In a soft fork, a majority of the network’s miners implement the new rules and begin following the updated version of the blockchain. Soft fork Ī soft fork is a backward-compatible change to the blockchain protocol that allows new rules to be introduced without requiring all users to upgrade their software. The network split was mainly due to a disagreement in how to increase the transactions per second to accommodate for demand. Ī more recent hard-fork example is of Bitcoin in 2017, which resulted in a split creating Bitcoin Cash. Alternatively, to prevent a permanent split, a majority of nodes using the new software may return to the old rules, as was the case of bitcoin split on 12 March 2013. The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment. In 2014 the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange. In this case, the fork resulted in a split creating Ethereum and Ethereum Classic chains. In a hard fork, the network splits into two separate versions: one that follows the new rules and one that follows the old rules.įor example, Ethereum was hard-forked in 2016 to "make whole" the investors in The DAO, which had been hacked by exploiting a vulnerability in its code. Intentional forks that modify the rules of a blockchain can be classified as follows:Ī hard fork is a change to the blockchain protocol that is not backward-compatible and requires all users to upgrade their software in order to continue participating in the network. The network abandons the blocks that are not in the longest chain (they are called orphaned blocks). The fork is resolved when subsequent block(s) are added and one of the chains becomes longer than the alternative(s). Accidental fork happens when two or more miners find a block at nearly the same time. Types of forks įorks can be classified as accidental or intentional. The concept of blockchain technology was first introduced in 2008 by an unknown person or group of people using the pseudonym “Satoshi Nakamoto” in a white paper describing the design of a decentralized digital currency called Bitcoin.īlockchain forks have been widely discussed in the context of the bitcoin scalability problem. Whereas permanent forks (in the sense of protocol changes) have been used to add new features to a blockchain, they can also be used to reverse the effects of hacking such as the case with Ethereum and Ethereum Classic, or avert catastrophic bugs on a blockchain as was the case with the bitcoin fork on 6 August 2010. Short-lived forks are due to the difficulty of reaching fast consensus in a distributed system. While most forks are short-lived some are permanent. When parties are not in agreement, alternative chains may emerge.
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