What is a hard fork?

hard fork is an extreme change to a Blockchain protocol resulting in a permanent divergence between the previous blockchain and the new blockchain after the change. Think of examples like Bitcoin (BTC), Bitcoin Cash (BCH), and Bitcoin SV (BSV) or Ethereum (ETH) and Ethereum Classic (ETC). 

In this article:

What is a hard fork?

What defines a specific blockchain network is the set of “hard” rules that govern it. Bitcoin (BTC), for example, has a fixed supply of 21 million BTC, uses a 1 megabyte limit for its block size, and has a special algorithm to adjust its mining difficulty every 2016 blocks. These are only a few of its “hard” rules that cannot be altered.

Since Bitcoin is defined by these “hard” rules (also known as Consensus Rules), changing even just one of them would create a completely new blockchain: we call this a hard fork.

The term fork can be easily visualized if you consider that both chains share a single transaction history and balance history until the fork, at which point they become separate chains.

How do hard forks originate?

Hard forks can occur in two ways:

Both chains (blockchains) "agree to disagree" and develop their separate projects with different names. Both projects are happy to go their separate ways, so both protocols will build and add to their chains something called replay protection. This protection prevents a replay attack where transactions on one chain are re-broadcasted onto the other.

Both chains claim to be the "real and original" blockchain, in which case things are more complicated. More recently, Bitcoin Cash (BCH) itself had a hard fork, splitting it into Bitcoin Cash and Bitcoin SV (BSV). This was the second type of hard fork and both projects were, for a time, fighting and claiming to be the legitimate chain. More importantly, though, only one side implemented replay protection putting people's funds at risk of a replay attack.

The Exodus developer team implemented replay protection to split Bitcoin Cash (BCH) and Bitcoin SV (BSV) on the wallet. After the split process is completed, those holding BCH on their Exodus wallets will be able to send and exchange both assets independently, without risking a replay attack.

If you want to learn even more about hard forks, this is a great article to read next.

What happens during a hard fork?

When a hard fork takes place, your addresses holding the original asset now contain two different assets, governed by different rules. You get to keep the original crypto you already had, but now you have some of the new hard forked crypto, too. This is what happened on the 1st of August 2017 when Bitcoin Cash (BCH) was forked out of Bitcoin (BTC). Another example of this is Ethereum (ETH) and Ethereum Classic (ETC).

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