As cryptocurrencies like Ethereum mature and become more mainstream in the investment arena, it is important to understand the meaning of “hard fork” and “split.”
That knowledge is especially timely, given that Ethereum is expected to go through a hard fork on October 17.
Earlier this year, we saw Bitcoin split and form Bitcoin Cash which was huge news and a historical event in cryptocurrency world.
Now without confusing you too much, in the case of Ethereum, it’s important to note: not all hard forks lead to splits, but all splits happen by hard forks.
The hard fork expected with Ethereum later this fall is not contentious and is not expected to lead to a split, according experts.
New cryptocurrencies usually occur when there’s a signal for a new hard fork but there’s no consensus — so a significant enough portion of nodes and miners continue to mine the old chain, thereby introducing a situation with two currencies. For example with Ethereum, we have Ethereum (ETH) and Ethereum Classic (ETC).
According to a source, the debate with the latest Ethereum fork is not really significant enough to say with 100% confidence that a new cryptocurrency will come from this, but for now, it’s looming in the background.
When does a hard fork occur? A hard fork is a protocol change that requires all users to upgrade, because it is not backwards compatible, meaning older iterations would not work as the blockchain advances. So if the protocol change is backwards compatible, it can be implemented as a soft fork. When it comes to most major Ethereal upgrades, they are done as hard forks, but none has resulted in a network split surviving any significant length of time.