Blockchain is an open and decentralised software that powers all the cryptocurrencies like bitcoin and ethereum. Since they comprise blocks of data, they get referred to as Blockchain. You can picture it as a long train that can get traced back to the first-ever transaction on the network. Whenever a community brings any change to the blockchain’s protocol or its basic set of rules, then a fork gets created.
Blockchains rely on communities to maintain and develop their underlying code because they are open source. Whenever a fork happens, the chain splits. It forms a second blockchain that shares its history with the initial one. But the second one is usually headed off in a new direction.
Most currencies have independent development teams responsible for changes and improvements to the network. It is similar to how changes to Internet protocols allow web browsing to become better over time. A fork also happens sometimes to make a cryptocurrency more secure. However, the developers of a new cryptocurrency can also use a fork to develop new coins and ecosystems.
A soft fork is like a blockchain software update. It becomes a currency’s new set of standards after getting adopted by all users. They are also used to bring new features or functions at the programming level to Ethereum and Bitcoin. The changes made by soft-fork are backward-compatible with the pre-fork blocks since the final result is a single blockchain.
Whenever a code changes to the extent that the new version is no longer backward-compatible with the earlier blocks, it is considered a hard fork. Here, the blockchain gets split into two: first, the original blockchain, and second, the new version, which follows the new rules. It leads to a whole new cryptocurrency and is also the source of many well-known tokens. A hard-fork has also led to the evolution of cryptocurrencies like bitcoin cash and bitcoin gold.
Blockchains get upgraded for various reasons, similar to all other software. Some of these reasons are as follows – • It adds functionality • Addresses security-related risks • It resolves all the disagreements within the community about the direction of cryptocurrency.
The Ethereum blockchains execute a set of predetermined actions automatically known as smart contracts that are nothing but chunks of code created when specific criteria get met. These include everything from games, logistics tools to DeFi apps. Since Ethereum Blockchain is a platform that runs all the applications, you can think of it as a computer operating system. There are also newer versions of this operating system that add features and efficiency that the previous versions lack. These include several Ethereum forks like – Ethereum, Ethereum Classic, Ethereum 2.0. A fork that has become old usually continues as a stable platform. And a new one offers developers a new way to interact with it. But they both can merge or continue to evolve even further. Ultimately, the soft fork is similar to a software upgrade. It is like when a phone asks you to upgrade its software to the latest version. And the hard fork is like a new computer operating system or an evolution of the old ones (like Linux or Mac OS that are updates of the old UNIX platform).