Bitcoin Forks: Upgrades And Radical Blockchain Changes

Bitcoin Forks: Upgrades and Radical Blockchain Changes

You must have heard of Bitcoin forks. A fork occurs when a blockchain splits into two blockchains. So when does a blockchain split into two blockchains? Such splits in the blockchain network occur when an update is made to the blockchain protocol but not all participants or nodes adopt the update.

There are two types of blockchain forks: Soft Fork and Hard Fork. In this article, we will examine why forks occur and the difference between a soft fork and a hard fork in Bitcoin (BTC).

What is a blockchain fork? 

To understand the blockchain and specifically Bitcoin (BTC) forks, it is necessary to first talk about the structure and function of blockchains. Blockchains are databases that function as a decentralized and public ledger, and cryptocurrencies are built on blockchains. Cryptocurrency transactions take place and are verified on the blockchain. Each transaction creates a data block and is added to the previous block.
In traditional banking, when you send money from your bank account to your friend’s bank account, a central authority bank makes sure that the sender has sufficient funds to process the transaction, then cuts the money from one account and adds it to the other. On the blockchain, the governing authority is decentralized. Network participants, called nodes, must individually verify new blocks of transactions and reach a network consensus about the new fund allocation.
Nodes play an important role in correctly executing and verifying new transactions. The nodes of a blockchain network are responsible for running the verification process managed by the network’s protocol. More specifically, the Bitcoin network is the sum of all decentralized nodes running the Bitcoin protocol.
When a protocol is updated, individual nodes are upgraded and they accept the new changes. Some nodes may reject these changes. In this case, a blockchain fork takes place. Sometimes the update in question is more or less optional, but sometimes it is mandatory. The optional fork type is known as the soft fork; The forced fork type is known as the hard fork.

What is a Bitcoin fork?

Network scalability issues provide an excellent opportunity to illustrate the difference between a Bitcoin soft fork and a hard fork. Around 2015, Bitcoin ran into trouble scaling its transaction capacity to suit its rapidly growing user base. As more users began to transact with bitcoin (BTC), the Bitcoin network became increasingly congested with huge transaction volumes, resulting in a slowdown in overall transaction time. This slowness in the network could also require users to pay higher fees to speed up transactions. This problem became known as the Bitcoin scalability problem.
One proposed solution to the scalability problem is called Segregated Witness (SegWit). SegWit increases transaction speed by separating signature data from Bitcoin transactions and rearranging that data more efficiently with each block. SegWit is a smooth fork. Soft forks occur when a change in the software of the protocol does not disrupt the basic functioning of the network.
Soft forks include a non-essential update. Therefore, each node in the network can choose whether to update its copy of the protocol, and in both cases, all nodes in the network can continue to interact with each other. For example, rejecting Bitcoin’s SegWit update did not result in a new blockchain or a new cryptocurrency.


Conversely, hard forks occur when an update is fundamentally different from the previous version, i.e. the protocol is no longer backward compatible. The Bitcoin Cash (BCH) hard fork that took place in August 2017 is a good example. The BCH hard fork aimed to solve Bitcoin’s scalability problem with a very different approach than SegWit. Some of the original developers of Bitcoin wanted to increase the maximum size of Bitcoin blocks from 1 MB to 8 MB. However, most Bitcoin nodes configured to mine a 1MB block size were unable to upgrade quickly and cost-effectively to start mining 8MB blocks. This incompatibility caused a philosophical crack in the Bitcoin community, and instead of forcing the existing protocol to upgrade, a hard fork was implemented. As a result, a new cryptocurrency, Bitcoin Cash (BCH), was launched.
When the hard fork occurs, nodes that accept this new update are moved to a new blockchain. Nodes are given new crypto-assets equivalent to the crypto-assets they hold from the previous blockchain. These coins on the new blockchain given to successful miners are separate and unique from the originals. When Bitcoin Cash was created, it created a unique Bitcoin Cash blockchain with its own BCH cryptocurrency.

What causes bitcoin forks?

Bitcoin forks can happen, albeit rarely, by accident. An accidental fork can occur if two miners mine a block almost simultaneously. Such forks are resolved after subsequent blocks are added to the chain. When one of the two blockchains grows to be longer than the other, the network blocks leave the shorter chain, known as residual blocks.
Sometimes, an intentional fork is implemented to repair a protocol’s history in response to a bug or cyber attack. For example, in 2016, a third-party application, also known as DAO, on the Ethereum blockchain was hacked and millions of dollars of Ether (ETH) was stolen. To erase the cyberattack from Ethereum’s ledger and in doing so return the stolen coins to their original owners, Ethereum developers implemented a hard fork. This newly created ledger, which eliminated the cyber attack and returned the stolen ETHs to their owners, became the main Ethereum blockchain. The version of the ledger containing the cyber attack was the Ethereum Classic (ETC) blockchain. The majority of users, such as those targeted by the attack, preferred the Ethereum version that deleted the attack, while some users preferred to continue using the original ledger in ETC format.


Yet most forks are deliberately caused by a community’s proactive desire to add a new feature or drastically change or improve the functionality of an existing blockchain. In the Bitcoin Cash (BCH) hard fork, the primary driver was the desire to significantly increase the network’s ability to verify transactions faster. This desire is reflected in the Bitcoin Cash structure by increasing the maximum block size and transaction speed.
Similar to Ethereum Classic and Bitcoin Cash, many other crypto projects emerged as hard forks revamped from the codebase of major cryptocurrencies such as Bitcoin, Ethereum, Dash (itself a fork of Bitcoin).

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