Category: blockchain

Types of forks

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To understand the explanations, you should know what nodes are all about. In brief, the nodes store the blockchain as network nodes and make it available to the network. At best, the current consensus of the blockchain, i.e. the most recent transaction history, is stored decentrally on all nodes.

All nodes in the network must be operated with compatible software so that they can agree on a blockchain. If a change proposal is submitted, there are two ways to perform the fork:

Soft fork and the Bitcoin code review

A soft fork is characterized by its downward compatibility. So there may be nodes in the network that work with the new software review. This does not lead to compatibility problems: The nodes with the old software also accept the opinions of the users who have now opted for the new software. On the other hand, the users want to establish their Bitcoin code review standard with the new software and therefore rely on their new procedure for all blocks.

As soon as the majority in the network is reached, all nodes agree on the new blocks. “Old” and “new” nodes continue to work together

Hard fork and the Bitcoin code scam

This type of fork is not downward compatible – and therefore poses special challenges to guarantee consensus in the network. Existing nodes must update their software to take the new blocks into account (in the Soft Fork, existing nodes could simply take the new blocks into account due to compatibility). The incompatibility of the versions means that the Bitcoin code scam network can be split, so to speak: Users who speak for or against accepting the changes then operate on different blockchains. This is called a blockchain fork (not comparable to a software fork). It is important to stress that not every hard fork creates a new, stable blockchain. Ethereum now has five hard forks behind it and only one of them has formed a new blockchain with Ethereum Classic.

“Old” and “new” nodes go their separate ways. Two blockchains can be created.
How is a fork performed?
Let’s take a look at a fork using Bitcoin as an example. The Bitcoin Core Team may be able to suggest changes – but they can’t enforce them alone. Ultimately, the miners decide which block chain to follow. This preserves decentralization because the network is also left with decision-making authority here. The core team can certainly push ahead with further developments – but it has to keep pitching before the miners and hoping for acceptance.

In the past, Ethereum and Ethereum Classic were indeed a decisive split of the Ethereum blockchain: After the DAO hack, the community intensively discussed undoing the transfer of the hacked coins by agreeing on a blockchain that does not include this transfer. Of course option A) Hacker may keep his loot with option B) Action of the hacker is reversed is not compatible. The procedure therefore requires a hard fork. And as long as 100% of the participants do not agree on a version, the blockchain is split. This happened because now two Ethereum blockchains exist: Ethereum Classic (without Hard Fork: the hacker remains in possession of the stolen coins) and Ethereum (with Hard Fork: unwanted transaction was reversed).

More information about Ethereum and Ethereum Classic can be found here.

Now there are different ways to perform a fork – not to be confused with the different types of forks.

Miner Activated Fork
In this case, the miners in the network decide whether to perform a fork. They signal that they want to perform the fork by attaching this information to confirmed blocks. If within the last 1000 blocks a sufficient amount of miners has signaled the fork, the changes will be enforced. For example, the new version becomes valid from 75% approval, from 95% even old blocks that are not marked with the new version are rejected.

User Activated Soft Fork (UASF)
The User Activated Soft Fork (UASF) is a fork that is triggered by a majority decision among the full nodes. It is terminated on a certain date on which the majority of full nodes must agree to it in order for the fork to actually take place.

Miner Activated Soft Fork (MASF)
With a Miner Activated Soft Fork (MASF), the miners use their computing power to decide on the fork as their voting right and initiate it. This makes the process more efficient, as the full nodes can then accept the changes. However, MASF entails risks because the network relies on computing power as a benchmark. In this way, the Re