A hard fork indicates the split of a blockchain into two chains that continue to develop independently of each other.
After delving into what is meant by a soft fork, in this article, we explain what an hard fork is and how it works.
An hard fork occurs when an update aims to loosen the consensus rules of the protocol. A hard fork is not backward compatible with previous versions of the software: after the update, blocks with parameters initially considered invalid are accepted. When a hard fork takes place, a new currency is created.
How does a hard fork occur?
Let’s explore the process of a hard fork with a hypothetical example. Suppose there is a consensus among Bitcoin users to increase the block size to 50 MB. A software implementing this change, let’s call it Bitcoin Fraud, is developed, and its code is released with an announcement that it will be usable by anyone starting from block number 900,000. Mining nodes that agree with the change will begin creating a subsequent block, 900,001, which does not comply with the protocol rules of the original Bitcoin code but aligns with the new rules of Bitcoin Fraud.
When a miner adopting Bitcoin Fraud finds a Proof-of-Work solution, they broadcast their block to the network, and it is accepted only by those using the new software. Miners who rejected the update continue to generate blocks of smaller sizes and broadcast them to the original Bitcoin network. As of block 900,001, a consensus split occurs, and the blockchain forks: the branch maintaining the original rules is Bitcoin, while the one with the new rules is Bitcoin Fraud.
When planning a consensus change that broadens the protocol rules, making it non-backward compatible, two scenarios may unfold:
- All network nodes upgrade their software and adopt the new rules;
- Some nodes reject the new rules and continue developing the original chain, resulting in a network split, i.e., a hard fork.
The most famous hard forks
- Bitcoin XT, the first hard fork of Bitcoin, occurred in 2014;
- Bitcoin Classic, a hard fork of Bitcoin, took place in 2016;
- Bitcoin Cash, a hard fork of Bitcoin, occurred in 2017;
- Bitcoin SV, a hard fork of Bitcoin Cash, took place in 2018.
Why avoid hard forks?
Avoiding hard forks is a fundamental practice to prevent excluding users from the network who choose not to comply with new changes.
For Bitcoin to serve as the foundation of the future monetary system, its structure must be as stable and open as possible. Over the years, this consideration has led a significant portion of Bitcoin users to be very conservative about updates. Except for some interventions to fix code bugs that occurred when Satoshi Nakamoto was still involved in Bitcoin development, the most significant changes to consensus have always been implemented in the form of soft forks.
As many users already do, it is possible to use older versions of Bitcoin Core that are not updated to the latest version but are still compatible with the network consensus.
