What is it about?
A hard fork in the context of cryptocurrency is a significant and non-backward-compatible change to a blockchain’s protocol. It involves altering the rules governing the blockchain’s operation in a way that nodes running the old software will not recognize or accept the new rules. As a result, a hard fork creates two separate and divergent blockchains, with one following the old rules and the other following the new rules.
What are the characteristics?
Non-Backward Compatibility: Unlike a soft fork, which maintains compatibility with older versions of the software, a hard fork introduces changes that are incompatible with the existing rules. This means that nodes running older software will not recognize blocks and transactions created on the new chain, and vice versa.
Rule Expansion or Modification: Hard forks often involve expanding or significantly modifying the rules of the blockchain. These changes can include increasing the block size, altering the consensus algorithm, or changing other fundamental parameters.
Contentiousness: Hard forks can be contentious events within the cryptocurrency community. They often arise due to disagreements among developers, miners, node operators, and other stakeholders regarding the direction and rules of the blockchain. These disagreements can lead to a split in the community, with some participants supporting the old chain and others supporting the new chain.
Creation of Two Chains: When a hard fork occurs, two separate blockchains are created: one that follows the old rules and one that follows the new rules. Each chain has its own set of nodes, miners, and participants. Holders of the original cryptocurrency on the old chain usually receive an equal amount of the new cryptocurrency on the new chain (a process known as airdropping) if they had holdings at the time of the fork.
Network Security: Hard forks can potentially impact the security of the blockchain. In the period leading up to and immediately following a hard fork, there can be a decrease in mining power on one or both chains, which may make them susceptible to attacks like 51% attacks.
Examples: Notable examples of hard forks in cryptocurrency include the Bitcoin Cash hard fork from Bitcoin, the Ethereum Classic hard fork from Ethereum, and the Bitcoin SV hard fork from Bitcoin Cash.
Summarized
In summary, a hard fork is a major and disruptive change to a blockchain’s protocol that results in the creation of two separate and incompatible blockchains. It often arises from disagreements within the cryptocurrency community and can lead to the formation of two distinct cryptocurrencies with their own sets of rules and participants. Hard forks can be contentious and have significant implications for the cryptocurrency ecosystem.
