Hard fork

A hard fork is a major change to a blockchain that can cause it to split. Afterward, two separate networks with different rules exist.

What is a hard fork?

A blockchain is a digital record where transactions are stored. During a hard fork, the network’s rules change so significantly that the old and new software no longer follow the same rules.

As a result, one part can continue using the old rules while the other part uses the new rules. A hard fork may be needed to fix a bug or security issue, add new features, or resolve a disagreement within the community.

An example of a hard fork

In 2017, Bitcoin split into Bitcoin (BTC) and Bitcoin Cash (BCH). The community disagreed about the network’s rules.

The split created two separate blockchains and two different coins. Under the rules of that fork, anyone who owned bitcoin at the time also received an equal amount of Bitcoin Cash. The two coins then each got their own price.

Why is a hard fork important in crypto?

You’ll see hard forks mentioned in news about major updates, security issues, or disagreements within a crypto community. Such a report means a network’s rules could change significantly and a new coin may be created.

Owning a coin during a hard fork doesn’t automatically mean your assets will double in value. Any new coin has its own value, which may be lower or higher. It’s also not always certain that you’ll receive new coins; that depends, among other things, on where your crypto is stored and whether a crypto exchange supports the fork.

A hard fork is different from a soft fork. With a soft fork, one blockchain remains, and the new rules are still compatible with the old software.