A misconception in the crypto community is that a blockchain network can’t change its protocol. This isn’t true. Thanks to something known as a “hard fork”, the protocol of a blockchain network can be changed, altered, or even deleted. A hard fork can completely invalidate previous blocks and transactions, which makes it a very radical occurrence and as a result, hard forks occur very infrequently.
Who Can Authorize a Hard Fork?
Based on the fact that blockchain networks are decentralized, the answer is theoretically “anyone.” Of course, altering a decentralized network protocol is no easy task. It requires a deep understanding of the cryptocurrency ecosystem. As a result, the most likely participants to initiate a hard fork are developers or miners.
Developers are responsible for creating and updating the code. Miners are responsible for securing the network. Miners tend to be primarily concerned with generating new blocks to get the rewards which means they’re unlikely to fork a network unless there is a specific financial benefit.
Developers, on the other hand, are more likely to want to improve functionality and as a result, are most likely to initiate a hard fork.
Why Initiate a Hard Fork?
There are a few reasons why the users of a decentralized network would want to lay down a hard fork. A common reason to initiate a hard fork is to overcome a security risk. It’s not uncommon for network developers to discover a potential security risk in an older version of the software. A hard fork is the safest way to solve this problem.
Another reason for launching a hard fork is to add new features or functionalities to the network. Of course, adding new features can often cause contentious disagreements between developers, miners, and full node users. Ultimately, this can lead to the creation of an entirely new cryptocurrency.
Arguably, the most famous hard fork occurred when the Bitcoin community was unable to reach a peaceful agreement in August 2017, concerning scalability and block size. A team of disgruntled Bitcoin developers and miners unveiled a new cryptocurrency known as Bitcoin Cash. Today, three years after the famous Bitcoin hard fork, Bitcoin Cash is still going strong. In fact, Bitcoin and Bitcoin Cash exist side-by-side on the same platform. However, they operate under two independent blockchains.
A third reason for initiating a hard fork is to reverse or roll back a transaction because of a hack on a crypto exchange. For example, in June 2016, the Ethereum crypto community voted unanimously to initiate a hard fork for the purpose of reversing a hack. Using a hard fork to reverse a crypto hack usually involves very little disagreement within the community. This is one example where hard forks avoid any unpleasant disagreements inside the community and can be used to bring people together.
Brief Summary of Hard Forks
- A hard fork can completely invalidate previous blocks and transactions.
- Hard forks occur very infrequently.
- Theoretically, anyone can initiate a hard fork.
- The most likely crypto users instigating a hard fork are developers and miners.
- Reasons for initiating a hard fork: security risk, adding features, and reversing a transaction.