What is the difference between hard fork and soft fork?
The decentralized idea of open blockchains, for example, Bitcoin means that participants on the system must have the come to go to an understanding with regards to the common condition of the blockchain. The complete consensus amongst network participants results in a single blockchain of verified data that everyone deems as correct. A blockchain fork will happen when there is a takeoff from the agreement, which can happen in three situations:
- Temporary Fork
- Soft Fork
- Hard Fork
Temporary forks will be forks that occur when miners, on cryptocurrency systems, discover a block at the same time. This outcome in two split contending blockchains. Temporary forks are settled in verification of-work frameworks, for example, Bitcoin when mineworkers selected which bind to shape subsequent blocks upon. The longest blockchain is viewed just like the ‘true’ blockchain and will win out, while the shorter chain will be abandoned.
Difference Between Soft Fork and Hard Fork
Soft forks and hard forks differ to temporary forks in that they represent a permanent change in the underlying rules of the protocol. Reasons for effecting such a change can occur for various reasons, including:
Adding extra functionality to the network in the form of upgrades
Changing a core rule in the protocol, such as increasing the network block size
Soft forks and hard forks differ to temporary forks because changes that are made are permanent, and thus, require changes at the protocol layer.
A soft fork is a backward compatible method for upgrading a blockchain. As such, a soft fork is a software upgrade that is in backward compatible with previous versions of the software. Soft forks don’t require nodes on the network to move up to look after the agreement because all blocks on the soft-forked blockchain follow the old set of consensus rules as well as the new ones. However, blocks produced by nodes conforming to the old set of consensus rules will violate the new set of consensus rules, and as a result, will likely be made stale by the upgrading mining majority. This is because for a soft fork to work, a majority of miners needs to recognize and enforce the new set of consensus rules. If this majority is reached, then the older network will fall into disuse, with the newer blockchain gaining recognition as the ‘true’ blockchain.
An example of a soft fork would be the implementation of a new rule changing the network block size from 1MB to 500KB. Nodes that have not upgraded will continue to see incoming transactions as valid, as these nodes follow the old set of consensus rules as well as the new. However, mining nodes that have not upgraded and attempt to mine new blocks will have these blocks rejected, as it does not conform to the new set of consensus rules (block sizes of 500KB). Thus, the blockchain with 1MB sized blocks is likely to fall into disuse as miners enforce the new consensus rule of 500KB.
Examples of prior soft forks include:
- Bitcoin Improvement Proposal (BIP) 66: A soft fork on Bitcoin’s signature validation
- Pay to Script Hash (P2SH): A soft fork that resulted in multi-signature addresses on the Bitcoin network
A hard fork is a permanent difference from the previous version of a blockchain; set of consensus rules are introduced into the network that is not compatible with the older network. At the end of the day, a hard fork can be thought of as a software upgrade that isn’t perfect with past renditions of the product. All network participants are required to move up to the most recent variant of the product with a specific end goal to keep confirming and approving new squares of exchanges. Under a hard fork, blocks that are affirmed by nodes that are not yet moved up to the most recent adaptation of the convention programming will be invalid. Nodes running the previous version of the software will have to follow the new set of consensus rules in order for their blocks to be valid on the forked network. In the event of a hard fork, if there is still mining support for the minority chain, then two blockchains can continue to exist simultaneously.
Hard forks can usually fall into two sub-categories, they can either be a planned hard fork or a contentious hard fork.
Planned Hard Fork: A planned hard fork is simply an upgrade to the protocol that had already been made clear in advance by the project developers. Usually, a high degree of consensus from the project developers and the community would already have been reached before the hard fork occurred. Examples of planned hard forks include Monero’s hard fork in January of 2017, which saw the addition of a new privacy feature known as Ring Confidential Transactions (RCT).
Contentious Hard Fork: These types of hard forks occur when there is severe disagreement between various stakeholders in the project, which can include: project developers, network users, and miners. Contentious hard forks normally take place because one portion of the community believe that major changes in a cryptocurrency’s code will produce a superior blockchain. A well-known example of a contentious hard fork was the Bitcoin Cash hard fork. Where it was believed by a portion of the community that increasing Bitcoin’s block size from 1MB to 8MB would allow for the faster processing of transactions on the network.
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