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Hard Forks

With open-source cryptocurrency, implementing changes and updates can be difficult. Hard forks and soft forks are two different mechanisms used to upgrade or change cryptocurrency networks.

A fork occurs when a project’s software is copied and altered. The original project continues to exist, but it is separate from the new one which adopts a different direction. Imagine a fork in a road.

In this Guide, we’ll take a closer look at hard forks and how they work.

Hard forks vs soft forks

Hard forks are backward-incompatible updates. Often, the rules of the new network’s nodes are incompatible with the old rules. So, the 2 networks operate in parallel.

In contrast, a soft fork is a backward-compatible upgrade which means the network’s nodes can still communicate with one another.

How do they work?

Put simply, a hard fork refers to when a crypto project is split in two.

A hard fork occurs when software is copied and one version modified. The original project stays the same but is separate from the second, new one, which adopts a different direction. The two versions of the project are now incompatible, as hard forks are backwards-incompatible updates. The process of creating a hard fork is permanent and cannot be reversed.

A hard fork can be used to validate previously invalid blocks or transactions on the blockchain. The reverse is also possible, so certain blocks may become invalid. Nodes may also add new rules that are incompatible with the rules of old nodes. New nodes can only interact with other nodes operating on the new version.

Now, these two projects run parallel. After the fork, they will no longer work on the same blockchain, and they’ll have different transactions and blocks.

Due to their shared history, if you held tokens before the fork, you’ll end up with tokens on both networks

Hard forks may occur when issues arise related to a project’s security or scalability. They may also be created to add new features that weren’t present in the original version of the project.

A hard fork may aim to create a better, more efficient version of the original project if this cannot be achieved through a simple software update.

Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

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