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What is Forking in Cryptocurrency?

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A fork or forking in the crypto space means a type of software update or upgrade in a given project.

The updating of a crypto code or protocol is also known as a fork. This effectively makes a clone version of the current blockchain. Two blockchains will then usually be running at the same time in separate network areas. However, occasionally there are exceptions.

There are two main types of forks. A soft fork is backwards compatible and a hard fork is not.

What does hard forking in cryptocurrency mean?

Hard forking refers to any form of software upgrade or change of protocol in the crypto space which makes the previous rules obsolete and utilizes new code as its main engine. It is a permanent change and all users and nodes need to upgrade this new version of software.

There is no backwards compatibility. A Bitcoin hard fork took place that led to the creation of Bitcoin Cash in August 2017. There can be a hard forking situation if a new feature needs implementation.

Hard forking can also occur if there is an alteration to the function of its proof of work or a change in the core rules.

What does soft forking in cryptocurrency mean?

Soft forking refers to any new change to the rules will not render the old ones obsolete. Therefore, it will be backwards compatible.

There is no need to universally update the software or nodes because the changes will be instantly recognizable.

However, miners usually need to upgrade when a soft fork occurs. An example of a soft forking occurrence was Segwit. This was a solution for Bitcoin’s scalability issue. It was implemented during August 2017 to help improve the network.

Common causes for forks

A lot of forks happen when a split in a community for a given cryptocurrency occurs. They have different ideas on the direction the project should take and one group decides to split away from the other.

Zcash is a token with a focus on security. They recently went through a hard forking event in October.

This hard fork is known as Sapling and it aims to improve the speed of the network, as well as its security and stability. The team hopes that transactions will be 90% quicker. They aim to reduce the necessary memory required to only 3% of previous levels.

 

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