What Is a Hard Fork?
A hard fork is a protocol change that introduces new rules incompatible with older validation standards.
What is a hard fork?
A hard fork is a change to blockchain rules that is incompatible with the older software. Some blocks that are valid under the new rules may be rejected by nodes following the old rules. Consequently, it becomes important which software and rules network participants choose to follow.
Not every hard fork creates two permanent coins. If participants migrate to the same update, the network can continue with the new rules. If different groups insist on both old and new rules and both sides continue to produce blocks, two separate chains may emerge.
An example of a rule change
In a simplified example, imagine the block size limit allowed by the network is increased. While the new software accepts larger blocks, the old software might consider them invalid. The basic source of incompatibility is that two versions of the software react differently to the same block. In actual updates, changes can be much more extensive; the example only demonstrates the logic.
What changes for the user?
For someone using a wallet or exchange service, the process may depend on the service provider’s decision to offer support. Deposits and withdrawals may be temporarily suspended; a software update might be required to support the new network. Even if two chains emerge, it should not be assumed that an exchange will list both or automatically credit users with balances.
After a fork, “coin claiming” tools may request private keys. Giving a key to other software can jeopardize assets on the old network as well. Additionally, in some splits, protections that prevent a transaction signed on one network from being reused on the other are important. This concept is called replay protection. Acting hastily without an official wallet announcement can risk existing balances for the sake of an expected additional balance.