A Hard / Soft Fork is a divergence in a blockchain's protocol or code that creates a new path in the chain. These changes can be either backward-compatible (soft) or non-backward-compatible (hard).

The Difference Between Soft and Hard Forks

To understand the difference, imagine a set of traffic rules for a highway.

A soft fork is like a new rule that says, "Cars must drive at or below 60 mph." All cars, both old and new, can follow this rule. Since it's backward-compatible, a soft fork does not create two separate highways. Old versions of the software will still recognize the new rules as valid, and no new cryptocurrency is created. It is a way for a blockchain to smoothly transition to a new set of rules without causing a permanent split.

A hard fork is a non-backward-compatible update, like a new rule that says, "All cars must be electric." Cars with gasoline engines cannot follow this new rule. This permanently splits the highway into two separate roads. In a hard fork, nodes that follow the new rules will begin creating blocks on a new chain, while those on the old chain continue to follow the old rules. If a community is unable to reach a consensus, it can result in the creation of a completely new cryptocurrency. A famous example is the contentious Bitcoin hard fork that created Bitcoin Cash.

How It Impacts Blockchain Evolution

Forks are a natural part of the evolution of open-source blockchains. They allow developers to introduce new features, fix bugs, or improve scalability. While a hard fork can be disruptive, it is also a powerful tool for a decentralized network to adapt and improve over time. A soft fork is a less disruptive way to achieve these goals and is often the preferred method for upgrades.