HardForks For Cryptocurrency Projects Explained

Launched in 2009, Bitcoin was the first popular cryptocurrency that has gained traction and is come into the mainstream consciousness in 2017; it’s purpose to function as a decentralized digital alternative to cash. More and more cryptocurrency and blockchain projects came online like Ripple, Bitcoin Cash, and Monero, among others. But these cryptocurrencies were not created from scratch but rather are the result of a HardFork (HF).

A HardFork is an event that occurs when there is a fundamental disagreement between members of the digital asset’s development team. This event could be triggered due to a security hack or a sudden drop in demand for the coin. It has a substantial impact on the coin’s development and price, often with price fluctuations as a HardFork nears.

This guide has the basic information about what you should know about HardForks and their impact on price action in the marketplace.

To understand the phenomenon of forks, we take a closer look at Bitcoin and its underlying technology. Bitcoin is a decentralized peer-to-peer payment network and currency. The underlying technology of Bitcoin is its software protocol, which constitutes of computing codes that serve as predefined rules for the network. One important fact about Bitcoin is that its code is open source and that makes it free and available for anyone to view, inspect and use.

Since Bitcoin is a decentralized network, participants in the network need to agree on a common set of rules to validate the transactions, in order to achieve consensus. Thus there is a single truth or single chain of verified data that everyone in the network agrees to. However, the fork splits in two when there is a split in consensus.

Everyday HardForks

As Bitcoin is a distributed and decentralized network, a fork occurs when miners discover a block at the same time, resulting in two split chains. However, this is a temporary fork as the chain that finds the next block first becomes the longest chain and automatically becomes the truth. Therefore, the shorter chain will be abandoned by the network because it does not have the majority consensus of the active miners.

Change in Protocol

When the devs make a conscious change in the underlying code, these changes are proposed, updated and then accepted as the permanent code for the chain. Changes might include adding new features to the protocol, improving the security infrastructure, block size, speed of transactions, or simply increasing privacy and anonymity in the transactions made on the network.

The forks within this category are permanent and require participants within the network to upgrade their Bitcoin servers with the new code so that the changes are in place to find or mine blocks.

As an aside, there are actually two categories of blockchain forks. They are HardForks and SoftForks.


In the event of a HardFork, all participants in the network upgrade their software to continue participating in the network. The ones who do not upgrade are left out of the network and cannot validate further transactions. HFs are planned as protocol upgrades and they are usually stated on the project’s roadmap.

The other type of HF is the result of controversy and results from disagreement in the dev team or community. When it comes to cryptocurrency, a HardFork could lead to the death of the old chain; an evolution or hard change, if you will. Bitcoin has undergone several HardForks where devs decided the old code did not work for them or their ideals so they branched off. Examples include Bitcoin Gold and Segwit2X. Those devs decided to stop supporting the old code and adjusted their servers accordingly. More examples of HardForks include Ethereum’s Byzantium in Oct 2017, and Monero’s HF in Jan 2017.


Bear in mind that there are also SoftForks that can affect a cryptocurrency network. A SoftFork is a software upgrade that is compatible with older versions. This means participants who failed to upgrade to the new software are still able to participate in the validation and verification of transactions. SoftForks are implemented with much more ease as only a majority of participants need to upgrade their software. However, the functionality of a non-upgraded participant is affected by post the fork’s implementation. Past examples of SoftForks are BIP 66 and P2SH on Bitcoin’s network.


Forks are unavoidable in a coin’s development. While some forks are outright scams, most of them have improved existing technology and created tokens like Ripple, Litecoin and Monero. Such implementations are needed for keeping up with the principles of decentralization and open-source code, which is what Bitcoin creator Satoshi Nakamoto intended when he released the Bitcoin code.

– This article was originally posted at CryptoTraderNews