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What is Blockchain, how it works and why it happens
What is a Hard Fork?
A blockchain hard fork is a change in programming that is incompatible with old programming. This essentially creates a new blockchain and cryptocurrency. Hard forks generally require any nodes or users who wish to remain on the new chain to upgrade to the latest version of the software.
Hard forks can be initiated by developers as part of progress or routine maintenance on a blockchain. They could also be created by a faction of the crypto community that wants to take a different direction with blockchain.
Key points
- A hard fork is an event in which a change to a blockchain results in two branches: one that follows the previous protocols and one that follows the new version.
- In a hard fork, token holders in the original blockchain will also be granted tokens in the new fork, but participants must choose which blockchain to continue verifying.
- Hard forks are not specific to a single blockchain – it is an event that many have experienced.
- Hard forks occur for several reasons, such as disagreements between developers, required updates to a blockchain, or someone attempting to create another blockchain and cryptocurrency they control.
How hard forks work
A hard fork occurs when a new blockchain version emerges that is incompatible with the original version. It is not always an adverse event; in fact, many blockchains have been hard forked to implement the necessary changes.
Blockchains are basically programs that create and store files of information on a network of computers and devices. There are usually layers of software that complete different tasks, some methods by which the network reaches agreement on the state of the blockchain, and many participants in the network. The underlying programming of each layer can be modified as needed, but must be accepted by network participants to be adopted.
Developers cannot force changes on a public blockchain that relies on participation. Public blockchains rely on their participants, so changes must be implemented by them, not imposed. Otherwise, they can refuse to accept the changes and keep the preferred version.
Because blockchains are essentially programs and scripts, they can be affected by errors, bugs, network communication problems, hardware failures, or other problems. Blockchains also rely on a large number of network participants to host versions for security purposes.
When developers publish a change to any of the functions of a blockchain, two things happen: a hard fork or a soft fork. If the change is drastic enough to prevent a participant running the old version from participating in the blockchain’s processes, the change is considered to have created a hard fork in the blockchain. In contrast, a change that allows the old and new nodes to run is considered a soft fork.
In a hard fork event, participants are faced with a choice: they can upgrade their software to the new version or not upgrade their software and use the old (and now unmaintained) blockchain.
Image by Julie Bang © Investopedia 2019
Reasons for a hard fork
There are several reasons or even events that lead developers to implement a hard fork. For example, when hacking on Decentralized Autonomous Organization (DAO) occurred, the Ethereum the blockchain was forked by a nearly unanimous vote.
The fork restored transactions that stole tens of millions of dollars of digital currency by an anonymous hacker. The hard fork also helped DAO token holders get their tokens ether (ETH) funds returned. However, some miners continued to mine the old chain, which was taken from OTC desks and equipped with an order book for price discovery. Poloniex has also listed this currency and some members of the Ethereum community have decided to maintain this version and create it Classic Ethereum.
What is the meaning of hard fork?
A hard fork is a change in the programming of a blockchain that creates a new blockchain and cryptocurrency. Many projects underwent a hard fork but kept the original names and tokens, while other groups decided to stay with the original code and change the name.
Is a hard fork good or bad?
It depends on the circumstances and the opinions of the participants. Some may believe that a hard fork is necessary and good, while others may not.
Why do hard forks happen?
There are several reasons why a hard fork might occur. The code may need to be modified to fix errors or address a weakness, or a group may want to create their own blockchain and cryptocurrency.
The bottom line
Hard forks are a change in programming that results in a split of the blockchain. Sometimes, hard forks are controversial in the community involved in a blockchain; other times they are necessary for a blockchain to progress.
In controversial situations, participants and users can upload the updated blockchain and start processing it or reject it and use the old chain. This is how several blockchains and cryptocurrencies were born, such as Bitcoin Cash and Ethereum Classic.
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