What is a Hard Fork?

The term “fork” sooner or later comes your way in the crypto-world. There are “hard” and “soft” forks – but what exactly is that?

In the abstract, a hard fork is a non-backward compatible consensus rules update. Sounds easy, but what does that mean? In short, who wants to participate in the Hard Fork, must adhere to the new rules. All users who still follow the old rules are not in the new network. Unanimity with the new rules is symbolized in the Blockchain cosmos with appropriate software. To “stick to the new rules”, participants need to update their crypto software. This can be a wallet or a mining client. The new software automatically adheres to the new rules. Important: The participation in a hard fork is “opt-in”, which means you have to actively do something – actively agree to the new consensus rules. Anyone who does not update will be left on an old chain. More about that right now.

Vegetarian to Meat Eater = Hard Fork

Consider a hard fork far from Bitcoin and Blockchain, using an example from the real world:

Imagine a group of vegetarians who collectively agree on the (consensus) rule “We eat no meat”. Now a part of the group changes their mind and wants to eat meat as well. The people get together and decide to do a hard fork. “We also eat meat” is the new rule. Of course, there is no software for people to download. In the example, the update would rather be the idea “Meat is allowed”. Nonetheless, the analogy is: who updates his rules, is no longer compatible with the old protocol (or the old rules). A vegetarian would still refuse a meal with meat.

A hard fork implies a chain split

Yet another characteristic of a Hard Fork: The Blockchain splits. A hard fork is activated at a certain block height. In other words, in the new software, the condition “When block number X comes, stick to the new rules”. That’s one of the reasons why the software has to be updated. This condition means that from block X the new rules apply. Anyone who sticks to the old rules at the time of Block X remains on an old chain. Imagine this as a parallel universe, which no longer runs identically from a certain moment. Both chains come from the same source but evolve over time.

That is also the reason for double coins. Those who had money on the old chain – in front of Hard Fork – also have that money on the new fork; and still on the old. The number of tokens has been doubled in some ways. This does not mean that the price doubles – actually, this should first halve after a hard fork.

So a hard fork is a change in the rules that does not allow backward compatibility. That’s why the blockchain splits in the event of a hard fork. The old blockchain still exists under the old rules.

Well-known examples of hard forks

At this point, two well-known Hard Fork examples from the Krptoindustrie are illuminated:

Ethereum: The DAO hack “lost” a good 150 million US dollars. The Ethereum Foundation decided to go back in time – before the hack had happened. That was not according to the ETH consensus rules. A hard fork had to be introduced. Ethereum (ETH) is the new chain since then; Ethereum Classic (ETC) is the old chain that has not undone the DAO hack.

Bitcoin Cash: For the scaling of the blockchain Bitcoin Unlimited demanded the enlargement of the block size. The consensus rules limited the block size in Bitcoin to 1 MB. Bitcoin Cash (BCH) is a hard fork that has raised this parameter; Bitcoin (BTC) is the old chain (English = Legacy Chain).

It should be clear what a hard fork is and what it does. However, claiming the hard forks is not always easy. In addition, a majority is essential if you want to Hardfork a project under the same name. Otherwise, you land quickly in Bcash Camp (Bitcoin Cash).

Whether vegetarian or carnivore, everyone has to make the decision themselves. Importantly, the software determines which rules to follow.