The term “fork” sooner or later gets in your way in the crypto-world. There are “hard” and “soft” forks – but what exactly is that?
We learned that hard forks are “non-backward compatible changes in the consensus rules”. The participants of a hard fork have to actively update their software in order to participate in the new rules.
In contrast, a soft fork does not require explicit approval. A soft fork – simply speaking – is a backwards-compatible change in consensus rules. What does it mean exactly?
Vegetarian to Vegan = Soft Fork
Let’s clarify this definition with our previous example – the vegetarian group. The consensus rule is quite simple: “We do not eat meat”. Now part of the group is changing their minds and wants to live vegan, which means they’re missing out on certain vegetarian products. The rules become stricter. From a vegetarian perspective, vegans still follow the rule of not eating meat. In other words, vegans can still exist in the consensus system of vegetarians – all vegan foods are also allowed for vegetarians. That means the change from vegetarian to vegan is backward compatible. In contrast, meat eaters can not exist in the vegetarian consensus system.
A soft fork shares the same blockchain
While a hard fork splits the blockchain, a soft fork uses the same blockchain as the “old system.” This also means that users do not have to upgrade their software. In most cases, the changes made to a soft fork do provide extensions to the network, but it’s up to the participants to actually make use of those changes. Who wants to use the innovation, gives its approval – as with the Hard Fork – in the form of an updated software.
Because the blockchain does not fork at a soft fork (but only gets one level to it), there are no duplicate coins here either.
Well-known example of soft fork
In 2017, the Bitcoin network experienced a Soft Fork – Segregated Witness (short: SegWit). SegWit closed a gap in Bitcoin – the Transaction Malleability. Among other things, this enabled the implementation of so-called second-layer technology (the Lightning network).
SegWit stores the signatures (witnesses) of the transactions – that is, the part of a transaction that verifies that the sender has the money – no longer in the block body, but separately (segregated). A transaction in SegWit is therefore smaller – and therefore cheaper.
All Bitcoin network subscribers who have not upgraded to SegWit can still participate in the consensus and verify blocks. This makes SegWit backwards compatible; a prime example of a soft fork.
The hard and the soft fork
Vegetarians can also eat vegan food – but meat requires a hard fork of consensus.
To understand Hard Forks and Soft Forks, we remember:
“In a Hard Fork, something previously illegal is allowed.”
“In a soft fork, something previously permitted is forbidden.”
Hard is the fork, if it requires explicit consent – otherwise you live in a parallel universe. Soft is the fork when participation is optional.