What Is a Blockchain Fork and Why They Happen

Blockchain forks are a common, yet confusing aspect for many when it comes to discussing blockchain technology. The good news is, once you learn about what a fork accomplished for one blockchain, it is easy to use that knowledge to understand a fork on another blockchain.

Blockchain forks are a division of the blockchain. But because blockchains are immutable, they may occur naturally when new features are added to a blockchain. Keep reading to learn more.

What is a Blockchain Fork?

A blockchain fork is a divide in a blockchain network. However, because blockchain transactions are immutable, the previous blockchain continues as is for all perpetuity, with the new one acting in parallel to the old—just like the prongs of a fork, which is where the name comes from.

What Causes Blockchain Forks?

Blockchain forks can be caused by tons of different reasons, but the two major reasons are an upgrade to the blockchain or a division in the thinking of those backing the blockchain.

As we mentioned above, a real blockchain will never disappear. This means when the creators want to add a major update to the blockchain, that a fork may be necessary. One example of a fork that has happened for this reason is Ethereum, which split after a hack to preserve and upgrade the security of the portion of the blockchain that remained unaffected.

The second reason, a division in the thinking/goals of those behind the blockchain, happens more frequently in blockchains where the creators are no longer involved, namely, Bitcoin. Satoshi Nakamoto disappeared in 2013, and it wasn’t long after that the miners began to disagree on how the future of the blockchain should be handled. This caused so many issues, with so many miners unwilling to budge, that the blockchain forked in 2017, yielding BitcoinCash while the original Bitcoin blockchain remained as is.

What Types of Blockchain Forks Are There?

Now that you know what a blockchain fork is, it’s important to inform you that there are two different types of forks: a soft fork and a hard fork.

The type of fork mentioned above is a hard fork—a division so serious that two separate blockchains remain after the fork is complete. This only happens when the change made to the blockchain is made in its base code, or the way the blockchain functions. Reducing block size, for example, will yield a hard fork.

A soft fork is more common than a hard fork, and it usually happens with an update to the blockchain’s protocol, which isn’t serious enough for the blockchain to actually split in two. It usually involved updates to the nodes, but it is minor enough that even nodes without the update can continue to process transactions, which is why a second blockchain is not created as a result.

Why Do Forks Matter?

While we would love for all blockchains to work for forever, technology is always changing. This means that blockchains, in order to stay relevant, have to be allowed to change and adapt as needed. This couldn’t happen without blockchain forks.

For example, with the Ethereum hard fork in 2016, the fork was caused by a hack that left part of the network vulnerable and exposed. If this fork had not been allowed to take place, other malicious actors could have tried to hack the blockchain using the same methods later, and Ethereum may never truly have recovered.

While not all forks are this necessary (i.e., the Bitcoin fork in 2017, which resulted in Bitcoin Cash), so many of them are that as an investor in cryptocurrency, you should be prepared, at some point, to hold tokens from two different blockchains as the result of a hard fork.

What Happens When a Blockchain Forks?

If you’ve found this article as a result of a notification that a blockchain you hold is about to fork, here is what you can expect to happen.

First and foremost, the process will vary depending on the consensus method of the blockchain. Blockchains which are proof of work blockchains which are full decentralized, will fork based on miner actions. Miners will have to decide if they want to adapt the new mining protocol and become part of the new blockchain or if they would rather continue with the old software.

For most other blockchains that run on proof of stake, proof of authority, or proof of history, the fork will come down to either a vote among governance token holders or a vote among the board that is running the blockchain. The users will often only be notified after the vote is approved.

When you are notified, you can assume the fork is a hard fork unless you are notified otherwise. You should then expect that once the fork is complete, you will hold the same amount of both cryptocurrencies, with the initial number based on what you currently hold on that blockchain. For example, in November 2017, if you held 1 BTC when Bitcoin forked, you would have 1 BTC and 1 BitcoinCash following the fork.

This may not always be the case, depending on the blockchain. For example, proof-of-authority blockchains may choose to stop processing transactions on the old blockchain and instead just port everyone’s balances to the new blockchain.

Either way, it’s best to ask so you know what to expect!

Famous Blockchain Forks Before 2026

·      2016: Ethereum divides to become Ethereum Classic (ETC) and Ethereum (ETH)

·      2017: Bitcoin hard fork creates BitcoinCash (BCH) while BTC remains active

·      2017: Bitcoin forks again to create Bitcoin Gold (BTG) while the original BTC remains.

·      2018: BitcoinCash has its own hard fork creating Bitcoin SV (BSV) while BCH remains available.

Overall, while the idea of a fork may sound scary, know that it is a regular aspect in the lifecycle of a blockchain, just make sure you ask if you have questions so you know if you’ll be gaining a new balance through the fork or not!