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Everything you need to know about Hard Fork (Bitcoin)

By Sujaini Biswas


Updated on: Mar 6th, 2023


9 min read

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The 2004 iteration (codenamed San Andreas) of the popular video game franchise Grand Theft Auto offered a perfect blend of open-world exploration, humour and action. However, it found particular favour among developers. The numerous modifications to the game enabled gamers to drive fast cars or real-life cosplay characters.

Forking in cryptocurrency is synonymous with video game mods. It implies alterations in the basic crypto protocol whose acceptance depends on the platform’s stability.

What Is A Hard Fork?

Synonymous with the modifications in video games, forking is essentially an alteration in the crypto transaction chain. These splits create newer crypto versions and are possible because of the decentralised nature of transactions.

Forks can be soft or hard, depending on the impact it creates on the online community. Soft forks are flexible and allow users to use the forked and un-forked versions interchangeably. 

In comparison, hard forks are rigid and behave as individual units that are not interchangeable. The 2017 Bitcoin hard fork gave rise to Bitcoin Cash or Bitcoin Gold. They work independently, and unlike original Bitcoins, they comprise 8 MB blocks instead of 1 MB.

What Are The Types Of Bitcoin Hard Forks?

Bitcoin Hard forks are irreversible changes derived from the original BTC blocks. The BTC community has witnessed numerous hard forks aiming to create a dent in the blockchain. Some popular BTC hard forks include:

  • BTC XT: With a capacity to perform up to 24 transactions per second, BTC XT was one of the first prominent hard forks. With a block size of 8 MB, BTC XT initially witnessed great success with over 1,000 nodes within six months. However, eventually, users lost interest in the project, and it soon ended operations.
  • BTC Classic: The demand for larger block sizes gave rise to Bitcoin Classic in 2016. Unlike BTC XT, BTC Classic utilises 2 MB per block. Although some developers support BTC Classic wholeheartedly, its importance has steadily declined. 
  • Segregated Witness: Initially launched as a soft fork, Core developer Pieter Wuille introduced SegWit in 2015. It aims to make room for more transactions by reducing the size of individual transactions. However, it simply served the purpose of promoting a hard fork. 
  • BTC Cash Hard Fork: The BTC community realised the need to deal with the occasional snags and delayed transactions faced while dealing with BTC. After a series of soft forks aimed to improve usability, the 2017 hard fork gave rise to BTC Cash. Unlike regular BTC, BTC Cash uses 8 MB blocks, thus making it more scalable and improving the user experience. Its split from the normal BTCalso indicates that it rejects BTC transactions and blocks. 
  • BTC Gold Hard Fork: To make Bitcoin mining more scalable and equal, developers introduced BTC Gold. Unlike regular BTC, it requires basic equipment, and users can mine it on standard graphics processors instead of Application Specific Integrated Circuits (ASIC). Gold forking enabled further decentralisation and experimentation devoid of quality compromise. 
  • Other BTC Hard forks: BTC has undergone numerous other experiments in the form of hard forks, which include
  • Bitcoin Diamond
  • Super Bitcoin
  • Bitcoin Atom
  • Bitcore
  • Bitcoin God
  • Bitcoin Private
  • Bitcoin Zeo
  • Bitcoin Post-Quantum

Why Do Hard Forks Happen?

In simple terms, hard forks are essential upgrades that can transform the blockchain and improve its network. When these upgrades undergo these irreversible changes, they split into two versions: the original blockchain and the upgraded one. 

Hard forks can happen when developers try to improve the functionality, debug potential errors or resolve a disagreement within the crypto network. When developers tweak the network functionality, they usually allow those not in consensus initially to re-join.

Hard forks can also happen accidentally, although they are easily resolvable due to a lack of consensus. Accidental hard forks can occur when two miners work on the same block instantaneously until another miner mines the subsequent block. 

Forks of other blocks or networks are eventually abandoned because of a lack of consensus. This makes the actual block longer and the more profitable one to invest in.  

Effects Of Hard Forks On The Crypto Landscape

The crypto landscape is primarily favoured for its decentralised and transparent structure. Any substantial changes are visible online in the premise of hard forks and their effect on the crypto community.

Three ways in which hard forks can affect miners and users alike are as below:

  • Although the transparent nature of Bitcoins makes it easy for anyone to inspect and tweak, it may pose difficulties in reaching a consensus to resolve issues. For example, BTC Cash resulted from non-consensus arising out of diversity in perspectives. It is crucial to note that hard forks often cause temporary price volatility.
  • Since anyone can create a BTC by tweaking the blockchain network, each form of cryptocurrency can have several versions resulting from a hard fork. BTC alone has more than 27 different versions, all existing autonomously. 
  • Hard forks represent the diversity and the entire network of BTC or other cryptocurrencies. It promotes empowerment for participants from around the globe, allowing them to research and bring in relevant changes. However, differences in perspective can also cause chaos and potential instability. Such a situation also helps manifest innovation and omits negativity. 

H22ard Fork vs Soft Fork

There are certain inherent differences between Hard Forks and Soft Forks, which are as below:

Hard ForkSoft Fork

When the underlying source code of a blockchain undergoes irreversible changes, thereby changing its security parameters or adding a particular feature. 

Soft forks are code changes that can add features and functions without altering the source code and are useful for introducing new features at the programming level.

Hard fork nodes in the underlying blockchain will stop processing the blocks in the older network when a blockchain rule is reformed. 

Soft forks result in a single split, thereby retaining the original blockchain. Soft forks are thus backward node compatible. 

Hard forks preserve the privacy and security definitions of a blockchain, although that requires a lot of electricity and computing power.

Soft forks do not cause any volatility or changes in the security code, thereby saving additional power consumption. 

Not all modifications introduced in GTA-SA were widely accepted. The successful ones paved the way for necessary updates in the newer GTA V.

Likewise, hard forks are those changes that actually affect the blockchain and create a new version. The growing popularity and magnetic appeal of investing in BTC require implementing updates. These would stabilise the blockchain network over time.

About the Author

A manager by day and a sloth by night. I enjoy writing on topics like personal finance and investments. With 10 years of experience in fintech, creating content that resonates with readers is my forte. Read more


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