In blockchain technology, hard forks and soft forks are two distinct methods for upgrading and updating network protocols. They have significant differences in implementation, affecting the structure and operation of the blockchain network.
Hard Fork - A "hard fork" refers to a change in rules where the new version of the network is no longer compatible with the old version, resulting in two branches of the blockchain (parallel and unaffected by each other).
Soft Fork - A "soft fork" refers to a change in rules where nodes that implement the new rules can still interact with nodes that have not adopted the changes. The new version of the network remains compatible with the old version.
| Hard Fork | Soft Fork |
|---|---|
| e.g. 2016 DAO | e.g. 2017 Segwit |
| Old version is not compatible with the new network. | New network is compatible with the old one. |
| Different Protocols | Same |
Situation Analysis
For example, if half of the network nodes want to expand block size from 2MB to 3MB, sending a 3MB block to old-version nodes will result in rejection since the old-version nodes have a rule specifying 2MB as the maximum block size. In this scenario, the network protocol splits into two, each using different currencies. All account balances are cloned from the original records to the new chain. Users with 20BTC before the fork will have an account with 20BTC and another with 20 new BTC on both chains
For example, if the original block size is 2MB, and now half of the network nodes implement a new restriction of 1MB block size and treat larger blocks as invalid, old-version nodes can still receive or broadcast blocks. In this case, the new network can cover all nodes without being limited by rule versions. Bitcoin's Segregated Witness (SegWit) is an example of a soft fork. This fork cleverly introduced a new format for blocks and transactions. Nodes that have not been updated can continue to receive block information but do not participate in validating new transactions