Hard Fork vs. Soft Fork How does it works and differentiate?
In the world of digital assets or cryptocurrencies, blockchain networks that upgrade for higher efficiency and stability all go through the process known as Forks, which can be divided into Hard Forks and Soft Forks, which can yield many opportunities for function studying.
The supporting reasons for any fork into a new blockchain network is often due to a number of elements, such as the collective voice of the original network's community or Decentralized application (dApps) developers’ desire to grow, all of which is taken into account in order to develop a better overall functionality.
Note that Decentralized Autonomous Organizations (DAOs) are different from conventional network management organizations, where every token or governance token holder has the right to make decisions to improve or change the functionality of the network.
A Hard Fork is a software upgrade of a blockchain network without any association with its previous software and involves building a new network user having to upgrade their software in order to continue using the functions on the network.
Moreover, a Hard fork occurs to improve work, add functionality, and modify the regulations to strengthen the system security and improve the risk tolerance in various aspects. Also, users are not able to communicate or collaborate through different software versions.
Creators or developers who are dissatisfied with the current network functionality may choose to use this method to make a difference or upgrade the blockchain network by modifying the rules in the new network which will work in parallel with the previous network. Transactions on the previous network are not related to the new blockchain network.
Soft Fork is an upgrade to a new version of the blockchain network software with the objective of providing higher performance, allowing users to communicate and share functions in the network even with different versions of the software.
In terms of pragmatic upgrades, convenience and security would be provided for the network as upgrading can add numerous functionalities, but cannot modify the rules or regulations instilled within the blockchain network.
For example, even if the iOS software is not upgraded to the latest version, it still can use identical applications as an upgraded version.
Difference Between Hard Fork and Soft Fork
A Hard Fork is the creation of one additional network to support more change in terms of performance, stability, and security. Users and developers are required to upgrade their respective network software for future use.
Moreover, there are also cases when building additional networks from a Hard fork may not be the original network, but a separate network. As everyone can see with Ethereum and Ethereum Classic or Bitcoin, Bitcoin Cash and Bitcoin SV.
Soft Fork is a change made in an original network’s structure. The development may not have conditions that force users to update their software version in order to utilize functions and work together, even if the version is not up to date.
In differentiation, a Hard Fork is an upgrade that completely separates into another network, making it unable to work with its original network or be modified back. Whereas Soft Forks are upgrades that can still work with its original network.
Whether it’s a hard or soft fork, both are new software upgrades to an original network with the objective of increasing its efficiency and fixing the problem of the old blockchain version which can happen with all cryptocurrencies including Bitcoin.
Learning the differences will help investors to distinguish news or development updates’ credibility in the cryptocurrencies and blockchain world.
Reference : Coin Telegraph, eToro, Investopedia, Binance Academy