What Is A Bitcoin Fork? A Bitcoin fork is a change to the Bitcoin consensus rulesWhat Are The Bitcoin Consensus Rules? The Bitcoin consensus rules are the set of rules that all of the bitcoin nodes agree on that govern and maintain the Bitcoin protocol..... There are 2 basic types of bitcoin fork: soft fork and hard fork. A soft fork results in a single blockchainWhat Is The Blockchain? The blockchain is the public record of bitcoin transactions, which are organized into blocks that are all chronologically linked to one another. Because every block is... while a hard fork results in two separate versions of the blockchain with a shared history.
Some consider forks to be an important feature of how bitcoin works while others consider it a bug.
Soft Fork
A Bitcoin soft fork is a change to the Bitcoin consensus rules that is backwards compatible. Soft forks do not require all users to upgrade to the new software in order for it to be used, as opposed to hard forks which do require all users to upgrade. After a soft fork, there is still only one single blockchain and users can choose if they will run the new software or stick with the older version of the software. This means that users who do not upgrade their software to the new rules will still be able to participate in the network, but they are limited to the functionality of the old software.
For example, a soft fork may allow for a more efficient use of block space which provides lower on-chain fees but only those who run the new software will be able to benefit from the lower fees.
Hard Fork
A bitcoin hard fork is a change to the consensus rules of the Bitcoin network that is NOT backwards compatible. This means that after a hard fork, there will be two different versions of the blockchain: the original one and the new forked one. Hard forks usually happen when there is a disagreement amongst the community about how the Bitcoin protocol should be changed. When a hard fork occurs, Bitcoin nodesWhat Is A Bitcoin Node? A bitcoin node is any computer that runs the bitcoin software, enforces the bitcoin consensus rules, and validates bitcoin transactions and blocks. Bitcoin nodes are... will have to decide which set of protocol rules they will run. Naturally, not all users will agree with the changes that have been made. As a result, some users will continue to use the old version of the software, and some with run the new forked software that is incompatible with the original. While both blockchains share a history up to the point of the hard fork, they are now completely independent blockchains and follow different consensus rules.
Despite the potential for confusion, bitcoin forks can be beneficial as they allow for different ideas to diverge.
The Blocksize Wars
In 2017, there was a large debate amongst bitcoiners around the world. An early bitcoin investor suggested increasing the size of bitcoin blocks from 1mb to 8mb to allow for more transactions per block and reduce the number of transactions that were piling up in the mempoolWhat Is The MemPool? The MemPool, short for memory pool, is a short-term database of unconfirmed transactions that is kept by each node. Although the term "MemPool" is frequently used,..., which was causing on-chain fees to increase substantially. This proposal was widely debated because the consensus rules limit the block size to 1mb per block. This global debate gave rise to the blocksize wars between two basic schools of thought. There were those who wanted to increase the block size and those who thought that a blocksize increase we premature and that other ways to scale Bitcoin should be fully explored before proposing a change to the consensus rules.
Ultimately, there was never an agreement between the two sets of ideals and a hard fork took place in August of 2017 which resulted in two different blockchains – the original Bitcoin blockchain and the new forked blockchain. This hard fork resulted in a completely new cryptocurrency being created.
A complete explanation about this controversial hard fork and everything that lead up to it is covered in detail in the book, The Blocksize Wars.