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Forked Paths: Decoding Blockchain Forks

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Blockchain technology revolutionized trust and transparency in decentralized networks. Blockchains and their underlying consensus mechanisms are subject to “forks” – pivotal moments in the evolution of a network. 

Forks shape the direction and future development of an ecosystem. Given the regularity but vastly different uses in the industry we thought it’d make sense to demystify the notion of forks by exploring types, causes, and distinct impacts.

What is a Blockchain Fork?

A public blockchain’s open-source ledger uses an underlying consensus mechanism to govern its transactions. The blockchain grows with each transaction, linking the entirety of the network’s data according to the rules of its protocol. Since all blocks are linked by the protocol, a collective agreement to update these rules creates a forked consensus. 

Essentially, a fork is a software update that enacts new rules for the blockchain to follow. The consensus rules can either be loosened or tightened, but all nodes continue building on the same development path.

Types of Blockchain Forks

Blockchains have two basic methods of changing their consensus: soft fork and hard fork. Fundamentally, a soft fork is a narrowing of the rules, and a hard fork is a broadening of them.

Soft Forks

A soft fork introduces a backward-compatible change to the protocol, enabling nodes operating on the new software to continue interacting with nodes on a previous version which maintains network cohesion. Although the new rules may be more restrictive than the original, old nodes can still process new transactions – updated nodes will not recognize or adhere to the previous protocols. 

Let’s say rules A, B, and C are currently allowed. In a soft fork, if the community declares rule C as invalid, but maintains rules A and B, then the protocol has been tightened. Now, users of the upgraded version are only allowed to operate with rules A and B, which were also previously permitted. This demonstrates a backward-compatible change. 

Generally, soft forks are implemented to address minor improvements or enhance features, such as transaction efficiency or security measures. Soft forks typically only require users to upgrade their software, however, a lack of adoption may reduce network efficiency.

Hard Forks

A hard fork represents a more drastic non-backward-compatible change to the protocol, initiating a permanent divergence from the original blockchain. During a hard fork, nodes that have not upgraded to the new protocol become incompatible with the network and continue to follow old rules, while updated nodes form a new chain with its own standards and features. 

Returning to rules A, B, and C as eligible standards, in a hard fork if the community declares the addition of rule D and all rules remain valid – showcasing a broadening of the protocol. Users of the new software are eligible for rule D, which was not allowed in the former version. This represents a non-backward-compatible change. 

Hard forks should only be conducted when absolutely necessary and represent intensive change for the blockchain’s ecosystem. While allowing for transformative change, hard forks can also lead to ecosystem fragmentation caused by a separation of users across the two chains.

Why a Hard Fork?

Hard forking frequency differs considerably among the various blockchain projects and companies. While some networks enforce a hard fork with relative regularity, others opt to rarely undergo such drastic changes – so why do they occur at all? Hard forks facilitate the improvements necessary to keep a network flexible amid blockchain technology’s constant evolution. 

A network may choose a hard fork to add functionality, fix security bugs, modify consensus, or resolve community disagreements. Regardless of reason, these changes can introduce potential risks, ranging from replay attacks and security breaches to double spending and loss of consensus. Despite these possibilities, it is important to note that not all hard forks are risky, but rather an essential step forward in the growth and advancement of a blockchain ecosystem.

At Chia, we are in the practice of only initiating a hard fork when absolutely essential to the health of our ecosystem. We have always prioritized our network stability and community cohesion in decision making – a commitment maintained throughout all tech optimizations. 

Our introduction of CHIP-0012 and plot compression come as foreseen network advancements crucial to ensuring Chia remains one of the most secure, compliant, and sustainable blockchains out there. Since releasing our original plot format, we have anticipated further necessary updates. Now, as we prepare to initiate such changes, we chose the most accessible and least disruptive options.

Impact of Blockchain Forks

A blockchain fork of either kind is a significant decision necessary for the evolution of a blockchain’s decentralized governance. Blockchain is an inherently dynamic technology and both hard and soft forks highlight its adaptability in unique circumstances. 

Whether simply incremental improvements of a soft fork, or the substantial separation of a hard fork, blockchain forks demonstrate the technology’s resilience, and a core component of its ability to redefine trust in the digital age.

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