Blockchain Fork

The public blockchains being decentralized require participants to reach consensus on the shared state of the blockchain. When all network nodes agree, it results in a verified and correct single blockchain. However, when nodes can't reach a unanimous agreement, it causes forks - a split in the 'single' chain into multiple valid chains.

What is a Blockchain Fork?

A blockchain fork is a situation that occurs when the nodes in the network cannot reach a unanimous consensus regarding the future state of the blockchain. In other words, when there is a disagreement amongst the nodes on the network, it can result in two or more valid chains being formed, instead of a single chain. This event leads to a split in the ideal "single" chain of blocks, which is why it is referred to as a "fork."

The concept of a fork is similar to a tuning fork used in experimental science. When a tuning fork is struck, it creates two separate sound waves that travel in opposite directions. In the same way, a blockchain fork creates two separate chains, each with its own version of the truth. This can result in different versions of the blockchain existing simultaneously.

Types of Blockchain Forks

There are two types of blockchain forks: Codebase Forks and Live Blockchain Forks.

A Codebase Fork is a copy of the entire code of a blockchain software, with modifications made to suit the needs of a new blockchain. For example, if you copied the Bitcoin blockchain code and made changes to it, such as decreasing the block creation time, you could launch it as a new blockchain. This would create a new blockchain from an empty ledger.

A Live Blockchain Fork, on the other hand, occurs when a running blockchain is divided into two separate chains. Live blockchain forks can occur due to two reasons: accidental or temporary forks and intentional forks:

Accidental or Temporary Forks occur when multiple miners mine a new block at nearly the same time, causing the network to disagree on which block to accept. This situation eventually resolves itself when one of the chains becomes inactive and the majority of the full nodes choose the other chain to add new blocks to and sync with.
Intentional Forks occur when the rules of a blockchain are changed by modifying its code. Intentional forks are further divided into two types: soft forks and hard forks:

A Soft Fork is a backwards-compatible alteration of the blockchain protocol, where new rules are added without conflicting with the old rules. This means that the old version of the software is still able to validate new blocks mined based on the new rules.

A Hard Fork, on the other hand, is a non-backwards-compatible alteration of the blockchain protocol, where the old version of the software is unable to validate new blocks mined based on the new rules. Hard forks often lead to the creation of a new currency, with an equivalent amount of the original currency being distributed to full nodes who choose to upgrade their software. The decision to join a particular chain rests with the full node, and upgrading the software is necessary to make transactions valid on the new chain.

Soft Fork vs Hard Fork

The blockchain and cryptocurrency communities have differing opinions on the best type of fork for upgrading their networks. While each fork has its advantages, it is their drawbacks that are the focus of concern and the reason for the divide.

Soft forks are viewed as the more gentle approach, but they come with their own set of risks, such as the potential for malicious actors to manipulate full-node users and miners into accepting blocks that don't follow the rules of the blockchain. Full-node users play a crucial role in maintaining the security of a blockchain by verifying that every new block follows the rules set by the old blockchain. If a group of users creates new rules without the knowledge of the full-node users, it can compromise the network's security.

For instance, the decentralized nature of Bitcoin is maintained by full-node users and miners who independently confirm the validity of the ledger. This is how important economic policies, such as the prevention of double-spending and the Bitcoin inflation formula, are enforced. If bad actors trick full-node users and miners into accepting blocks that violate the rules, the blockchain could begin validating invalid blocks, leading to a potential collapse of the system. To mitigate this risk, blockchains have made all soft forks public.

However, hard forks are not without their own challenges, such as dividing communities and reducing the security and processing capacity of the network by splitting its hashing power. Unlike a soft fork, there is no compromise with a hard fork.

Reasons Behind the Emergence of a Blockchain Fork

So, why do forks emerge in the first place? There are several reasons, including adding new functionality, fixing security issues, and reversing transactions. By understanding the reasons behind the emergence of a blockchain fork, we can gain a better understanding of the challenges that blockchain technology faces and how they are being addressed.

Enhance Functionality: The blockchain code undergoes regular upgrades and is developed by a global community of contributors since it is open source. Improvements and bug fixes are addressed and new versions are released as necessary.
Enhance Security: As blockchain technology is relatively new compared to traditional currencies, ongoing research is conducted to fully understand it. Thus, updates are released to address any security vulnerabilities that may arise.
Reverse Transactions: The community has the ability to reverse transactions that are determined to be malicious or in violation, by voiding all transactions within a specific time frame.

The Bottom Line

In conclusion, a blockchain fork is a situation that occurs when there is a disagreement amongst the nodes in the network on the future state of the blockchain. It results in a split in the ideal "single" chain of blocks, creating two or more separate chains. Understanding the concept of forks is important for anyone involved in blockchain technology, as it can have significant impacts on the security and stability of the network.