Forks, either hard or soft, are important elements of the cryptocurrency world. Cryptocurrency community often associates the appearance of new hard and soft forks on the market with Bitcoin, but there is still no full understanding, what features do they have and how they function. Last August the creation of Bitcoin hard fork, named Bitcoin Cash was discussed by crypto traders and enthusiasts all around the world. This topic still causes serious debates and misunderstandings.
In a new Coino article, we will discuss what is a fork and the difference between a hard and soft fork.
In the IT language, a “fork” is a specific open source code change or modification. Normally the modified code is comparable to the original one. However, the 2 codes (forked and original) still have a number of important functional differences, which help them effectively co-exist. In some cases, a new fork is created in order to test a system or a process. In crypto world, forks are created when there are two or more radically different views on the backbone features of one cryptocurrency. Sometimes a community of a specific cryptocurrency makes a decision to create an alternative asset with similar features as the original. Some forks are unintentional; their creation was not planned or discussed. The creation of fork can take place unintentionally when nodes are replicating different. It can be partially explained by a globally spread open-source codebase. In most cases, such forks are found easily and resolved. It is important to emphasize that most modern forks in the crypto world were created because of the disagreements over some specific features. Both a fork and original cryptocurrency have a mutual history because of the identical record of transactions.
As we have already discussed above, there are 2 types of forks: a hard fork and a soft work. A hard fork is a serious modification of a protocol. Hard fork makes modifications that would have been declared invalid or rejected in the past (not compatible with the previous version). A hard fork is often caused by a change in the rules that caused the split in the chain of blocks – some users will agree to these changes, some will not. The emerging blocks are not in a position to transfer transactions to each other, creating two different cryptocurrencies that profess different standards. In this situation, we can assume that not all participants in the system have an appropriate software and, thus, a split was created.
For example, the limit of each block was increased from 2MB to 10MB, so a block with 3MB size would not have conflicts with nodes running the latest version, but it will not be accepted by the older version.
Is Ethereum hardfork possible?
“We missed the condition checking in the code, because of which the full Parity nodes could accept the block containing the incorrect transactions,” he explained.
It is assumed that the bug could affect about 30% of the participants in the Ethereum network, which they use to synchronize with the network of software from Parity. Representatives of the company claim that it was patched before reaching the node network Ethereum. However, network members had to update the software to eliminate the vulnerability.
Several companies, including the Bitfly Mining Pool, have already said they updated their software to a new version (1.10.6-stable or 1.11.3-beta), but the bug can still complicate the work of the blockchain with the Parity software, including users of Ethereum Сlassic (ETC ).
On August 1, 2017 hard fork of Bitcoin, named Bitcoin Cash (BCC), was created. Bitcoins owners also became owners of Bitcoin Cash. That’s why the creation of fork is usually accompanied by a sudden increase in value. Speculators are investing in the main currency (in this case, BTC) to easily get a BCC. As we already know, fork is accompanied, as a rule, by the lack of compatibility of network members. In the period before the fork, the community struggled with the lack of liquidity – the deals were not completed quickly enough, which confused the network. Using BTC as a quick and cheap means of payment was pointless. A new solution was proposed – to increase the block size from 1 to 8 MB and SegWit (Segregated Witness). And here we come to the point of contention. The community was divided into those who support the increase in the block size of 1 MB (which includes about 2.5 thousand transactions) at 8MB and reject SegWit (BCC) and those who disagree with it.