Soft fork? First sharp left and a hard fork
Following a previous article about the blockchain hard fork, it’s time to understand the soft fork.
Cryptocurrencies such as Bitcoin and Ethereum rely on a series of rules called protocols. The protocols are built into the cryptocurrency code. The protocols dictate all aspects of how the cryptocurrency should work. These aspects include the current block number, its size, the type of encryption being used in the hash and the difficulty rules (for mining).
A hard fork is the point in which there is a change in one or more of these protocols. The hard fork occurs as some users and miners continue to use one set of rules, whilst others plough on with a new set of rules. The hard fork requires nodes to upgrade their software to initiate the new protocols.
Bitcoin Cash is a well known example of a hard fork. It was spun out of the original Bitcoin protocols in August 2017 as some users demanded greater block capacity.
Another well known example of a hard fork was when the current Ethereum was spun out of Ethereum Classic. This was done so in order to correct a security weakness that resulted in the theft of a large amount of Ethers.
In a hard fork both forks keep the same transaction history up until the point of forking. Thereafter, the altered protocol kicks in and two versions of the blockchain emerge. However, both forks of blockchain will continue to be used whilst users continue to utilise each fork.
Miner activated soft fork
The key difference between a soft fork and hard fork is that a soft fork is backwards compatible. This means that the previous transaction history can be altered to reflect the new protocols. Unlike a hard fork the soft fork simply needs more than fifty percent of miners in order to change the protocols.
Generally, the soft fork works by invalidating certain types of transactions and does this retroactively. This means that it does not need to change any previously existing protocols as in the case of a hard fork. Instead it is a collaboration of a majority of miners simply rejecting certain types of transactions. As a consequent, the soft fork does not require nodes to upgrade their software.
User activated soft fork
Rather than rely on a majority of miners a user activated soft fork does what it says on the tin. The actual crypto users could en masse activate the fork within their software. In doing so miners would be obliged to follow suit. Were the miners to ignore the will of the users then they would not earn any rewards for producing blocks.
Whilst possible, a user activated soft fork is unlikely given the amount of coordination needed between users. However, as will all types of forks, whether it be hard, soft, or user activated soft forks the power lies with the majority in a decentralised system. This is always preferable to the power of the decision residing in a single place as in the case of the fiat system.