A Guide to Hard Forks & Soft Forks in Blockchain

by | Aug 26, 2021

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Right from explaining Bitcoin to your grandma to understanding the working of blockchain technology in laymen’s terms, we’ve extensively covered the world of cryptocurrencies. In this series of explainers, today, we’ll be discussing the concept of hard and soft forks in a blockchain network.

However, to understand the concept of forking in a blockchain network, we first need to see how transactions actually work in a blockchain network such as Bitcoin.

Getting the Basics

Once a transaction is created on the Bitcoin blockchain, a transaction message is passed around all the nodes available through the Mempool queue. This is where all the unconfirmed transactions are waiting to be mined and validated into the ledger by miners. 

Now, the miners will pick a batch of transactions not exceeding the size of 1MB from the Mempool to form a new block and validate it by solving a complex mathematical problem. Once a block is successfully mined and validated, the miner will pass around the updated ledger with this new block for all other miners to validate a new block on top of that.

It’s also worth noting that, in case, more than one miner validates a new block almost at the same time, it often results in a temporary forking of the blockchain – a chain of blocks with two separate branches. However, Bitcoin blockchain applies the longest chain rule to discard the other chain and accepting the chain with more blocks. Therefore, agreeing on the same state of the network.

Now, here comes the idea of a hard and soft fork in a blockchain network.

What is a Hard Fork?

A hard fork can be defined as a permanent split of a blockchain network. Usually, it occurs when a set of nodes tweak few rules of the network that conflicts with the current rules. Thus, splitting the blockchain into two separate networks – one with old rules and another with a new set of rules.

For example, during the block-size debates in Bitcoin during the year 2017, the community got divided into two segments. One side advocating for increasing the block size from 1MB while the other side wanting to keep it the same. Hence, the Bitcoin network split into two separate blockchains.

What is a Soft Fork?

Unlike hard fork, soft forking a blockchain network doesn’t result in splitting of the chain. It can be generally defined as the network update which is backward-compatible. This kind of forking only requires a majority of the nodes to upgrade the software version, thus resulting in an upgraded version of the network.

For example, the upcoming Taproot update of the Bitcoin network is a soft fork that will improve the privacy of users on the network. For this upgrade, only the majority of miners will need to update their Bitcoin Core client and the network will soft fork.

Conclusion

So, that’s all you need to know to get a basic understanding of forking in a blockchain network. If you’ve been keeping up with our blogs for the past few months, you must have a pretty good understanding of blockchain technology. Do check out HyperTrader if you’d like to try your hand at trading cryptocurrencies.

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Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"
Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"

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