We are glad to welcome our dear readers again. We continue our journey through the modernized system. And the topic for today is Hard fork
A hard fork is a change in the cryptocurrency code, in which compatibility with the old version of the blockchain is lost. As a result, instead of one, two coins appear with different characteristics and names. The balances remain on the old wallets, while the new network accrues the same amount to everyone who wants it by airdrop.
Hard forks occur when the user community cannot agree on a common vision for the future of the cryptocurrency and a team of “revolutionaries” starts developing a new protocol.
What usually changes:
– mining algorithms (PoW, PoS, PoB, etc.),
– block reward amount,
– the maximum block size, the time of its creation,
– the complexity of the tasks.
There are two more types of forks.
– Normal fork – the creation of a new coin based on an existing code with the launch of the blockchain from 1 block. The result is a completely new currency with no transaction history and no user base. This is how Dash and Litecoin were created on the basis of the Bitcoin protocol.
– Soft fork – making changes to the code, in which it remains possible to use the old version of the software without problems. The transition to the new version of the protocol is gradual. Disabling support for the old version only happens when the majority of network members upgrade their wallets.
When is a hard fork needed?
A hard protocol update is required in the following cases:
– low network scalability;
– centralization of mining and its inaccessibility for ordinary users;
– heavy blockchain workload and high commissions;
– it is necessary to roll back fraudulent transactions (the case with the DAO hack and theft of 3.6 million ETH);
– elimination of errors and bugs in the code;
– change of ideals, vision and goals of the project.
When dissatisfaction with one or more problems is brewing in the community, an initiative group is formed from well-known traders, miners, developers, visionaries. If the ideas of the group are not accepted by some of the users, then instead of a soft fork, it implements a hard fork.
Important! Anyone can start developing new software, because. The source code of almost all cryptocurrencies is open source. No licenses, agreements with regulators are required.
– Development and discussion of the new concept by the community.
– Development of a new protocol code.
– Announcement of the official implementation date. In the future, a transfer is possible to correct shortcomings and bugs, as was the case with London in Ethereum.
– Early launch on testnets. Developers test the functionality of the code in an environment similar to the main blockchain. Fix vulnerabilities prior to mainnet activation.
– Main launch. New software is being introduced that miners and other members of the new network need to download.
– Airdrop of new coins in accordance with the balance of the old wallet at the time of the network split.
After six months or a year, you can evaluate the results. If the new network was able to lure most of the miners and traders to itself, then everything is in order. If not, then over time, such a hard fork simply fades away until the final desolation.