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Hard Fork 2017-10-31T00:34:09+00:00

What is a hard fork?

A hard fork is a mandatory update to the part or all of the blockchain protocol. A permanent divergence in the blockchain is created and all nodes running the previous version will not be accepted. This is different to a soft fork as it requires the all nodes must upgrade their software in order to continue transacting on the blockchain. Unlike a soft fork, a hard fork is not backwards compatible.
When the hard fork takes place all the users validating the newest version will continue along a new path and all users validating the old version will continue along the original path.
A good example of this is when Bitcoin Cash was created… a certain percentage of nodes started to support the updates to the protocol which caused the chain to split. All Bitcoin nodes continued on the original Bitcoin blockchain, and a new blockchain was created which became Bitcoin Cash.
Another great example of a hard fork was when the transactions were reversed on the Ethereum blockchain following the hack on the DAO (Decentralized autonomous exchange). Read more on Investopedia here
 bitGuru Hard Fork Diagram

As you can see from the image above, both new blockchain’s contain the same previous transactions. But that is all they share in common, blockchain 1 cannot verify transactions on blockchain 2 and vise versa.

Advantages of  a hard fork

Given the nature of a hard fork it can be quite difficult to pull. Generally, a lot of time goes into this type of update to make sure they do go smoothly. A hard fork can be used for a number of reasons:

  • Updating errors in the previous version of the blockchain
  • To increase block sizes, if there is too much demand at the previous capacity. This could be to speed up the network
  • To increase the supply of the coin
  • Upgrading the network, adding new functionalities to the blockchain
  • Reversing transactions
  • Simply to create a new version of the blockchain, if there is a divide in how the network should run

When used effectively can be very beneficial. While a hard fork will always cause a split in the original blockchain the new blockchain may not be used. If 100% of the nodes enforce the upgrade rules then the other blockchain will exists but not be in use.

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