Blockchains are an example of a decentralized, open-source system that doesn’t have a central authority and works on its own. The blockchain records all previous Bitcoin transactions and makes this data publicly available. So, all network users must agree to the system update before it can be put into place.
A fork is a fresh way to enhance or change an existing blockchain. Forks can be divided into two categories based on their primary use: soft forks and hard forks. Before we proceed, what exactly does a “fork” on a blockchain signify?
How do Forks Work?
A blockchain, first and foremost, is a distributed ledger made up of data blocks that are safely connected together via cryptographic keys.
Given that as the case, a graphic representation of the blockchain shows a linear path made up of connected blocks. Since all blocks are connected by an agreement, any change to a system must be approved by all of them. The possibility of obtaining such a consensus is vanishingly minimal because the blocks are connected by a rigid set of protocols.
Forks are a common way to make changes to a blockchain without having to rewrite each block. A fork happens on the network when changes are made to the original code of the blockchain. Since it’s impossible to have two independent blockchains operating together, the new blockchain will split in two, diverging from the original blockchain in a fork.
What is Hard Fork?
A fork occurs when the blockchain’s network algorithm is altered in a way that separates it from the original blockchain network. Following a fork on the primary blockchain, a new coin is created on the recently split blockchain network. This occurs if the original blockchain hosts functioning cryptographic protocols.
A hard fork causes the blockchain’s rules to either be updated or changed, rendering the previous blockchain incompatible with the new one. This means that older nodes will refuse to acknowledge the updated blocks.
Also, the newer blockchain will operate under new rules that will forever refuse to accept blocks from the older blockchain. Frequently, this method is referred to as a “backward-incompatible” software upgrade.
For instance, disagreements about the most effective method for increasing its capacity led to a hard fork in the Bitcoin blockchain network. Some people desired to increase the size of the blocks. On the other hand, there were more users in the community who were opposed to the reforms.
In the sections below, we’ll discuss a few of the hard forks on the Bitcoin network. It is essential to know these so as to fully maximize the benefits of using cryptocurrencies in the day to day business and activities such as playing for profit at a crypto casino, shopping, trading, or storing.
One of the first important hard forks of the Bitcoin network was Bitcoin XT. With the goal of adopting some of his suggested adjustments, Mike Hearn published the program in late 2014.
Seven transactions could be made every second with the earlier version of Bitcoin, but 24 will be supported by Bitcoin XT. In order to accomplish this, it advised doubling the current block size from 1 MB to 8 MB.
More than a thousand nodes were running Bitcoin XT’s software by the end of the summer of 2015, which was during the project’s early stages. Sadly, the majority of its consumers stopped using the project after just a few months. Currently, you can’t get any right now because the Bitcoin XT website has been removed.
There are still Bitcoin supporters that favor a higher block size despite the demise of Bitcoin XT. As a result, a team of programmers launched Bitcoin Classic at the start of 2016. Classic only projected a two megabyte increase, as opposed to XT’s anticipated eight megabyte update.
Similar to Bitcoin XT, Bitcoin Classic had significant traction in its early days, reaching 2,000 nodes for a brief period in 2016. A number of developers continue to promote Bitcoin Classic as the project is still active. In reality, it appears that the majority of the bitcoin community has moved on to other issues.
Bitcoin Unlimited has been cloaked in secrecy ever since it was first introduced in early 2016. When the code for the project was shared, its creators were vague about the necessity of any resulting forks.
Bitcoin Unlimited is unique because it gives miners the option to determine the largest block size. Nodes and miners can place a 16 MB cap on the largest blocks they would accept. Though it hasn’t gained popularity, there is still considerable interest in Bitcoin Unlimited.
In response to SegWit, some Bitcoin core developers and users decided to launch a hard fork in order to avoid the protocol modifications it brought about. As a result of this hard fork, Bitcoin Cash emerged as a new cryptocurrency. In August 2017, when Bitcoin Cash wallets started rejecting blocks and transactions from the main blockchain, it split off into its own network.
Notwithstanding, Bitcoin Cash has remained the most prosperous Bitcoin hard fork. Market capitalization-wise, as of the end of June 2021, it ranks twelfth, thanks in large part to the support of several industry heavyweights and major trading platforms. In addition to supporting 8 MB blocks, Bitcoin Cash rejects the SegWit protocol.
A hard fork that happened in October 2017, not long after Bitcoin Cash, resulted in the creation of Bitcoin Gold. This hard fork was initiated by those who thought mining had become too technical in terms of equipment and technology. They did this with the intention of re-enabling it on inexpensive graphics processing units (GPUs).
There were several noteworthy aspects of the Bitcoin Gold hard fork. One of these involved the “pre-mine,” where the project’s developers mined 100,000 coins after the fork had already occurred.
Some of these coins were set aside in a separate “endowment.” Its creators have said they want to use it to expand and support the bitcoin gold ecosystem. Some of the funds were used to compensate the project’s creators.
Overall, Bitcoin Gold is in line with many of the principles that led to the creation of bitcoin. Nevertheless, it differs in that it necessitates the use of a separate proof-of-work (PoW) technique by miners.
In March 2018, developers released a new cryptocurrency system called Bitcoin Private, which is a hard fork of Bitcoin and ZClassic. It was designed to have more sophisticated privacy features similar to ZCash and Monero.
Bitcoin Private is notable for its incorporation of zk-SNARKs, a zero-knowledge proof mechanism. This provides enhanced privacy protections for all parties involved in a transaction recorded in a public ledger. The network’s block times are significantly lower than Bitcoin’s (2.5 minutes vs. 10 minutes), and the UTXO set is a hybrid of ZClassic and Bitcoin.
What is Soft Fork?
Whereas soft forks are rule updates that can coexist with older blockchains, hard forks are upgrades that are incompatible with earlier versions. The old blockchain will continue to accept blocks from the new advanced blockchain platform because the split is a backward-compatible move.
In general, a soft fork means getting the current blockchain network to agree to the new rules. This enables both the upgraded and old blocks of transactions to be processed simultaneously. In contrast to a hard fork, a soft fork keeps the older blockchain alive by keeping two separate blockchains alive, each with its own rules and requirements.
Segregated Witness (SegWit)
Segregated Witness, a soft fork in the Bitcoin system that took place in 2015. Bitcoin transactions used to cost $30 and take several minutes to complete in their early stages.
Also, according to the SegWit upgrade’s developers, signature data makes up around 65% of a transaction block. In light of this, SegWit suggested expanding the effective block size to 4 MB from 1 MB.
This update sought to either eliminate or segregate signature information from the transactional data records that are contained on each blockchain block. By doing so, more space would be made available for higher transactional productivity inside each block. The Bitcoin network may accept both 4MB and 1MB blocks at the same time following a successful soft fork.
The advanced architecture of the soft fork enabled the old nodes to continue validating the new blocks.
When SegWit was originally made available in August 2017, programmers anticipated a second round of protocol advancements. By a hard fork, SegWit2x suggests expanding the maximum block size to 2 MB from 1 MB.
SegWit2x was supposed to undergo a hard fork in November 2017 as initially anticipated. Initially, SegWit-supporting consumers and companies abandoned the hard fork.
Replay protection in SegWit2x, which would have restricted the types of transactions the new fork could accept, led to the reaction. On November 8th, 2017, the SegWit2x team revealed that its hard fork would not take place due to conflicts among the project’s original sponsors.
Differences Between Hard Fork and Soft Fork
The ideal fork technique for advancing distributed ledger technology is a topic of debate in the blockchain community. Each fork has advantages, but the disadvantages tend to separate communities more.
Although soft forks are the safest choice, they do have their own risks. The biggest danger is that unscrupulous cybercriminals might employ a so-called “soft fork” to dupe full-node users and miners into confirming illegitimate transactions.
As auditors, full-node users keep a complete copy of the blockchain network. Their responsibility is to ensure that every new block in the blockchain complies with the guidelines established by the network that came before it. The credibility of the network could be harmed if a small subset of Blockchain users seeks to change the rules without informing the platform’s complete node users.
Bitcoin relies on a network of users called “miners” and “full-node consumers.” They independently verify the ledger’s integrity and preserve the currency’s decentralized nature. By doing this, basic economic concepts like the ban on double spending and the blockchain’s inflation formula are strengthened.
Blockchain platforms have thus made all soft forks readily apparent to the general public in order to reduce the likelihood of this happening.
To begin, it’s well known that hard work causes social isolation. This is because, unlike a soft fork, a hard fork does not provide any accommodation.
Second, some contend that hard forks damage the platform’s hashing power, which is why they are bad. This in turn decreases the site’s reliability and performance.
Which is Better?
No matter the fork chosen, a lot of effort needs to be done to ensure that the blockchain’s upkeep and updates are successfully transferred. Many in the blockchain sector prefer hard forks because they reduce the possibility of invalid blocks being mined or verified.
By using hard forks, blockchain users, including crypto casinos, miners and traders, are protected from being duped or left behind while the network is still operational. Yet, they use a lot of computational resources and are believed to impede the development of digital currencies.
Soft forks are still a quick, inexpensive alternative to conventional blockchain software changes, although becoming less predictable. Since they enable modifications to be implemented with little interruption to the community, soft forks are frequently lauded.
Cryptocurrency-dependent companies claim that hard forks and soft forks have different purposes. Hard forks can be contentious, but they can also result in code changes that are widely accepted, particularly if they are well-planned and intentional.
Users can now choose a milder, more diplomatic alternative rather than a hard fork. Changes should be written so that they don’t break the rules that are already in place.
Any blockchain network will eventually require updates to further its goals, just like any other piece of software. Changes to the program may be made independently of any organization using either hard or soft forks.
In a very short period of time, Bitcoin has forked a massive number of times. It’s safe to anticipate that cryptocurrencies will continue to undergo both soft and hard forks in the upcoming years, even if no one can say for sure.