What are crypto hard forks and how do they work

Investing in crypto means that you should take some time to understand all the special terms that come with it. Among the special terms you can usually encounter are forks and they are sometimes used to describe assets that are related to certain blockchains. 

The two most successful blockchains in the crypto market are Bitcoin and Ethereum. Aside from the success of their coins, there are several other assets that patterned themselves after them. This resulted in several hard forks in the crypto scene which are also oftentimes visible when you play online casino games. 

With the rise of assets like Bitcoin Cash, many people wonder about what a hard fork crypto is. In case you aren’t that familiar with it, read along to find out: 

What is a fork in crypto?  

When the majority of blockchain users cannot agree on an upgrade, this usually results in a crypto fork. Forks became possible due to a lack of agreement on divisive software updates on major networks, including Bitcoin and Ethereum.

These forks can either be split into accidental or intentional forks. The former occurs when two or more blocks are discovered at once, and they are resolved when new blocks are added and one of the chains becomes longer than the other. The latter is intentionally created with well-defined blockchain rules. This covers hard forks and soft forks. 

A hard fork in cryptocurrency occurs when the nodes of a particular blockchain stop accepting the older versions of the blockchain as a result of new governance principles. This means that hard forks are a permanent divergence from where they had been forked from. Therefore, people can distinguish the hard fork from its source by comparing the regulations seen on its code. 

How they work 

Now that you know more about hard fork crypto meaning, you may be wondering how these assets work. Technically speaking, a hard fork in crypto can happen in any crypto platform. That's because blockchains and cryptocurrencies function quite similarly. Some might even consider thinking about blockchain blocks as cryptographic keys that can move memory. Given the fact that miners are already familiar with the standard blockchain rules, it becomes easier for them to understand the new rules.  

All miners must follow the new rules that will help validate a block in the chain. This means that when someone wants to change the rules, they must create a hard fork cryptocurrency to show everyone that there’s been a change to the protocol. The programme can then be updated by the creators to include the new regulations.

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Why they are made 

You may also wonder about the possible reasons why some people think that having a crypto hard fork is necessary. There are several reasons why people came up with it. Among them is to correct security risks that are present in older versions of the software. It may also be to add new functions or reverse transactions. This is what happened when the Ethereum blockchain made a hard fork to reverse the hack on the Decentralized Autonomous Organization (DAO). 

As the developers learned how to hard fork crypto, the Ethereum community almost unanimously supported a hard fork after major hack attempts. With it, it is possible for them to reverse transactions that were completed by an anonymous hacker used to syphon off tens of millions of dollars worth of digital currency. True enough, this worked as a powerful move as several DAO token holders were able to get back their Ether (ETH) funds. 

Do they affect the price of the coin they were forked from? 

BTC or ETH hard forks also have their respective values. In line with that, you may wonder about what hard fork crypto price effect it may have on the coin it was forked from. Technically speaking, it is when a hard fork is created that a little part of the original value is also split into the forked chain. 

This means that while the value of the assets may decrease as a result of the fork, a person may still benefit because they now possess an equivalent quantity of another currency. Then, the secondary currency’s value makes up for the loss in the original coin, resulting in a net gain for the user.

What happens with a crypto hard fork is that it can allow the original currencies' problems to be solved. It can also prompt change in a way that would make them more appealing to investors. The underlying codes may either be useful or innovative, depending on who it was made for. Additionally, they enable the growth of a particular token in a way that would optimise profits by ensuring that the fork would be worth more than simply the token's initial value.

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Popular examples 

With a better understanding of these forks, you may be wondering what popular ones are already out in the market. To have a better idea about it, here are several hard fork examples from both Bitcoin and Ethereum blockchains: 

• Bitcoin Cash (BCH)
   

BCH is perhaps the most popular Bitcoin hard fork in the market today. In fact, some people think that it was just inspired by the popular coin and not forked from it. This is the reason why some people just can’t seem to spot which crypto is hard fork proof when it comes to this asset.  

Despite having ‘Bitcoin’ in its name, BCH differs significantly from where it was forked from. The creators of this cryptocurrency have ensured that they will enhance BTC's current qualities, particularly its block size.

BCH can handle up to 8MB of transactions, in comparison to BTC's block size that can only handle 1MB. It can verify more entries at once, resulting in faster transactions.

• Bitcoin Gold (BTG)
   

In 2017, BTG was created by Hang Yin and Alejandro Regojo as a hard fork of Bitcoin. Their main goal is to restore Bitcoin's decentralised nature.

BTG was able to create a profitable crypto that offered solutions to BTC's challenging mining process. Regular users of this wouldn't have to worry about mining because they wouldn't require application-specific integrated circuits (ASICs) or any other specialised equipment.

Aside from that, the developers also changed the Proof of Work (PoW) algorithm from SHA-256 to Equihash. As a result, mining equipment will simply need to have graphic processors, which are far more readily available than ASICs.

• Ethereum London Hard Fork 
   

This is a set of five Ethereum improvement proposals (EIPs) that each have a special function. It was given that name because, prior to the project's completion, all developer conferences were conducted in London. The Ethereum London Hard Fork was developed as an improved, more streamlined version of Ethereum.

With it, the Ethereum blockchain community can gradually transition from Proof-of-Work to Proof-of-Stake. Therefore, this introduces the idea that those who yield more coins will be more powerful in the network.

There are several other crypto assets that function similarly. You may want to check in with the latest crypto news to find out more about the next crypto hard fork that will be offered on the market. 

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Crypto hard fork vs soft fork 

After knowing more about hard fork meaning in crypto, you may also wonder about how it differs from soft forks. Technically speaking, the two types of forks are quite similar in the sense that they have changed a part of the existing blockchain code. Even so, the old version still exists even when a new one is created out of it. 

Once users accept the update with a soft fork, only one blockchain will continue to be valid. With it, the old and new blockchains coexist while needing a software update that will help adhere to the new regulations. Even though both forks create a split, a hard fork produces two blockchains and a soft fork only aims to produce just one. 

Given the security differences between hard and soft forks, several developers urge for a hard fork even when a soft fork appears to be a better option. While updating a blockchain's blocks needs a lot of processing power, using a hard fork to increase privacy makes more sense than a soft fork.

These are just some facts that you would have to learn about hard forks and how relevant they are in the crypto industry. By understanding what they are and what they do, you will find it easier to learn why many developers create one. Learning about these will also make you more knowledgeable about your assets and factors that may affect its price. 

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Words: Kyra Jimenez