Hello and welcome to a new Cryptomatics episode! Today, I will explain what does a Bitcoin Hardfork
mean, why do hard forks appear, and how they work. I will also compare the
hard fork with a soft fork. What is a Bitcoin Hardfork? A hardfork represents a radical
change to the network of a protocol, that makes previously invalid blocks and
transactions valid – or the other way around. It also needs for all of its nodes or users to upgrade to the newest version
of the protocol software. Forks can be created as developers or
members of a community are less and less satisfied with the way the
current blockchain is working. Forks can also be a result of crowdsource funding
for new technology projects or crypto offerings.
After a hard fork, the blockchain
now has two branches, one that goes with the new protocol, and
one that follows the old one. How Do Hard Forks Work? A fork in a blockchain can happen in
any crypto platform, not just Bitcoin. You can picture the blocks in blockchains as cryptographic keys that are
in charge of moving memory. The catch is that all of the miners
have to agree on the new rules. So, if you want to make a change to the
rules, you will need to “fork it”, aka, like a fork in a road, in order to present the
fact that the protocol has suffered a change.
The forking process is the reason why
we have several digital currencies with names that are close to Bitcoin, like
Bitcoin Cash, Bitcoin Gold, and others. Why Do New Hard Forks Appear? We could mention several reasons 1. Correcting important security risks that
are part of the older versions of the software 2. Adding new functions 3. Reverse transactions – a perfect example of
this is when the Ethereum blockchain created a hard fork in order to reverse the hack on the
Decentralized Autonomous Organization (DAO). Hard Fork versus Soft Fork Hard forks and soft forks are similar, in the
sense that when the existing code of a platform is changed, the old version remains on the
network as the new one makes its debut. The difference: a soft fork means that only
one blockchain will continue to be valid. A hard fork means that both the old and the new
blockchains will continue to run in parallel, so the software has to be updated
in order to work with the new rules.
Both types of fork will
create a split, regardless, but a soft fork will result in only one
blockchain, while a hard fork will result in two. The main advantage is represented by the
fact that a hard fork has better security. Conclusions Hard forks are used and needed whenever
there is an update required by a blockchain. Throughout its history, there have
been several Bitcoin Hard forks, which have led to the creation of
Bitcoin-related currencies, like Bitcoin Cash.
While a soft fork may sound great, users and
developers tend to prefer the idea of a hard fork, even if it requires more work, for the fact
that it offers more security for the blockchain. I hope you enjoyed today’s video, and if
you have other questions about hard forks, don't hesitate to tell us in the comment section. So much for today, don't forget to
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latest concepts in the crypto sector.
