Understanding the difference between hard forks and soft forks in cryptocurrency is important to understanding how blockchain networks evolve and adapt to change. That is, while soft forks incorporate backwards-compatible changes that usually introduce new features or enhancements without inducing a permanent deviation, hard forks lead to a permanent deviation in the blockchain, often spawning a new cryptocurrency.

A hard fork refers to a significant change that is not backwards compatible to a blockchain protocol. This will cause a permanent deviation in the blockchain as nodes not updated to the new protocol will be unable to verify transactions or blocks. This is an example of a Bitcoin to Bitcoin Cash split, meaning that a hard fork often results in a new cryptocurrency being created.

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On the other hand, a soft fork represents a backwards-compatible change to the protocol. This means nodes adhering to the old rules will still be able to accept blocks created under the new rules while maintaining consensus. Blocks created under the old rules may reject nodes conforming to the new rules. Soft forks typically introduce new features or enhancements to the blockchain without causing permanent deviations. A great example is the implementation of Segregated Witness (SegWit) in the Bitcoin network.

Let's talk a little more about these 2 issues -

1. Hard fork -

~ Definition : A hard fork is a fundamental change in the protocol of a blockchain network that makes previously invalid blocks/transactions valid. All nodes and users are required to upgrade to the latest version of the protocol software. This can split the network into two separate chains if some nodes continue to use older versions while others upgrade.

~ Creation of New Coins: Here often a hard fork creates a new cryptocurrency. A hard fork from Bitcoin in 2017 resulted in the creation of Bitcoin Cash, which we can cite as an example.

~ Example : Suppose a group of developers proposes a change to the Bitcoin protocol that is not backwards compatible. That is, when most miners, nodes, and users agree to implement these changes, a hard fork occurs and a new blockchain (and often a new currency) is created.

2. Soft fork -

~ Definition: A soft fork is a backwards-compatible change to a protocol. It tightens the rules by invalidating valid blocks/transactions. Nodes that have not been upgraded may not be able to fully participate in network consensus but they can still accept new transactions.

~ No New Coins : There is usually no new cryptocurrency created in a soft fork. This results in them maintaining a single blockchain and currency instead.

~ Example : It will be easier to mention a clear example In this case, let's say a group of developers propose a change to the Bitcoin protocol that lowers the block size limit. That is when it becomes a soft fork, if most miners and nodes accept the change. Backward compatibility here will ensure that nodes that have not been upgraded will still recognize small blocks as valid.

So finally we can say that - hard fork and soft fork have their difference in their effect on the network and creation of new coins but both are methods to change the protocol of blockchain. Soft forks maintain a single chain and coin with backward compatibility whereas hard forks create new chains and often new coins.

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So friends, that's it for today. Let me know in your comments what you think of today's topic. I am ending here wishing everyone good health. All be well and stay healthy.

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