Blockchain networks host developers who can participate in the decision-making process on the network, try various updates, and make these updates work after having the necessary support via related consensus mechanisms. Forks happen when blockchain networks are regulated, changes are made to protocols, and adjustments are made to the base set of rules.

Key Takeaways

  • Participants who join a blockchain network and cause a fork on that blockchain are developers, miners, and full node users.
  • Blockchain forks occur when source codes are changed. A fork can leave the original project unchanged (hard fork), and realize the changes in a split chain. Or it can make minor ”soft” changes on the existing chain (soft fork) that will develop the functionality.
  • Blockchain forks can improve security, reconcile when there is controversy, and make blockchain networks more useful.
  • Hard forks occur when software updates that are not compatible with the old software are made. New updates conflict with the rules of the old nodes; therefore, a new chain is created with the new rules.
  • Unlike the hard fork, the soft fork is an upgrade that is compatible with the rules of the past.

Who Decides on Regulations on Blockchain Networks

If you want to understand how forks occur in a blockchain, you should review the decision-making processes and management in it, where forks occur or may occur, and learn which governing bodies are involved in these decision processes. Participants in the blockchain network can be listed as developers, miners, and full node users.

DevelopersParticipants who provide the creation of the blockchain code and update the blockchain networks based on necessities are developers. Note that any developer can assist in the development or creation of a blockchain network. Since the codes of a blockchain network are completely public, developers can review the codes made by others and comment on their transactions to make updated proposals.
MinersNecessary for the blockchain network to be secure, miners are those who strive for validation of transactions. Mining ensures that each transaction made by users within the network is added to the chain as an immutable and unique block. The underlying consensus mechanism for mining generated cryptocurrencies (f.e: Bitcoin) is Proof-of-Work. In addition, the most important reason why people become miners is that they get a block reward for keeping the blockchain network under control.
Full node usersFull node users, who are the most important participants of any blockchain are responsible for verifying the blocks and transactions in the blockchains while having a copy of all the chains.
Mobile wallets, laptops, and desktops are considered light node users. Although these users are frequently used in blockchain networks, they cannot qualify as ‘’participants’.

What is Fork in a Blockchain?

Blockchain forks occur when source codes are changed. A fork can leave the original project unchanged (hard fork), and realize the changes in a split chain. Or it can make minor ”soft” changes on the existing chain (soft fork) that will develop the functionality.

Let’s give a practical example to help you better understand the fork operation in a blockchain. Imagine that the team of a crypto money site whose content you like very much has a disagreement and there is no definite decision on how to continue the work. In this case, the part of the team that caused the disagreement can leave the team and create a website with a completely different domain name but with the same codes as the site itself. Posts on the website created later may differ from the content on the original website. Well, this is the case with a hard fork. Now, although the disagreements in the project cause forks, both projects have the same infrastructure and the history. However, having the same background or the same infrastructure does not change the fact that these two projects took different paths.

Now imagine that the developers of the same website decided to make a significant change to their landing pages as a result of their A/B test. The developers agreed on this change and made some changes to the source code to strengthen the final UX. This too is a fork, but it causes an update to an existing website instead of a new creation. Yeap, you guessed right, that is a soft fork.

Why Do Forks Occur in Blockchains?

Forks that occur in blockchain networks are actually kind of like updates, and there are important reasons for them. We can list the reasons for forks in blockchains as follows:

  • Forks that occur in blockchain networks can increase the functionality of blockchain networks, making them more user-oriented and more useful.
  • Security vulnerabilities can sometimes occur in blockchain networks, or they may have been in there from the very beginning. Forks can be used to get rid of them.
  • Communities in blockchain networks may disagree in some cases. Forks are used if there is a dispute over the course of a cryptocurrency. Examples of this are Bitcoin and Bitcoin Cash (fork).

What a Hard Fork Means & Hard Fork Examples

When the software update intended by the majority of developers conflicts with the existing source code of the project, the developers create a new chain that splits from the original. This fork leaves the existing blockchain network unchanged and performs all of the said updates on the new chain, which takes the source code from the initial version. This is exactly how the hard fork happens.

Let’s explain what a hard fork means with a very simple example: You wrote an algorithm and added the phrase “If the question ‘What is your name?’ is asked, say ‘’My name is Alice'” to the algorithm. After a while, you updated the answer as “My name is Steven” to the question “What is your name?” The new update completely contradicted the old update. If this happens on a blockchain network, it is called a hard fork.

A very simple example? In fact, it really is that simple in terms of its main working principle.

Since newly created nodes can communicate with nodes using the new version, the old nodes in the blockchain become useless, and in this case, two different blockchain networks occur. The newly created blockchain network is bound by the new rules, while the old blockchain network is bound by the old rules.

The First Bitcoin Hardfork: Bitcoin XT

The first hard fork that occurred on the Bitcoin network was launched by Mine Hearn. This event, which took place in 2014, aimed to increase the number of transactions that could be processed per second. For this, it was proposed to increase the size of each block in the network to 8 megabytes instead of 1 megabyte.

Makes sense, doesn’t it?
It really succeeded. But for the emerging network to be sustainable, it needs attention. The network, which reached 1,000 nodes, or users, started to lose users gradually in 2015. Today, it has completely disappeared.

Attempts to Increase Block Size: Bitcoin Classic Hard Fork

The disappearance of Bitcoin XT did not deter users. The developers, who think that increasing the block size is essential for faster block creation power, introduced Bitcoin Classic in 2016. This time the increment was only targeting 2 megabytes. This hard fork is available now. You can also buy Bitcoin Classic to invest. However, BXC is not a popular alternative.

Flexible Size of Blocks: Bitcoin Unlimited Hard Fork Attempt

Another hard fork on the Bitcoin network happened in early 2016. Aiming to increase the processing speed in Scale, the code included miners’ decision to increase the size of each block up to 16 megabytes. Bitcoin failed to garner support from most of its users. One of the most important reasons for this is thought to be the following: The increase in the size of each block in the Bitcoin network means that the storage space that miners and developers must have in order to run the Bitcoin network also increases. This could lead to different hardware needs for many people.

More Transactions Stored in a Block: Segregated Witness Soft Fork

The slowness of the block generation speed in the blockchain network continued to bother everyone. So the idea of an update called Segregated Witness, introduced by Pieter Wuille in late 2015, is hardly surprising. Also known as SegWit, this hard fork attempt brought a different approach to fast trading. According to this proposal, instead of increasing the size of the block, multiple transactions could be processed in a single block by reducing the size of each transaction. We included SegWit, which emerged as a soft fork, in the hard fork examples. Because this approach contributed significantly to the development of subsequent hard forks. The next hard fork attempt, Bitcoin Cash, was successful.

The Most Succesful Hard Fork Ever: Bitcoin Cash

SegWit gained impressive popularity, and the developers, who thought that it should not be limited to soft forks, rolled up their sleeves. The Bitcoin Cash hard fork that emerged in 2017 argued that the size of blocks should grow instead of SegWit. And the support that the market received from its users at that time allowed this network to be strengthened, which allowed the block size to grow up to 8 megabytes. Currently, the BCH price has exceeded $300 and is considered the most successful hard fork in the blockchain world.

With a hard fork that took place on 15 November 2018, the Bitcoin Cash network was also split in two, producing a cryptocurrency called Bitcoin SV. The reason for the split was two groups advocating different ideas in the network. The side of Roger Ver and Jihan Wu of Bitmain introduced software called Bitcoin ABC. This software required the block size on the network to be 32 megabytes. The second group included Craig Steven Wright and Calvin Ayre. This group was saying that the block size should go up to 128MB and they labeled the idea as “Bitcoin Satoshi Vision”.

The Biggest DAO Hack: Ethereum Classic

Of course, improvements and hard forks don’t just happen on the Bitcoin network. The Ethereum network also experienced a hard fork that caused Ethereum Classic to be launched. There are also some differences between ETC and ETH:

  1. ETH has a consensus mechanism plan that plans to move from PoW to PoS mechanism step by step. ETC, on the other hand, is a classic PoW user, just like Bitcoin.
  2. There is a max supply limit for ETC, just like Bitcoin. For ETC, this value is determined as 210,700,000. ETH, on the other hand, does not have a max supply limit, so it can be produced an infinite number of times.

So, why was this hard fork done? Actually, there is a hacking incident behind this situation. In June 2016, the Ethereum network encountered a major hacking scandal. 60 million dollars were stolen from the network. At that time, the developers hard forked the network in order to prevent further damage to assets by ensuring the security of the network. Today, ETC is a cryptocurrency with an all-time-high price of $176.16.

8 Changes in One Update: Byzantium Fork

The hard fork Byzantium, which took place on the 4,370,000. block of the Ethereum network in October 2017, was mainly aimed at increasing privacy, security, and scalability within the network. Believing that using Ethereum in the business world is very difficult due to the high transaction fees and low block generation speed, a group of developers created a hard fork that enables faster transactions. This is recorded as the fifth major change in the Ethereum network.

  • The Byzantine hard fork succeeded in making the network require much less power for zk-snarks, zero-knowledge encryption operations. For this, a total of four native Ethereum contracts were processed.
  • Another change was related to blocking rewards. The update has reduced the reward of 5 ETH per block to 3 ETH. The ultimate goal of the project is to completely eliminate block rewards.
  • There are things that are not done as well as things that are done with the Byzantium update. As you know, the main purpose of the Ethereum network is to switch to PoS as the consensus mechanism. However, users who earn a lot of money from mining are very reacting to this. To speed up the transition to verification with staking, Ethereum wants to make mining more and more difficult and minimize the reward per block. The “difficulty bomb” policy to be introduced with PoS is still on the agenda. But the Byzantine update did not announce it.

It’s not limited to these. Until now, there have been nine big Ethereum hard forks in history, which can be listed as Frontier Thawing, Homestead, DAO Fork, Tangerine Whistle, Spurious Dragon, Byzantium, Constantinople, Istanbul, and Muir Glacier.

Having a New Cryptocurrency on the Hard Forked Blockchain

If you have any previously purchased cryptocurrencies on a hard-forked blockchain network, you have the cryptocurrency on both networks (generally, the new network offers airdrops of new currency to the old currency’s holders).

For example, let’s say there are 500.000 blocks of a chain that is just hard forked, and you have five of that blockchain’s cryptocurrency. It is possible for you to spend those cryptocurrencies in the five hundred thousand first block of the old blockchain network, and the coins you own are considered not spent in the five hundred thousand first block of the new (hard forked) network. Naturally, you will have cryptocurrencies on both blockchain networks, but your cryptocurrencies will not be doubled. Instead, you get two different cryptocurrencies.

What Does Soft Fork Mean?

Unlike the hard fork, the soft fork, which is an upgrade that is fully compatible with the rules of the past, is a type of software development in which the upgraded nodes and the non-upgraded nodes can communicate. In this type of fork, the old rules in the blockchain network do not conflict with the new rules, so unlike in a hard fork, the blockchain network does not have to be divided.

Here is an example of a soft fork: 

The Bitcoin protocol has experienced a recent update to solve the problem of too slow transactions. So the developers came to a consensus and the SegWit update took place. This update resulted in lower per-transaction fees and shorter block generation time by quadrupling the size of a block (to 4 from 1 MB) within the network. Since it is realized as a soft fork, the update complied with all previous network rules.

You must remember SegWit: The one that started the domino effect.

What are the Differences Between Hard Fork and Soft Fork?

We mentioned that hard fork and soft fork are completely different concepts and have many structural differences while explaining these two definitions. To examine the differences between a hard fork and a soft fork in more detail, be sure to take a look at the table below:

Hard ForkSoft Fork
It is an update that is completely incompatible with the rules made in the past.It complies with all the rules that have been made and applied in the past.
The hard fork, which is the process of splitting into multiple blockchains, can be reversed as if nothing had happened because nothing was changed on the main blockchain.A soft fork that causes a compliant change to the main blockchain cannot be undone because the change has already been committed to blocks on the blockchain.
In addition to being able to validate all previously made invalid transactions, it can also invalidate valid transactions.It can only invalidate valid transactions entered in the past.
It completely changes all the rules in a blockchain.It adds new features and new functionality that can add functionality to a blockchain.
A soft fork is not required to reverse the hard fork because there has been no change in the underlying blockchain network.A hard fork is essential to reversing a soft fork because the main blockchain has changed.

Should I prefer a hard fork or a soft fork?

Since these two types of forks serve completely different purposes, which fork you should choose depends on what changes you are aiming for. If there is a disagreement about how the related network will continue to work, a certain number of developers may choose to come together and create a hard fork. However, it is sufficient to create a soft fork for the consensus network updates.

When was the last Bitcoin fork performed?

Some bitcoin developers and bitcoin owners, dissatisfied with the SegWit soft fork carried out on Bitcoin’s blockchain network, wanted to avoid updates to this protocol and agreed to create a hard fork. This fork created by people who wanted to avoid the SegWit protocol was Bitcoin Cash and was the last Bitcoin fork to occur. Bitcoin Cash left Bitcoin’s blockchain network in August 2017 and became completely independent from Bitcoin.

Does Bitcoin fork double your money?

Yes -and no. Explaining with an example: Hard forks that happen on Bitcoin’s blockchain network won’t double your ‘’Bitcoin’’. Instead, it allows you to hold the amount of Bitcoin you own on the old chain, and have hard-forked cryptocurrency on another blockchain at the same value as your Bitcoin.

When did Ethereum hard fork?

The hard fork of Ethereum that occurred in October 2017 was called Byzantium, and this hard fork occurred at block four million three hundred seventy thousand. This hard fork is known to be created from the Ethereum Enhancement Protocol (EIP), which increases Ethereum privacy, improves security features, and is a solution to the scalability problem.