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Hard Fork (Blockchain)


A hard fork in blockchain refers to a significant change in the underlying rules or protocols of a blockchain network. This change results in the creation of a new, separate blockchain that is incompatible with the original, effectively splitting the network into two. Users must then decide to either support the new blockchain, the old one, or both, which can lead to a divide within the community.


The phonetics of “Hard Fork (Blockchain)” is: /hɑrd fɔrk (ˈblɒkʧeɪn)/

Key Takeaways

  1. A hard fork is a significant change to a blockchain’s protocol, making previously invalid blocks valid, or vice versa.
  2. Hard forks require consensus among the majority of the network participants and result in the creation of a new, separate blockchain, splitting away from the original chain.
  3. The purpose of a hard fork can be due to software upgrades, improvements to the overall functioning of the blockchain, or to reverse transactions in response to hacking incidents or security breaches.


The term “Hard Fork” in blockchain technology is crucial in the context of business and finance as it represents a significant change in the underlying protocol of a blockchain network, leading to the creation of a new, separate chain. This change can result from various reasons, such as addressing a security vulnerability, implementing new features, or resolving differences among community members. A hard fork can lead to the creation of a new cryptocurrency – often accompanied by considerable market volatility and opportunities for investors – while simultaneously impacting the dynamics of existing projects and their stakeholders. Consequently, understanding and staying aware of hard forks is vital for businesses, investors, developers, and users within the blockchain and cryptocurrency domain to navigate potential risks and opportunities.


A hard fork in the context of blockchain technology is a significant event that offers developers and stakeholders an opportunity to introduce substantial changes or upgrades to the existing system. Its primary purpose is to improve the efficiency, security and adaptability of the platform, allowing it to cater to the growing needs of users and evolving regulatory environments. Additionally, it serves as a means to correct critical security flaws that may put the integrity of a blockchain at risk, thereby setting a new direction for that particular blockchain project. A hard fork entails modifying the fundamental rules and protocols, such as block size limits or the manner in which mining rewards are distributed, that govern the functioning of a blockchain network.

The process of implementing a hard fork can be disruptive in nature, as it requires majority consensus from the network participants. Once the new rules are put in place, nodes running the previous version of the software will no longer be able to participate in validating transactions or maintain synchronization with the upgraded network. As a result, the blockchain’s history diverges, resulting in the creation of two separate and distinct chains—a phenomenon that creates new digital assets for the participants to account for. Therefore, it is vital for developers and community members to collaboratively weigh the benefits and risks of a hard fork before moving forward with such a profound shift in a blockchain network’s identity and ethos. If successfully implemented, a hard fork can rejuvenate a project and maintain its relevance in the ever-evolving landscape of digital innovation.


1. Bitcoin Cash (BCH) Hard Fork: In August 2017, the Bitcoin network experienced a hard fork known as Bitcoin Cash. This hard fork was implemented due to disagreements within the Bitcoin community about how to scale the cryptocurrency for increased transaction capacity. Bitcoin Cash increased the block size from 1MB to 8MB, allowing for more transactions per block. Since then, Bitcoin Cash has continued to exist as a separate cryptocurrency with its own blockchain, and the original Bitcoin network continues to operate separately.

2. Ethereum Classic (ETC) Hard Fork: The Ethereum network underwent a hard fork in July 2016, which resulted in the creation of Ethereum Classic. This hard fork was implemented following the exploitation of a vulnerability in the Decentralized Autonomous Organization (DAO), where an attacker was able to steal around 3.6 million Ether tokens. The hard fork was executed to reverse the hack and recover the stolen funds, but not everyone in the Ethereum community agreed with this decision. Those who maintained the original Ethereum blockchain without implementing the hard fork became Ethereum Classic, while the new Ethereum network continued as Ethereum (ETH).

3. Steem and Hive (HIVE) Hard Fork: In March 2020, the Steem blockchain experienced a hard fork, leading to the creation of the Hive Blockchain. This hard fork was initiated due to community concerns about centralization and control within the Steem network after Steemit, Inc. was acquired by TRON, a competing blockchain platform. The Hive fork was designed to remove tokens associated with the Steemit, Inc. founder and other large stakeholders, effectively redistributing power within the network and preventing potential abuse. Hive operates as its own separate blockchain, and Steem continues to operate independently as well.

Frequently Asked Questions(FAQ)

What is a Hard Fork in the context of blockchain?

A Hard Fork is a significant change to a blockchain network’s protocol that makes previously invalid transactions or blocks valid, or vice-versa. It requires all nodes on the network to upgrade to the new protocol, resulting in a permanent divergence from the old protocol.

Why do Hard Forks occur?

Hard Forks occur when there is a need for major updates or improvements to a blockchain network’s functionality, or to address issues such as security vulnerabilities or scalability concerns. They can also result from disagreements among developers and community members about the direction the project should take, leading to the creation of two separate blockchains.

What is the difference between a Hard Fork and a Soft Fork?

A Hard Fork results in a permanent split of the blockchain, creating two separate chains that cannot interact with each other. A Soft Fork, on the other hand, is a backward-compatible update that only requires a majority of nodes to upgrade. Once a Soft Fork becomes dominant, it becomes part of the main blockchain and does not cause a permanent split.

How does a Hard Fork impact cryptocurrency holders?

When a Hard Fork occurs, it creates two separate blockchains, each with its own cryptocurrency. Users holding the original cryptocurrency at the time of the fork usually receive an equal amount of the new coin on the newly created blockchain. It is important to ensure that you have control over your private keys or that the wallet or exchange you use supports the fork to claim your new coins.

What are some examples of Hard Forks in blockchain history?

Notable Hard Fork examples include Bitcoin Cash (a fork of Bitcoin), Ethereum Classic (a fork of Ethereum), and Bitcoin Gold (another fork of Bitcoin). In each case, disagreements within the community about the project’s direction or technical updates led to the creation of separate blockchains with their own unique features and cryptocurrencies.

Are Hard Forks beneficial or detrimental to the blockchain ecosystem?

The impact of Hard Forks can be both positive and negative. On one hand, they may provide necessary updates or improvements to the network and resolve issues, ultimately strengthening it. On the other hand, they can cause confusion and division within the community, and the resulting split may dilute the overall value and support for each separate project.

Related Finance Terms

  • Blockchain Split
  • New Cryptocurrency
  • Consensus Rule Change
  • Software Upgrade
  • Legacy Chain

Sources for More Information

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