Hard Fork
A "Hard Fork" in cryptocurrency, similar to the idea of a fork in the road, represents a drastic change or divergence from the existing protocol or rules of a blockchain. This can create a split, resulting in two separate blockchains that may continue to exist independently of each other.
Causes of a Hard Fork
A Hard Fork is often introduced when significant modifications or upgrades are made to the underlying code of a blockchain. These changes can include altering the size of a block, changing the mining algorithm, or introducing new functionality that was previously not possible on the blockchain. The reasons behind implementing a Hard Fork may vary, but typically involve improvements in:
- Security
- Speed
- Functionality
- Addressing existing issues or bugs
Effects of a Hard Fork
When a Hard Fork happens, all participants of the blockchain are essentially forced to adhere to the new rules or continue with the old ones, with no backwards compatibility. This creates a fork in the road, where one path follows the updated blockchain (new rules) and the other path continues along the original blockchain (old rules). Following a Hard Fork, two distinct cryptocurrencies will exist. For example, the Hard Fork of Bitcoin in 2017 led to the existence of Bitcoin (BTC) and Bitcoin Cash (BCH). The assets held by a user prior to the fork usually are available on both paths post-fork.
Notable Hard Forks
Major examples of Hard Forks in the cryptocurrency world include:
- Bitcoin Cash (BCH) - A spinoff of Bitcoin created in 2017 with the goal to increase the block size to speed up transaction processing.
- Ethereum Classic (ETC) - Resulted from a 2016 Hard Fork of Ethereum (ETH) following the infamous DAO attack.