Hey you!
Welcome back to “that’s what she said”, the newsletter which is your biweekly dose of web3 knowledge. Last time, we explored keys and crypto wallets — digital keychains that prove you own your assets (if you missed it, go back and read it before diving into today's topic).
Today, we're tackling something that is actually fundamental to how blockchains evolve: forks. Yes, like the thing you eat with, but also like a literal fork in the road where one path splits into two.
You've probably heard about Bitcoin Cash splitting from Bitcoin, or Ethereum Classic diverging from Ethereum. These weren't accidents — they were forks, a natural part of how decentralised networks adapt. Forks are both the solution and the problem. They allow blockchains to upgrade, but they can also split communities and create competing versions of the same cryptocurrency.
Ready? Let's yap on this topic!
🧠 Definition
In the simplest terms, a fork occurs when a blockchain's protocol (its fundamental set of rules) changes, causing the chain to split into two distinct paths. Think of it like a software update, except instead of everyone smoothly upgrading to the new version, some people say "nah, we're good with the old one", and suddenly you have two separate blockchains sharing the same history up until the split.
Here's a better analogy: imagine a blockchain as a really long train where each car represents a block of transactions. You can trace it all the way back to the very first car (the genesis block). Now imagine that at some point, the railway splits. One track continues following the original route, while the other track heads in a new direction. Both trains share the same history up to that split point, but from there forward, they're on completely different journeys.
Why does this happen? Because blockchains are open-source software maintained by communities, not corporations. When changes need to be made — whether for security, scalability, new features or ideological reasons — not everyone always agrees on the best path forward. In centralised systems, the company decides, and everyone follows. In decentralised systems, disagreements can lead to actual splits in the network.
The critical thing to understand: your crypto doesn't disappear during a fork. If you held Bitcoin before the Bitcoin Cash fork, you automatically received an equal amount of Bitcoin Cash. Your original Bitcoin remained unchanged, and you received the new forked coin as a bonus. It's like the blockchain photocopied itself, and you now own assets on both versions.
💡 Why Forks Are Needed
Forks are features that allow blockchains to evolve while maintaining their decentralised nature. Here's why they matter.
- Upgrades and improvements. Blockchains need to improve just like any software. As technology advances and user demands change, networks must add new features, fix bugs, and optimise performance. Forks provide the mechanism to implement these upgrades. Without them, blockchains would remain frozen in their original state, unable to adapt to new challenges or opportunities.
- Security patches. When vulnerabilities are discovered, forks allow developers to fix critical security issues before they're exploited. This might mean changing how transactions are validated, updating cryptographic standards, or addressing weaknesses in the consensus mechanism.
- Resolving community disagreements. When the community genuinely disagrees about the network's direction, forks provide a peaceful resolution mechanism. Rather than one side forcing its vision on everyone else, both sides can pursue their preferred approach on separate chains. This is democracy in action, blockchain-style.
- Responding to crises. Major hacks, protocol failures, or unforeseen consequences of previous decisions can threaten a blockchain's viability. Forks offer a way to course-correct, potentially reversing damage or implementing emergency fixes that wouldn't be possible otherwise.
The alternative to forks would be either complete stagnation (never updating anything) or centralised control (one entity decides everything). Neither option aligns with crypto's core values of innovation and decentralisation.
⚙️ How Forking Works
Forks don't just happen spontaneously. They follow a fairly structured process, even when emotions are running high:
- Identification. First, someone in the community identifies a need for change. Maybe transactions are too slow, maybe there's a security vulnerability, maybe the block size is limiting scalability. The problem gets discussed across developer forums, community channels, and social media.
- Proposal. Developers propose specific changes to the protocol through code modifications or formal improvement proposals. In Bitcoin, these are called BIPs (Bitcoin Improvement Proposals). In Ethereum, they're EIPs (Ethereum Improvement Proposals). These documents outline exactly what should change and why.
- Review and testing. The proposed changes undergo scrutiny from the technical community. Developers review the code, test it on testnets (sandbox versions of the blockchain), and identify potential issues. This is where technical merit gets evaluated separately from politics.
- Decision time. The community must decide whether to adopt the changes. This isn't a formal vote; it's a coordination game involving miners, node operators, exchanges, wallet providers, and regular users. Different stakeholders have different amounts of influence, which can lead to tension.
- Implementation. If enough of the network agrees, a block height or timestamp is set for the fork to activate. When that moment arrives, nodes running the updated software start following the new rules, while nodes on the old software continue following the original rules. Whether this causes a permanent split depends on the type of fork and the level of consensus.
The Role of Nodes and Miners
Nodes validate transactions and maintain copies of the blockchain ledger. During a fork, each node chooses which protocol version to follow by running the corresponding software. Update to the new version, and you're supporting the fork. Stick with the old, and you're rejecting it.
Miners (or validators in proof-of-stake) secure the network by creating new blocks. During contentious forks, they decide which chain gets their computational power. Their collective choice determines which chain survives. The longest chain — with the most accumulated work — typically wins, but sometimes both chains survive independently, like Bitcoin and Bitcoin Cash.
Consensus and Governance
Forks expose decentralisation's governance challenge: no CEO, no board, just rough consensus among stakeholders with conflicting interests. Developers want elegance, miners want profit, users want low fees, and investors want gains. Getting everyone to agree is like herding cats, which is why forks sometimes result in permanent splits.
Some projects use formalised governance (voting systems, governance tokens, DAOs), while others rely on informal consensus-building. Neither approach is perfect, and both can lead to forks when disagreements become irreconcilable.
👀 Hard Forks vs Soft Forks
Not all forks are created equal. The two main types — hard forks and soft forks — have fundamentally different implications for the network.
Hard Forks: The Permanent Split
A hard fork is a radical protocol change that's not backwards-compatible with the previous version. Once a hard fork happens, nodes running the old software can no longer validate blocks created by nodes running the new software. This incompatibility creates a permanent divergence, resulting in two separate blockchains that share a common history but follow different rules going forward.
Key characteristics:
- Not backwards-compatible. Old nodes reject new blocks as invalid because they violate the old rules.
- All participants must choose. Miners, nodes, exchanges, and wallet providers must decide which chain to support.
- Permanent split. Both chains can continue to exist independently, each with its own community and ecosystem.
- Major changes possible. Hard forks enable fundamental modifications like changing consensus algorithms, altering block size limits, or restructuring governance.
The classic example is Bitcoin Cash, which hard forked from Bitcoin in 2017 over disagreements about how to scale the network. Bitcoin Cash increased the block size limit to allow more transactions per block, while Bitcoin maintained its smaller blocks and pursued different scaling solutions. Both chains still exist, each with passionate supporters.
How hard forks work in practice:
When the fork activates, anyone holding Bitcoin suddenly also holds an equivalent amount of Bitcoin Cash. Your private keys control the same amount of both cryptocurrencies because they share transaction history up to the fork point. Exchanges and wallets must decide which chain (or both) to support, creating temporary chaos as the market figures out the value of each version.
Soft Forks: The Smooth Upgrade
A soft fork is a backwards-compatible protocol change that tightens the rules without breaking compatibility with the old version. Nodes running the new software enforce stricter rules, but the blocks they create are still valid according to the old rules. This means the network can remain unified even if not everyone upgrades immediately.
Key characteristics:
- Backwards-compatible. Old nodes still accept new blocks as valid, even if they don't understand all the new rules.
- No network split. The blockchain remains a single chain, not two competing versions.
- Majority consensus sufficient. Only a majority of miners need to upgrade; the minority can continue operating without being forced off the network.
- Limited changes. Soft forks can only make rules stricter, not looser, which limits what they can accomplish.
The most famous soft fork is SegWit (Segregated Witness) in Bitcoin, implemented in 2017. SegWit changed how transaction data was structured to fix transaction malleability issues and increase block capacity, but it did so in a way that old nodes could still function. Transactions looked valid to both old and new nodes, preventing a network split.
How soft forks work in practice:
Once a majority of miners adopt the new rules, blocks following the old rules start getting rejected by the upgraded majority. This economic pressure incentivises remaining miners to upgrade, eventually leading to near-universal adoption. The transition happens gradually without the drama of competing chains or duplicated coins.
☝️ Other Types of Forks
Beyond the hard fork vs soft fork distinction, there are other ways to categorise these blockchain splits.
- Planned vs Contentious. Planned forks are scheduled upgrades with broad community support. They're announced well in advance, thoroughly tested, and generally execute smoothly. Think of Ethereum's regular network upgrades. Contentious forks arise from fundamental disagreements where compromise isn't possible. These are the dramatic splits that make headlines, like Bitcoin Cash breaking away from Bitcoin.
- Temporary vs Permanent. Temporary forks (also called chain reorganisations) happen naturally when two miners find valid blocks simultaneously. The network temporarily diverges but quickly converges back to a single chain as the next block is found. These happen regularly and resolve automatically. Permanent forks result in two chains that continue to exist independently indefinitely.
- Accidental forks. Sometimes forks happen by accident due to software bugs or inconsistencies between different versions. The Ethereum network experienced an accidental fork in 2020 when different client implementations handled a specific transaction differently. These are quickly identified and resolved, with the community coordinating to get everyone back on the same chain.
💡 Disadvantages of Forking
We’ve already discussed why forking might be necessary, but let’s also look at the potential downsides of the process.
- Community fragmentation. Forks split more than just the blockchain; they split the community. Developers, miners, and users end up on opposite sides, often with bad feelings and burned bridges. This division weakens both resulting chains compared to what might have been achieved with unity.
- User confusion. When Bitcoin forks into Bitcoin Cash, Bitcoin Gold, Bitcoin SV, and others, regular users get understandably confused. Which is the "real" Bitcoin? Where did these new coins come from? Should I sell them or hold them? This confusion hinders mainstream adoption.
- Reduced network effects. A blockchain's value comes partly from its network size. Split that network in two, and each resulting chain has less developer talent, lower liquidity, and a smaller user base than the original had. Sometimes, both chains end up weaker than the unified chain would have been.
- Security vulnerabilities. New forks can introduce unexpected bugs or security issues. Even well-tested code might behave unpredictably in production. Additionally, minority chains in contentious forks face the risk of 51% attacks, where malicious actors with sufficient mining power could manipulate the blockchain.
- Market volatility and uncertainty. Fork announcements often trigger price volatility as investors speculate about outcomes. Exchanges struggle to decide which chain to support, sometimes freezing trading during fork periods. Regulatory uncertainty around forked assets adds another layer of confusion.
💪 Fork Examples
Theory is great, but real-world examples show how forks actually play out.
Bitcoin vs Bitcoin Cash (Hard Fork, 2017)
The Bitcoin scaling debate raged for years. As popularity grew, transaction fees skyrocketed and confirmation times lengthened. Two camps emerged: increase block size to fit more transactions, or keep blocks small and build second-layer solutions like Lightning Network.
In August 2017, Bitcoin Cash hard forked away with an 8MB block size (later 32MB), positioning itself as "peer-to-peer electronic cash" for everyday transactions. Bitcoin kept its 1MB blocks and SegWit upgrade, becoming more "digital gold" and a store of value.
Today, both exist. Bitcoin dominates by market cap and adoption, but Bitcoin Cash maintains its own ecosystem. The split demonstrated that contentious forks often create two weaker chains rather than one stronger one.
Ethereum vs Ethereum Classic (Hard Fork, 2016)
When The DAO was hacked for $60 million worth of ETH in 2016, the Ethereum community faced an agonising choice: respect "code is law" and let the hacker keep the funds, or hard fork to reverse the theft.
The majority chose to hard fork, creating Ethereum (ETH) with the rollback. A minority who opposed intervention continued mining the original chain, creating Ethereum Classic (ETC).
This fork illustrated the philosophical divide in crypto: pragmatism vs idealism, community protection vs code absolutism. Both chains still exist, though Ethereum vastly dominates.
SegWit (Soft Fork, 2017)
Not all significant forks are contentious. SegWit was a soft fork in Bitcoin that fixed transaction malleability and increased block capacity by restructuring transaction data storage.
Because it was backwards-compatible, SegWit didn't split the network. Old nodes could still validate upgraded blocks, allowing gradual adoption without drama. It paved the way for Lightning Network, showing how well-designed soft forks can expand capabilities without fragmenting the community.
Key Takeaways
- Forks are feature updates, not failures. They're how decentralised networks adapt and evolve without a central authority making decisions. The ability to fork is fundamental to blockchain's open-source, community-driven nature.
- Hard forks split the chain; soft forks update it. Hard forks create two incompatible versions that can coexist independently. Soft forks tighten rules while maintaining backward compatibility, keeping the network unified.
- Forks reveal governance challenges. Without central leadership, reaching consensus is messy. Forks expose the tension between different stakeholder groups and their competing visions for the network's future.
- Not all forks are created equal. Planned forks with community consensus execute smoothly. Contentious forks fragment communities and weaken network effects. Accidental forks get resolved quickly.
Final Thought
Traditional software updates are simple: the company ships a new version, and users update or get forced to. Forks flip that model. They’re messy, controversial, and can split communities and currencies.
Forking is decentralisation in action. No one can force changes on you. Don’t like the direction? Fork the chain. Keep the rules you believe in and see if others follow. That freedom isn’t cheap. Forks weaken network effects, confuse users, and sometimes leave both chains worse off. So, when a fork causes drama, don’t call it a failure. It’s democracy, crypto-style: chaotic, uncomfortable, and real.
If you learnt something new today, pass it on. Share it with your community. Let's spread the knowledge and level up together.
That's a wrap, normies. Next time, we'll talk about block explorers. Don’t go anywhere 😉
Cookies She Left Behind
If you'd love to dig deeper into the topic, I'd also recommend reviewing the following:
- Soft Fork vs Hard Fork in Crypto by Whiteboard Crypto