What Is Soft Fork And Hard Fork In Bitcoin?

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Until we start talking about gentle, rough, and other strange words, I would like to describe each term briefly. Just to say that we are on the same page.

  1. Blockchain protocol: code convention specifying the rules for connection, mining, and transaction. You must comply with the protocol to be part of the network.
  2. Fork: the moment you have a separate version of the protocol from the main one.

Now, let’s talk in more detail about each of them.

The first question that we have to answer before we talk about forks or any other cutlery is: Why are we updating the protocol?

  • Fix important safety risks in older versions. Since cryptocurrency has recently entered the lifetime of an ordinary currency years ago, it is a relatively new invention. It took a lot of versions of the paper, color, font, and safety layers to develop the dollar we know today. Now it’s much harder to counterfeit it. In the same way, it will take some time to identify and fix all of the security risks of cryptocurrency.
  • And add the new features-the fact that Windows 10 is currently available means that some updates were needed for the first Windows. There are many improvements. The coding for Blockchain is also updated annually. Since it is an open-source product, developers around the world are working on it and offering community improvements. If a function is good enough, the next iteration is added.
  • Transactions to reverse. Recall the fake dollars? The government could put the guy in prison, but could hardly reimburse everyone who took it as real money. Too bad. Too bad. In the world of cryptography, you can minimize the harm. Once the community discovers that a security breach has occurred, they can declare that all transactions made from a certain date do not exist. Yeah, it never occurred. Have you ever want to return on time? Enjoy, here you go. A reverse process for the good guys means that we only have to make the transactions again. For the “poor”–stealing is harder. But not impossible. Not unlikely.

https://i.imgur.com/dGcHalM.jpg

What is a soft fork?

As I said earlier, it’s a change in protocol, but with backward compatibility.

I’ll take the laws of traffic as an example (it’s pretty similar, actually). Say, the US had a law, which should have a minimum speed of 30 miles, a maximum speed of 60 miles. One day the Government will decide that it will be at least 40 and at least 70 from now on. What’s going to happen? For most drivers who drive 55 miles on average-nothing will change. You can still drive and do not violate the new low. But you must speed up if you drive 30 miles.

Likewise, you don’t have to upgrade your Blockchain version to the soft fork immediately, and you can work exactly as you did before, without anything against the new protocol.

Soft fork scenarios

In these example scenarios, I show a soft fork “activating” even if nodes or miners simply force activation to illustrate. Imagine the soft fork would have been triggered if it was deployed.

All full nodes and miners are updated

https://i.imgur.com/13gRJOR.png

In this case, there are no full nodes that comply with legacy rules and no miners that generate blocks compliant with legacy rules. All full nodes have been updated to implement the soft fork rules and all miners are manufacturing compliant blocks. As a result, no chain split exists.

In this scenario, the winning blockchain is the soft fork blockchain.

All full nodes with one upgrade and all miners but one with 1% hash power update

https://i.imgur.com/sMPHvdl.png

In this scenario, there is a full node that complies with the rules of legacies and a miner that produces 1% of the blocks that comply with the rules of legacy. The rest of the full nodes comply with the new soft fork rules, and the other miners are mining blocks that comply with the new soft fork rules.

Since soft fork blocks are compatible with legacy rules and soft fork blocks manufacturers have a greater hazing capacity than one miner who produces legacy blocks, legacy nodes, and soft fork nodes will follow the blockchain fork. As a result, no chain split occurs.

In this scenario, the winning blockchain is probably the soft fork blockchain. The only way that the legacy blockchain could gain is if it can attract significant economic investments to catch up and overtake the soft fork blockchain. If it can, then the legacy blockchain will cause the blockchain to rearrange and scrub off the soft fork blockchain in the view of the legacy nodes. Weak fork nodes won’t know the existing blockchain and will be safe from a blockchain reorganization.

All full nodes except one update and only one miner with 1% hash power of the updates

https://i.imgur.com/E9WPABZ.png

In this scenario, one full node implements the legacy rules and one miner produces blocks that conform to the soft fork rules. The rest of the full nodes comply with the new soft fork laws, and other miners are mining blocks that comply with the old rules.

Since the legacy blocks have more hate powers than one miner producing soft fork blocks and soft fork nodes, legacy nodes and fork nodes will each see two different blockchain versions. This creates a chain split, but it progresses very slowly on the side of the soft fork because the soft fork miner has only 1% of the hatch.

This situation, however, is not as straightforward as it might seem. Please note that all full nodes but one have been modified to follow the soft fork rules while all but one miner produces legacy blocks with 1 percent hash power. Miners on the legacy network have only one full node to offer legacy bitcoin, as all soft fork full nodes do not want legacy blocks.

Either the legacy node has to have much buying capacity to support the legacy miner’s hazard, or the legacy miners will need rapid upgrades to comply with the soft fork rules to allow the larger soft fork supporting full node network to accept their blocks. This scenario would probably happen as a user-activated soft fork, a soft fork planned to be announced by full economic nodes before the activation date to allow the miners time to upgrade and prevent a chain break.

Depending on the relative economic power of the soft fork rules and their willingness to enjoy prolonged confirmatory delay in the event of chain splits, the winning blockchain in this scenario is uncertain. The longer they can wait for a break, the more economical strain the miners can upgrade.

If the miners don’t upgrade, the soft fork blockchain must attract significant economic investment to protect it from a 51% attack. With adequate investment in danger, the soft fork blockchain may trigger either a permanent chain split or a blockchain reorganization that can catch up and resolve the legacy blockchain.

Only one full node update and only one miner with 1% hash power of the updates

https://i.imgur.com/8f5Hq6g.png

Just one full node follows the soft fork rules and one miner with 1 percent of the hazard generating blocks that adhere to the soft fork rules. The rest of the nodes enforce the rules of legacy and the other miners generate legacy blocks.

Since the miners that generate legacy blocks have more hazard power than the miners that produce a soft fork block, the legacy nodes are based on the blockchain version created by legacy miners. However, since legacy blocks by a soft fork node are considered invalid, a chain split happens, although it progresses very slowly since the soft fork miner has only 1 percent of the hazard power.

The winning blockchain is almost certainly the legacy blockchain unless the soft fork blockchain attracts significant economic investment that keeps it safe from an attack of 51 percent, in which case the soft fork blockchain might either cause an ongoing chain breakdown or with sufficient hash power, a blockchain reorganization that removes the old blockchain.

No update of full nodes and no update of miners

https://i.imgur.com/Xv2RPHC.png

All full nodes in this scenario comply with legacy rules and all miners produce blocks that comply with the legacy rules. No full nodes have been updated to comply with the rules of the soft fork, so there is no chain division.

In this scenario, the winning blockchain is the legacy blockchain.

https://i.imgur.com/R7bEJJD.jpg

What is a hard fork?

Continuing with the example of traffic is essentially a creation of a new parallel universe. The roads, drivers and blackjack are their own.

Where one driver was living in Nebraska who had a jeep-now there is and there is a new’ Driver Cash,’ who lives in’ Nebraska cash’ and who has the’ Jeep Cash ‘ driver. But Nebraska Cash driver can never see or apply for a job in Nebraska-there is no portal between the realities. It sounds like a plot of “Black Mirror.”

Let’s go back to the terms of cryptography. After a hard fork, the previous and the new versions are separated, there is no communication or exchange between the two. The new version typically inherits all the historical transactions, and each version has its history of transactions.

Hard fork scenarios

In those examples, I will show a hard-fork “activating,” even if nodes and miners simply force activation for illustration purposes. Imagine that the hard fork would have been activated if it had been deployed. I also assume that there is no soft fork provision in the new hard fork rules that disregards legacy blocks.

All nodes and miners are updated

https://i.imgur.com/OSYmpcA.png

There are no full nodes that enforce legacy rules in this scenario. All full nodes have been updated to comply with the rules for hard forks and all miners create blocks that are compliant with the rules for hard forks.

The winning blockchain is the hard fork blockchain in this scenario.

All full nodes with one upgrade and all miners but one with a 1% hash power update

https://i.imgur.com/e613Lo8.png

In this scenario, one full node enforces legacy rules and one miner producing blocks that comply with the legacy rules, with 1% of hash power. The other nodes comply with the new rules on the hard fork and the majority of the miners are mining blocks that meet the new rules on the hard fork.

Since hard fork blocks are incompatible with legacy rules, and a full node is used to enforce traditional rules, a chain split occurs, albeit very slowly because the miner producing legacy blocks has only 1% of the Hashpower.

In this case, the winning blockchain is almost definitely the hard fork blockchain. Legacy nodes and miners have been forked out of the network for all purposes. The only way the legacy blockchain can survive is if it attracts significant economic investment to defend against a 51 percent attack, whereby a permanent chain divide may occur or, with sufficient power of hash, a blockchain reorganization to wipe out the hard fork blockchain.

All full nodes except an upgrade and only one miner with updates of 1% hash power update

https://i.imgur.com/rg4fDjc.png

In this scenario, there is one full node that complies with the rules of the legacy and one miner, 1% of which produces blocks that conform to the hard fork rules. The rest of the full nodes comply with the new hard fork rules and the other miners are mining blocks that adhere to the laws of heritage.

Because legacy blocks are compliant with hard fork rules but hard fork blocks are not compatible with legacy rules, the legacy blockchain must contend with the hard fork blockchain and the legacy blockchain would adopt hard fork nodes and legacy nodes. As a result, no chain break occurs.

The winning blockchain is almost certainly the legacy blockchain in this scenario. While this scenario is similar in network topology, it ends differently from the previously mentioned soft fork version because hard fork nodes do not reject legacy blocks. Thus, while the vast majority of the network runs full nodes, there are no chain split and no economic pressure to update miners.

The only way to win the hard gate blockchain in this situation is if it can draw significant economic investment to catch up and conquer the legacy blockchain. If this is possible, then in the eyes of the hard fork nodes, the hard fork blockchain will cause the blockchain to reorganize and wipe the legacy blockchain out. Legacy nodes are not aware of the hard fork blockchain and are protected from reorganizing blockchain.

Just one total node update and one miner with 1% of hash power updates

https://i.imgur.com/KKDX9Ju.png

In this case, only one full node enforces the hard fork rules and only one miner can produce 1 percent of the unsafe power blocks conforming to the rules for the hard fork. The remaining nodes comply with the legacy rules and the other miners generate legacy blocks.

Because legacy blocks comply with hard fork rules but hard fork blocks are not compliant with legacies, the legacy blockchain must contend against the hard fork blockchain and the new blockchain will follow both hard fork nodes and legacy nodes. As a result, no chain split occurs.

The winning blockchain, in this case, is almost definitely the legacy blockchain, unless the hard fork blockchain receives significant economic investments to catch up and defeat the legacy blockchain. If it can do so, then the hard fork blockchain allows the network to rearrange and wipe out the old blockchain in the eyes of the hard fork nodes. Legacy full nodes are not aware of the hard fork blockchain and will be secure from the blockchain restructuring.

No update of full nodes and no update of miners

https://i.imgur.com/69Cil5u.png

All the full nodes in this scenario comply with legacy rules and all miners produce blocks that conform to the rules of legacy. No miners have updated to produce hard fork blocks, so no chain division exists.

The winning blockchain is the legacy blockchain in this scenario.

Hard Fork Cases

Bitcoin Cash

The difference from the original Bitcoin: higher transaction speed, less decentralized.

What happened: After the Hard Fork, Bitcoin Cash was a new, separated currency, all who had Bitcoins received the same amount in the Bitcoin Cash wallet before the hard fork.

When happened: 08/01/2017

The DAO

The difference from the Ethereum Blockchain: DAO was built on the Ethereum Blockchain as an intelligent contract and was intended to operate as a risk capital fund. All Ether holders may exchange it for DAO tokens after the launch.

What happened: The DAO was hacked to drain 3.6 mln of Ether. To avoid the hacker cashing, the community chose a soft fork. After a short period, however, the majority voted for the hard work.

When happened: 07/20/2016

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