Fork

A backward-compatible upgrade where new rules are a subset of the old rules. Non-upgraded nodes still see new blocks as valid, though they may not fully understand them.

• Mechanism: Tightens validation rules (e.g., reducing block size).
• Example: Bitcoin's Segregated Witness (SegWit) upgrade.
• Outcome: Creates a single, unified chain as long as a majority of hash power adopts the new rules.

A non-backward-compatible upgrade that requires all nodes to update their software. Old nodes will reject blocks created by new nodes, creating a permanent split.

• Mechanism: Introduces new rules that conflict with old ones (e.g., increasing block size, changing consensus algorithm).
• Examples: Ethereum → Ethereum Classic (2016), Bitcoin → Bitcoin Cash (2017).
• Outcome: Creates two separate, competing blockchains with a shared history up to the fork point.

A temporary divergence in the blockchain caused by a consensus failure, not a protocol change. This is a normal part of blockchain operation and is quickly resolved.

• Mechanism: Occurs when two miners produce blocks at nearly the same time, creating competing valid chains.
• Resolution: The network follows the longest chain rule (or highest cumulative difficulty). The shorter, orphaned chain is discarded.
• Purpose: This mechanism is fundamental to achieving eventual consistency in a decentralized network.

Forks are ultimately a social and political process. Code changes are simple; coordinating the network's participants is the true challenge.

• Key Actors: Miners/Validators, Node Operators, Developers, Token Holders.
• Process: Proposals (BIPs, EIPs), signaling, and activation thresholds.
• Risk: Contentious hard forks can split communities and dilute network effects, as seen with Bitcoin Cash's subsequent splits.

Critical technical considerations during a hard fork to prevent transaction replay attacks and ensure network separation.

• Chain ID: A unique identifier (EIP-155) that cryptographically separates forked chains. Transactions signed for one chain are invalid on the other.
• Replay Protection: A protocol change (e.g., adding a unique marker to transactions) that makes transactions invalid on the opposing chain.
• Consequence: Lack of proper replay protection was a major issue in the 2016 Ethereum/ETC split.

Forks differ fundamentally in their intent and community alignment.

• Planned/Protocol Upgrade: A coordinated, non-contentious improvement agreed upon by the core development community (e.g., Ethereum's London hard fork).
• Contentious Fork: A divisive split where factions disagree on fundamental protocol direction, leading to a permanent chain split and the creation of a new asset (e.g., Bitcoin Cash).
• Outcome: Planned forks strengthen the network; contentious forks often create competing ecosystems.

A hard fork is a permanent divergence from the previous version of a blockchain, creating two separate networks that are incompatible. Nodes that do not upgrade to the new rules cannot validate blocks on the forked chain. This is used for non-backward-compatible protocol changes, such as altering consensus rules or block size.

• Examples: Bitcoin Cash (from Bitcoin), Ethereum (from The DAO hack), Ethereum Classic (the original chain).
• Result: Creates a new, separate cryptocurrency and ledger.

A soft fork is a backward-compatible upgrade to a blockchain protocol. Nodes that do not upgrade will still see new blocks as valid, as the new rules are a subset of the old ones. It tightens the rule set and is typically used for feature additions or minor rule changes.

• Examples: Segregated Witness (SegWit) on Bitcoin, which was activated as a soft fork.
• Key Characteristic: Maintains a single chain, as non-upgraded nodes follow the new chain (though they may not fully understand the new transaction types).

A temporary chain split occurs when two miners produce blocks at similar times, creating competing branches. The network resolves this via the longest chain rule, where the branch with the most cumulative proof-of-work becomes the canonical chain. The shorter branch is orphaned. A reorganization (reorg) happens when a longer, competing chain is discovered, causing nodes to switch to it, potentially reversing recent transactions.

• Mechanism: Core to Nakamoto consensus in Proof-of-Work.
• Impact: Highlights the probabilistic nature of blockchain finality.

Forks are the ultimate tool for on-chain governance when consensus cannot be reached. A contentious hard fork represents a fundamental ideological or technical split in the community, leading to a permanent partition of the network, users, and economic value.

• Driver: Disagreements on scaling, monetary policy, or core principles.
• Outcome: The market determines the value and survival of each resulting chain (e.g., Bitcoin vs. Bitcoin Cash).

A codebase fork (or "project fork") occurs when developers copy and modify the open-source software of an existing blockchain to create a new, independent project with different parameters or features. This is distinct from a live network fork, as it starts a new genesis block.

• Examples: Litecoin (forked from Bitcoin code), Polygon POS (forked from Go-Ethereum).
• Purpose: Leverages proven code to bootstrap new networks with different goals (e.g., faster block times, different hashing algorithm).

A replay attack occurs when a transaction valid on one chain is maliciously or accidentally rebroadcast and executed on the forked chain. This can lead to unintended asset transfers. For example, a user who splits coins on a new chain may have their transaction replayed on the original chain, duplicating the action.

• Mitigation: Networks implement replay protection, often via unique chain IDs or specific fork-specific rules.
• User Action: After a contentious fork, users should move funds to a new address on one chain before transacting on the other.

In a chain split, the period of uncertainty before a dominant chain emerges creates a temporary double-spend vulnerability. Miners or validators can work on both chains, potentially confirming conflicting transactions.

• Risk Window: The risk is highest before sufficient proof-of-work accumulates or finality is achieved on a proof-of-stake chain.
• Best Practice: Exchanges and merchants typically require deep confirmations (e.g., 100+ blocks) before crediting funds after a major fork.

When a fork occurs, the state (balances, contract storage) of the two chains is identical at the fork block. However, subsequent transactions cause state divergence. This can have severe consequences:

• Unexpected Logic: A contract's code may execute differently due to changes in EVM opcodes (e.g., EIP-150) or rely on an oracle whose data feed diverges.
• Asset Mismatch: Tokens on the new chain may not have the same value or utility, and bridges may not support them, leading to trapped liquidity.

Contentious forks often result in a hash power or stake split, temporarily reducing the security of both resulting chains. A smaller set of validators is more vulnerable to 51% attacks.

• Security Threshold: The chain with minority support becomes exponentially easier to attack.
• Long-term Risk: If the fork fails to attract sufficient decentralized participation, it remains perpetually vulnerable to reorganization attacks, undermining its economic security.

Forks create operational hazards as infrastructure must correctly identify and separate chains. Wallet software, explorers, and nodes must be explicitly configured for the correct chain ID and consensus rules.

• User Error: Sending assets to addresses on the wrong chain is a common, irreversible loss.
• Infrastructure Attacks: Malicious actors may set up phishing nodes or RPC endpoints for the forked chain to steal private keys or misdirect transactions.

Forks are often preceded by intense social and political conflict within a community. This environment is ripe for exploitation:

• Scam Coins: Fraudulent "airdrop" claims and imposter wallets appear to steal funds.
• Misinformation: Bad actors spread confusion about replay protection, legitimate claim processes, and chain legitimacy to create panic-selling or insecure actions.
• Supply Attacks: Malicious pre-mines or unfair token distributions on the new chain can be disguised as legitimate forks.