When you start to get involved in cryptocurrency, you are going to have to learn quite a bit of new terminology just to keep up with everything that is happening. You need to understand the names of the different coins, you need to know what airdrops are, and you will want to know what hard and soft forks are, and what the differences are between them.
What Are Forks
You might have heard of the term “forks” before, but it can often be difficult to understand exactly what they mean and why they are important. The first thing to do is to understand that a fork is simply a modification to the open source code. The code that has been forked is going to typically be similar to the original code, but there will be certain changes that have been made to modify the code. There are essentially two tines on the fork, and they can both exist together.
When it comes to cryptocurrencies, forks are used as a means to implement a change in many cases. Sometimes, they can be used as a way to create a new asset. The new asset will have similarities to the original, but there will also be some differences.
Most of the times, forks are intentional, but that is certainly not always the case. In some cases, a fork might happen when the nodes are not all replicating the same information. In most cases, when an unintentional fork occurs, they are found and taken care of right away. As mentioned, there are two types of forks, which we will discuss below.
Soft forks are still capable of working with older versions. If a protocol were to be changed, and if it causes the rules to be tightened, or has an additional function or a cosmetic change, the new version blocks can still be accepted by the old version nodes. However, the newer version would reject the older blocks.
With Bitcoin, this means that miners would see that older blocks are rejected, and then they would upgrade. This would eventually create more old version blocks that are essentially orphaned, and even more miners would upgrade, and the system would eventually self-correct. These tend not to be as problematic as hard forks, and they do not carry a risk of double spending, as hard forks can.
A hard fork occurs when there is a protocol change that will cause the older versions to be invalid. If the older versions were to continue running, it would mean that there could be different data than what is in the newer version. As you can imagine, this could lead to some significant problems.
When it comes to Bitcoin, a hard fork might be needed when changing things such as the difficulty of the puzzle or to change the block size, for example.
Those mining or trading in cryptocurrency will want to keep abreast of any changes and forks as they occur.