A “Mild Fork” Compatible with Old Rules
1. Definition and Characteristics of Soft Forks
A soft fork is one of the common types of blockchain forks, with the core characteristic of “backward compatibility”—that is, after the introduction of new rules, nodes following the old rules can still normally verify blocks generated under the new rules and will not be excluded from the network. Eventually, the entire network will gradually unify under the new rules without forming two long-term independent chains.
Specifically, a soft fork is usually a “tightening” rather than a “subversion” of existing rules, such as reducing the maximum block size or adding additional conditions for transaction verification. Since old nodes recognize blocks under the new rules (new blocks meet the core requirements of the old rules), while new nodes do not recognize non-compliant blocks under the old rules, as more nodes upgrade to support the new rules, old nodes will gradually accept the new rules, and the network will eventually return to unity. This is why soft forks are called “mild forks.”
2. Cryptocurrency Cases of Soft Forks
The “Bitcoin Improvement Proposal BIP66” in Bitcoin’s history is a typical example of a soft fork. In 2015, to fix a vulnerability in Bitcoin transaction signature verification, the development team proposed BIP66, which required transaction signatures to comply with a stricter format. Blocks generated by nodes supporting the new rules met the basic requirements of the old rules and could be normally verified by old nodes; however, if old nodes generated blocks that did not conform to the new format, they would be rejected by new nodes. As most nodes upgraded to support BIP66, the entire network quickly unified under the new rules without forming an independent new chain, successfully completing the soft fork.
In addition, some small-scale rule adjustments launched by the Ethereum network to optimize the Gas fee mechanism also mostly adopt the form of soft forks, ensuring that users do not need to change wallet addresses and exchanges do not need to make major adjustments, thereby reducing the impact on cryptocurrency circulation.
III. Hard Fork: A “Complete Fork” Incompatible with Old Rules
1. Definition and Characteristics of Hard Forks
Contrary to a soft fork, a hard fork is a type of fork that is “not backward compatible.” When there is a fundamental conflict between new rules and old rules—nodes following the old rules cannot verify blocks under the new rules, and nodes following the new rules also do not recognize blocks under the old rules—the blockchain will split completely into two independent chains. These two chains will coexist for a long time, each with its own consensus mechanism, block data, and corresponding cryptocurrency.
Hard forks usually result from major modifications to the core rules of the blockchain, such as significantly increasing the block size or changing the consensus mechanism (e.g., switching from Proof of Work to Proof of Stake). Due to the complete incompatibility between old and new rules, nodes must choose between “supporting the new rules” or “sticking to the old rules.” Eventually, two chains are formed: the original chain continues to operate according to the old rules, while the new chain develops according to the new rules. Users holding the original cryptocurrency will usually receive an equal amount of the new cryptocurrency on the new chain.
2. Cryptocurrency Cases of Hard Forks
The most well-known hard fork case is the “Bitcoin Cash (BCH) Fork” of Bitcoin in 2017. At that time, the Bitcoin community had a serious divergence over “block size”: some teams believed that the block size should be increased from 1MB to 8MB to solve the problem of transaction congestion, while other teams opposed major modifications to the core rules. Since a unified consensus could not be reached, nodes supporting the expansion launched a new chain according to the new rules (8MB blocks), forming “Bitcoin Cash (BCH),” while the original chain continued to operate with 1MB blocks as “Bitcoin (BTC).” After this hard fork, BTC and BCH became two independent cryptocurrencies, traded separately on exchanges, and their price trends gradually diverged.
The 2016 “Ethereum (ETH) and Ethereum Classic (ETC) Fork” of Ethereum also belongs to a hard fork. At that time, the Ethereum network was attacked by hackers, resulting in significant losses of users’ assets. Most nodes in the community supported rolling back transactions through a hard fork to recover the losses, while a small number of nodes opposed “modifying the historical ledger” and continued to stick to the original chain, forming two independent chains: ETH and ETC.
IV. The Impact of Blockchain Forks on Cryptocurrencies
Whether it is a soft fork or a hard fork, it will have an impact on the network stability, liquidity, and market value of cryptocurrencies. Due to its strong compatibility, a soft fork has a small impact on the network, usually completing rule iterations smoothly, and may even enhance users’ recognition of the cryptocurrency due to network optimization. However, a hard fork splits the chain into two, which may lead to the dispersion of network computing power (some computing power flows to the new chain), affecting the transaction processing efficiency of the original chain in the short term. At the same time, the launch of a new cryptocurrency may divert market demand for the original currency, triggering price fluctuations.
For cryptocurrency users, soft forks require almost no additional operations, as wallets and exchanges will automatically adapt to the new rules. In the case of a hard fork, users need to pay attention to whether their wallets support the new chain to avoid asset losses due to improper operations. At the same time, users should rationally judge the value of the new cryptocurrency and avoid blindly participating in investment activities related to forks.
V. Frequently Asked Questions About Blockchain Forks
- Q: Will all cryptocurrencies experience forks? A: Not all cryptocurrencies will have forks. Forks usually occur in cryptocurrency networks with a high degree of decentralization and divergences in rules among the community or development team. If a cryptocurrency has an efficient governance mechanism and can quickly reach a consensus, forks are less likely to occur.
- Q: Does the new cryptocurrency generated by a hard fork necessarily have value? A: Not necessarily. The value of a new cryptocurrency depends on factors such as its technological innovation, community support, and application scenarios. Some new cryptocurrencies generated by hard forks may experience a sharp price drop after short-term speculation or even gradually withdraw from the market due to a lack of actual demand.
