Hard Fork vs Soft Fork In Cryptocurrency - Explained

Introduction

The process of making new changes to a blockchain project's code is referred to as a hard fork or soft fork event. The phrase "blockchain fork" is commonly used in two contexts: one to refer to an unexpected and temporary split in the blockchain that occurs for purely technical reasons, and another to describe two different sorts of voluntary protocol changes.

What is a Hard Fork In Crypto?

A hard fork occurs when miners decide on a substantial modification to the crypto blockchain protocol. A hard fork creates a new blockchain. And, following a hard split, both the old and new blockchains continue to exist, distinct and side by side. To understand what is Bitcoin Hardfork read this article - https://blog.buyucoin.com/learn/what-is-bitcoin-hard-fork/

Let's Look at some Crypto Hard Fork Examples -

Litecoin(LTC):

Charlie Lee, a Google employee, invented Litecoin in 2011. It was a Bitcoin fork, but there were some distinctions. Lee wished to establish a similar network geared at quick payments. As a result, Litecoin's block creation time is four times quicker. Instead of ten minutes, each block takes only 2.5 minutes. The Litecoin network employs a new consensus technique known as "script," which is less resource-intensive. In addition, because it was intended to be a low-cost cryptocurrency, the maximum supply ceiling was raised to 84 million coins. Buy Litecoin In India at Best Price through BuyUcoin.

Bitcoin Cash (BCH):

It was founded in 2017 during the Bitcoin hard fork as an alternate solution to BTC difficulties. These issues arose as a result of the following fact: BTC grew too popular to accommodate an ever-increasing number of users. The initial limitations imposed on Bitcoin functioning have become obsolete. Those restrictions were put in place with good intentions, but their creators had no idea the rate of expansion would be so rapid.

What is a Soft Fork in Crypto?

A backwards-compatible rule modification is referred to as a soft fork. It does not result in the creation of a new blockchain. Instead, it preserves the previous blockchain by operating on two lanes with distinct sets of rules. Simply said, the old blockchain may accept blocks generated by the new protocol rule modifications.

New regulations permit a subset of prior valid blocks, allowing both updated and old blocks of transactions to be valid simultaneously.

Let's Look at some Crypto Soft Fork Examples -

Segwit:

SegWit, or SEGREGATED WITNESS, was a Bitcoin soft fork that increased transaction speed. Because a new block of transactions is mined every 10 minutes on average, the goal was to increase the number of transactions that may be included in each block. SegWit would free up some space in each block, which could then be utilised to accommodate additional transactions. It was activated on 21st July 2017.

PAY-TO-SCRIPT-HASH:

P2SH, also known as PAY-TO-SCRIPT- HASH was a patch implemented on the Bitcoin network in 2012 that altered how transactions were verified. It is most readily recognised as addresses in Bitcoin, which begin with a '3' rather than a '1'.

Main Difference Between Hard Fork And Soft Fork in Cryptocurrency

Backward Compatibility

One significant distinction between hard forks and soft forks is "backward compatibility." The phrase refers to a software system's ability to utilise interfaces and data from previous system versions.

Backward compatibility is provided by a change in software protocol in a soft fork. While the new program speaks a new language, it still recognises data in the old language. A hard fork is more akin to altering the language in which the program communicates. It can't grasp what's being stated in the old language anymore.

This is why a hard fork divides the network into two parts: before and after the fork. Because there is no backward compatibility, the two sides of the network can never communicate again after they have forked. Legitimate transaction blocks in one network are no longer regarded as valid in the other.

Block Size

One cause for a split on a cryptocurrency like Bitcoin is to modify the size of the blocks utilised in its blockchain. These blocks include transaction data, and the more data there is in each block, the faster the transaction.

One of the primary causes for the first Bitcoin hard fork was Bitcoin Cash's (BCH) creation in 2017. One block in the BCH blockchain may record more transactions than a block in the original Bitcoin blockchain due to its bigger block size. That enables the currency to process more money more quickly.

Some kinds of cryptocurrency may wish to restrict the size of blocks to boost the compensation to miners. This is where a soft fork may help by introducing a new set of rules to the old blockchain that reduces block size from, say, 1MB to 500KB. Current nodes will still consider the 1MB block acceptable with a soft fork, but when additional nodes update to the soft fork, they may reject any blocks greater than 500KB.

The only thing a soft fork can do is limit the size of the blocks. It can only create new rules; it cannot modify current ones.

Speed and Security

Another well-known example of a hard split was to improve blockchain security following a large attack. The Ethereum network voted overwhelmingly to hard fork as part of a strategy to recover from a breach that lost tens of millions of dollars in cryptocurrencies. As a result, the old blockchain is now known as Ethereum Classic and the fork as Ethereum.

That is an exceptional case. And there are numerous scenarios on a crypto network where a soft fork would suffice in terms of speed, volume, or security.
On the other hand, hard forks provide a significant benefit when a network has to fix an issue rapidly. With both hard and soft forks, the old and new copies of the cryptocurrency's code coexist on the grid for a length of time. However, the old and new versions are visibly and permanently separated on two independent networks with a hard fork.

However, both versions will stay in existence with a soft fork for as long as it takes for all network users to upgrade the software. And there's always the possibility that the legacy version may triumph. As a result, most users and developers prefer a hard fork when there is a hack or similar severe security concern.

Summing Up

Bitcoin was the first cryptocurrency to fork, and it has forked several times since then, with both hard forks and soft forks. Hard forks, such as Bitcoin Cash and Bitcoin Gold, resulted in the creation of totally new blockchains. On the other hand, soft forks are backwards compatible, which may be used with the existing blockchain.

Some Bitcoin splits resulted in the invention of wholly new cryptocurrencies, providing more investment options for cryptocurrency enthusiasts. BuyUcoin ( https://www.buyucoin.com/) offers members the opportunity to buy Bitcoin, Ethereum and 150+ cryptocurrencies from their crypto exchange platform.