In the context of cryptocurrency, a fork refers to a divergence or split in the blockchain's transaction history. It occurs when a blockchain undergoes a significant change, resulting in two separate versions of the blockchain with a shared history up to a certain point. There are two main types of forks: soft forks and hard forks.
- Soft Fork:
- A soft fork is a backward-compatible upgrade to the blockchain protocol.
- It imposes new rules that are more restrictive than the existing rules.
- Nodes that haven't upgraded to the new rules can still validate transactions, as they consider the new blocks valid.
- Hard Fork:
- A hard fork is a non-backward-compatible upgrade to the blockchain protocol.
- It introduces new rules that are not compatible with the old ones, leading to a permanent divergence in the blockchain.
- Nodes that haven't upgraded to the new rules consider the new blocks invalid.
