A hard fork is a type of upgrade or modification to a blockchain protocol that is not backward-compatible. It involves making significant changes to the underlying rules of the blockchain, resulting in a divergence in the blockchain’s transaction history.
In a blockchain network, nodes (computers) maintain a shared ledger by following a set of rules known as a protocol. These rules dictate how transactions are validated, recorded, and processed. When a hard fork occurs, a group of nodes decides to adopt a new version of the protocol with different rules.
As a result of the hard fork, there are two separate and distinct chains: the original chain (often referred to as the “legacy” chain) and the new chain. Each chain will have its own transaction history and may evolve independently from that point forward.
Hard forks can happen for various reasons, such as introducing new features, resolving disputes, improving security, or addressing scalability issues. However, they require widespread consensus within the community because the forked chain creates a divergence in the network, potentially resulting in a split of the community and ecosystem.
It’s important to note that after a hard fork, holders of the original blockchain’s tokens usually have an equivalent amount of tokens on the new chain. However, the two chains are typically separate and may have different values, rules, and communities associated with them.
The “Bitcoin fork wars” in 2017 refers to a period of intense debate and disagreement within the Bitcoin community regarding the scaling of the Bitcoin network and the implementation of a proposed upgrade known as Segregated Witness (SegWit).
The conflict primarily revolved around the issue of block size, which refers to the maximum size limit of each block in the Bitcoin blockchain. Some members of the Bitcoin community believed that increasing the block size was necessary to accommodate a larger number of transactions per block, thereby improving scalability and reducing transaction fees.
The disagreement led to a significant divide among Bitcoin developers, miners, businesses, and users, resulting in the creation of several competing proposals and ultimately a notable hard fork resulting in the Bitcoin Cash (BCH) network. On August 1, 2017, a group of developers and miners initiated a hard fork to create Bitcoin Cash, which increased the block size to 8 megabytes (MB). Bitcoin Cash aimed to offer faster and cheaper transactions compared to the original Bitcoin chain. This fork resulted in the creation of the new cryptocurrency, Bitcoin Cash, that shared the transaction history with Bitcoin up until the point of the fork but evolved separately afterward.
The Bitcoin fork wars created a great deal of controversy and debate within the community, with passionate arguments on both sides. Ultimately, the conflicts highlighted the challenges and complexities associated with scaling decentralised blockchain networks and the differing visions within the Bitcoin community regarding its future development.
The market has ultimately decided that the original Bitcoin core chain is the real Bitcoin and the best investable digital asset for someone allocating superannuation funds. Bitcoin (BTC) is the dominate network and when the likes of Microstrategy or Blackrock invest in digital gold, they choose the original BTC coins and not a forked Bitcoin chain that comes with increased risk of centralisation and control.