A Hard Fork in the blockchain space is a major change in the network protocol that results in a split of chaining path resulting in two different blockchains. Hard forks occur when there is a need for improvement in the blockchain’s functionality which could be to increase its scalability capacity or correct important security risks and create new coins for a project.
What Happens when a Hard Fork Occurs
A blockchain is a digital ledger that stores transactional data immutably on all participating computer nodes. A hard fork creates a permanent split in a blockchain database because there is a change to the underlying code. This creates two different paths of chaining where one path has a new blockchain with new tokens, and the second path has the original blockchain. The original (old) blockchain can continue on its path if some miners choose to continue validating transactional blocks. An example of such is the Bitcoin that has hard forked several times generating new blockchains like Bitcoin Cash and Bitcoin SV, while the original blockchain remains strong.
When a hard fork occurs, all nodes on the blockchain are expected to download the new software for an upgrade to the latest version of the network protocol. The old blockchain nodes will not store information from the new blockchain but the new blockchain maintains access to the old database. The new blockchain generates new tokens and automatically, the holders of original tokens will be granted new tokens on the new blockchain if they choose to upgrade.
A hard fork has a tremendous impact on a blockchain as it could be a hard decision to make because of the decentralisation and the amount of energy needed to power it. Hence, some crypto expert advises that soft forks should be considered to create minor software protocol changes without splitting the blockchain path.
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