What Is a Hard Fork and a Soft Fork in Crytocurrency Term?
Before breaking down what a hard and soft fork is and some other strange words you probably never heard of, let me draw a short mental picture of each term to make sure you can follow along without wondering ‘wtf did I just read.’
First, let’s define the Blockchain protocol. You will definitely come across the term ‘blockchain protocol’ at some point as you dive more and more into the world of cryptocurrency. Without protocols, there is no blockchain. A protocol is simply a bunch or layer of computer codes that tell something how to function or behave. In this case, the protocol gives the blockchain directions. It’s basically a software that generates a set of rules that allows the blockchain to communicate in order to transmit information.
Protocols are not unique to blockchain or cryptocurrency. The websites you use daily usually use what’s called an ‘Internet protocol.’ Sites like Facebook, Amazon, Twitter, Google, Netflix, banking websites, news websites, to name a few. Every time you type ‘http’ or ‘https’ on your computer browser, you invoke a protocol. In the world of blockchain and a cryptocurrency like Bitcoin, a protocol is vital for secure data transmission and communication.
Secondly, what is a fork? A hard fork is the term used when a blockchain or cryptocurrency splits into two versions. The decision to have a hard fork strictly lies with the miners. After the split, the developers modify the codes to completely cut off communication between the two protocols. Each coin or tokens from the split will keep its own transaction records.
Hard Fork Case / Example
Bitcoin Cash is a perfect example of a hard fork. BCC or BCH is the first to introduce a hard fork to the world of cryptocurrency. After splitting on August 1, 2017, Bitcoin Cash becomes a new and its own cryptocurrency rose from the belly of Bitcoin itself. Every holder of Bitcoin at the time received an equal amount of Bitcoin Cash. BCH becomes the standard for all other cryptocurrencies that have had a hard fork. Consider a hard fork as a mother giving birth to a child and that child immediately becomes independent of the mother.
What is a Soft Fork?
A soft fork, on the other hand, is simply an upgrade to the software or protocol of a cryptocurrency or blockchain. When a soft fork occurs, all previous transactions are automatically made invalid. When miners come to majority consensus to upgrade the system to enforce the new rules, the process is called a miner-activated softfork (MASF).
Whenever upgrades are made by a minority (the majority of miners don’t agree), the upgrade is labeled as a user-activated softfork (UASF). New blockchain transaction types are soft forks. That process only requires the senders, receivers, and the miners to understand the new transaction types.