Blockchain Fork
Blockchain Fork
A Blockchain fork occurs when a Blockchain diverges into two separate chains, typically due to changes in the protocol, disagreements among the community, or the introduction of new features. Forks can be categorized into two main types: Hard Forks and Soft Forks.
Types of Forks
- Hard Fork: A Hard Fork is a significant change to the protocol that is not backward-compatible. Nodes running the old version of the software cannot validate blocks created by the new version. This often results in a permanent divergence in the Blockchain.
- Soft Fork: A Soft Fork is a backward-compatible change where new rules are introduced but existing nodes can still validate blocks. This means that non-upgraded nodes will still recognize the new blocks as valid.
Examples
- Bitcoin Cash: In August 2017, a Hard Fork from Bitcoin created Bitcoin Cash due to disagreements over block size limits.
- Ethereum Classic: In July 2016, following the DAO hack, a Hard Fork of Ethereum was implemented to reverse the hack’s effects, leading to the creation of Ethereum Classic.
- Segregated Witness (SegWit): A Soft Fork implemented in Bitcoin to help with transaction malleability and increase block capacity.
Cases
Forks can lead to increased innovation but can also create confusion and division within the community. In some cases, they can result in significant market impacts, as seen with Bitcoin and its forks, where new coins often experience volatility and differing values in the market.