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Are blockchain forks inevitable: disruption or upgrade?



As discussed in the previous article, blockchains collaborate to verify transactions and store information through a distributed network of nodes. Essentially, information on the blockchain is immutable, meaning that once data has been verified and added to the chain, no one can change or delete it. Still, developers sometimes have to make changes to the blockchain’s code, either to upgrade or to fix certain issues. This complex process is the blockchain fork. What exactly does it mean for the blockchain?

Blockchain Encyclopedia No.51: Blockchain Fork

Fork is not a proper term for blockchain.

In software engineering, an independent project fork occurs when a developer takes a copy of the source code from a software package and begins independent development based on it, creating another software program.

A blockchain fork is like an application update.

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For a centralized system, its upgrade is relatively simple, which can be divided into: server upgrade and terminal upgrade. For server upgrade, as long as it is deployed in the background, it can be upgraded with one click; for terminal upgrade, you can choose to upgrade directly in the software library or application store. Moreover, the inconsistency of terminal versions will not affect customers' use of its services.

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For a decentralized system such as blockchain, its upgrade is more complicated. Since there is no central organization and no central server, each "code upgrade" needs to be unanimously approved by network participants. If everyone cannot reach an agreement, the blockchain will form a fork, that is, the terminal version is inconsistent. What needs to be noted here is: the inconsistency of the terminal version may affect the customer's use of its services.

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In simple terms, a fork occurs when:

At any time, two "miners" (competitors for accounting rights) discover a block almost at the same time.

The developers, trying to change the rules that determine whether a transaction is valid or not.

Of course, not all forks will succeed. It is very common for different miners to produce a block at roughly the same time, which creates a noticeable fork in the blockchain, as shown in the diagram below. But when a new replacement block is generated by an unreliable miner, the system will agree that this block is invalid, and this "orphan block" will be quickly abandoned by other miners. Only when the new agreement is unanimously approved by some people, the forked chain will be truly formed.

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Essentially, blockchain forks are changes to the protocol. Because blockchains are built on common rules, the easiest way to improve them seems to be to introduce new rules or change existing ones. This mechanism has long been considered dangerous, or at least disruptive, but it is also a more intuitive mechanism for upgrading blockchains.

It's like we are walking on the same road, we arrive at an intersection, and there are two diverging roads in front of us. We can choose one of these paths without affecting previous journeys. Due to the different nature of the two forked roads, different choices will lead us to different ends.

Despite the similar names, blockchain forks can be divided into two types based on whether the old and new versions can interact: hard forks and soft forks.

Hard Fork

A hard fork is the introduction of a whole new set of rules that are incompatible with older network protocols. In other words, a hard fork is a backwards-incompatible upgrade. All network participants must upgrade to the latest version, following the new consensus rules, in order to continue validating and validating new transaction blocks. Of course, in the case of a hard fork, two blockchains can exist at the same time: one using the old rules and the other using the new rules, provided there is continued support for the old version.

A hard fork can be a planned hard fork: this usually means that before the hard fork occurs, project developers and the community have reached a high degree of consensus, and there is a clear upgrade agreement in advance. For example, the "hard fork" launched by Monero in January 2017 added a new privacy feature, Ring Confidential Transactions (RingCT).

It can also be a contentious hard fork: This type of hard fork occurs when there is a serious disagreement between the various parties involved in the project, including: project developers, network users, and nodes. A famous example is the Bitcoin Cash hard fork, in 2017 Bitcoin was split into two separate chains - the original Bitcoin (BTC) and the new Bitcoin Cash (BCH). This is because parts of the community believe that increasing Bitcoin’s block size from 1MB to 8MB will allow transactions to be processed faster on the network.

soft fork

Generally speaking, a soft fork is a backward compatible upgrade. This means that a soft fork does not require nodes on the network to be upgraded to maintain consistency, it generally just adds a new rule that does not conflict with the old one. So all blocks on the soft-forked blockchain follow the old set of consensus rules as well as the new set of consensus rules.

For example, block size (the amount of data held in each block) changes can be achieved through soft forks. If you only want to accept blocks smaller than a certain size, then just reject larger blocks.

But in fact, blocks produced by nodes that conform to the old rule set will violate the new rule set, so they are likely to become stale as new nodes increase. This is because, for a “soft fork” to work, a new set of consensus rules will be recognized and enforced. If this ratio is achieved, the old blockchain will be phased out and the new blockchain will be recognized as the "true" blockchain.

It can be seen that whether it is a hard fork or a soft fork, its durability depends on the nature of the rule change and its relative allocation to resources. But the innovative breakthrough brought by the fork itself will help the development of blockchain technology.


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