Hard Forks Explained
Hard forks are a common term used within the Cryptocurrency space, often heard when referencing Bitcoin/Bitcoin Cash or Ethereum/Ethereum Classic. So what is a hard fork and why do they occur?
Before speaking on hard forks, we must first touch on ‘Blockchain Protocol’ and its definition. Blockchain protocol is the code convention that defines the connection, mining and transaction rules. To interact with the network you must comply with the protocol. A fork occurs the moment you have a protocol that differs from the main one. A hard fork occurs when a duplicate protocol is created and adjusted/updated. For example, Ethereum is the hard fork of Ethereum Classic, and Bitcoin Cash is the hard fork of Bitcoin. When hard forks occur, holders of the original protocol receive an equal number of coins used on the new protocol. For example, if I held 1 Bitcoin before the Bitcoin Cash hard fork occurred, I would receive 1 Bitcoin Cash once the hard fork took place. There are a number of reasons the protocol may need to be updated, such as
- Increase security/minimise security risks
- Implement new functions
- To reverse transactions
We also have an article and infographic explaining the 5 Key Differences Between Hard and Soft Forks
If you have any questions regarding hard forks please contact us.