https://nasacademy.com/blog/article/what-is-blockchain-fork
So there’s the fork that belongs to cutlery… and then there’s the fork that belongs to Blockchains. Blockchain forks are one of the many aspects of Blockchain technology, and once you understand how a Blockchain forking works, you’ll better appreciate how a change in protocol is relevant for crypto mining.
In a typical software deployment, there is a central authority that is running the entire show. Therefore, that group usually create the product, test it, and then ship it to their customers. In case something goes wrong, they repeat the process and release an update right there and then.
But Blockchains do not follow the Web 2.0 rules of software lifecycle.
Once a product (Blockchain) is developed, tested and shipped, it does not remain under the control of a single authority. Even the owners, who created that Blockchain, do not have solo rights to edit it. So one may ask at this point, how do Blockchains get upgraded? Well, that is primarily what we are going to talk about in this article: what is Blockchain fork and how does it work?
The easiest way to visualize a Blockchain Fork is to think of it as a chain of blocks, stacked on the top of each other. As you all know, these blocks are meant to store data. Now, there are some rules governing the formation of these blocks. For example, there cannot be more than ‘X’ MB of data in each block. Another example could be that only ‘Y’ transactions could be added to a block.
Since every individual has their own copy of the Blockchain, one may decide to change these rules. But in that process, they would end up creating a different blockchain altogether. This new Blockchain would now be run on a different set of norms.
Therefore, what essentially happened here was that someone just ‘split’ the existing Blockchain into two different Blockchains. In other words, they ‘forked’ it.
A few imminent examples from the past for the fork are Bitcoin Cash, Bitcoin SV, Bitcoin Gold – which are all the forks of Bitcoin.
There could be a couple of different reasons behind forking a Blockchain. Let us quickly go through each one of them:
We discussed one example of forking where people with different ideologies may decide to quit the network and choose to run it in their own manner.
Philosophically, forking is the Web3 manifestation of the concept of voice-and-exit.
Basically, at any point of time if sufficient network participants feel that the quality of the network is diminishing and they are unable to exercise change, not only can they leave – but leavers can take their data with them.
It feels like forking will replace outrage and petitions, because it is simply a way more effective way.
One of the very famous forks in history due to this reason was for a famous decentralized exchange called Uniswap. The decentralized exchange Sushi Swap was created after forking Uniswap.
This is where it gets really interesting. It is not possible for someone to simply upgrade the Blockchain at will. Not even the founders. So usually, they release a proposal for upgrading. This proposal carries the details of upgrade, rationale behind it, and the specific dates.
After that, some Blockchains also seek votes from the people who are holding the native tokens. Based on their approval, the proposal goes ahead.
Once the proposal is passed, every node is requested to update as per the new protocol and rules.
All the nodes which fail to upgrade themselves are left behind based on the type of fork.
Yes, you read that right. There’s more than one type of forks. Let us discuss them in detail.
Depending on whether or not the previous nodes are still able to operate in the system, forks can be divided into two parts: Hard Fork and Soft Fork:
A soft fork is a type of fork which is backward compatible. This means that nodes with older software are allowed to create new blocks unless they break any protocol rules laid down by the update.
For example, a protocol may decide to change the maximum storage size of the block from 3MB to 2MB. In this case, older nodes can still create blocks with storage of 2MB or less. However, they would be rejected if they try to create a Block storage greater than 2MB. Why, because it violates the new rules of the Blockchain.
A hard fork is a permanent divergence made in a Blockchain that no longer accepts the blocks created by nodes that have not upgraded themselves. Adding a new rule in the Blockchain adds a fork in the Blockchain. This creates two new paths: one path that follows the new rules, the upgraded blockchain and an older path, which is yet to upgrade.
As more and more nodes realize that their version of blocks is outdated, they would upgrade.
A hard fork is incompatible with the previous version of the Blockchain. This means that nodes that do not upgrade would not be able to create blocks anymore. For example, a protocol passes a rule that all the new blocks would have their storage increased from 2MB to 4MB. In this case, whenever the upgraded Blockchain will create a block with a size of 4MB, the older Blockchain would not be able to process it.
Hard Forks can be further subdivided into two categories:
In a planned hard fork, participants voluntarily upgrade to comply with the rules of the new Blockchain. Those who do not upgrade are left behind with the older Blockchain that very less people would be using.
In a controversial hard fork, two split Blockchains are split into two different incompatible Blockchains each having their own community and roadmap. Often the new Blockchain issues a similar number of tokens which an individual had on the older Blockchain.
The world of Blockchains is full of different types of forks that we discussed above. However, some of these forks have a really interesting history. We are sure that you would be amazed after learning more about them:
This fork is a classic example of ideological forking. Back in 2016, there was a DAO (decentralized autonomous organization) on Ethereum with funds worth $150,000,000 locked in it. However, one fine day, someone hacked the DAO and stole about $500,000 worth of Ethereum from that fund.
Since it was a hack, Vitalik Buterin, co-founder of Ethereum wanted to reverse this transaction and give them their funds back.
At this point, some purists condemned this decision and believed that whatever has happened, has happened. Blockchains should not violate the ethos of immutability.
Hence, there was a hard fork. One Blockchain that emerged out of that fork is the Ethereum that we know of today, and the other one is known as Ethereum Classic. The original Ethereum without any changes.
Famously known as the ‘London Hard Fork,’ EIP 1559 fork happened in October last year. EIP stands for Ethereum Improvement Proposal. This was a planned hard fork that aimed to change the speed and incentivizing mechanism on Ethereum.
Unlike BTC, miners can charge ETH as per their convenience for validating transactions on Ethereum.
Once the update was rolled out, there was an upper limit that was put to the amount of ETH that can be charged. This constrained the supply of ETH in the network, thus pushing up its value. Also, it gave the users predictability in terms of the gas fees that are being charged.
The upgrade ensured that no amount of network congestion results in shooting up Ethereum gas price.
Another fork of recent times is the Bitcoin Taproot upgrade that happened in November 2021. Taproot upgrade simply batches the multiple transactions and signatures together. This helped in increasing the transaction speed of the overall network.
Are you overwhelmed by a new jargon popping up every time you try to decipher Web 3? We’d rather say, that is the beauty of it. There is just so much to learn – and even more opportunities. But you know what is the most difficult step? Getting started. That is where we can add value. Head over to our web3 community to kickstart your journey!
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