In blockchain technology, hard forks and soft forks are two different ways of upgrading and updating network protocols. They differ significantly in how they are implemented, and these differences can directly affect the structure and operation of a blockchain network.
Hard Fork
A hard fork is a rule change in which the new version of the network is no longer compatible with the old version. As a result, the blockchain splits into two separate branches that run in parallel and do not affect each other.
Soft Fork
A soft fork is a rule change in which nodes that adopt the new rules can still interact with nodes that have not upgraded. In this case, the new version of the network remains compatible with the old version.
Comparison
Hard Fork
Example: 2016 DAO
The old version is not compatible with the new network
Runs under different protocols
Soft Fork
Example: 2017 SegWit
The new network remains compatible with the old version
Operates under the same overall protocol framework
Situation Analysis
Hard Fork
For example, suppose half of the network nodes want to increase the block size from 2MB to 3MB. If a 3MB block is sent to old-version nodes, those nodes will reject it because their rules still define 2MB as the maximum block size. In this case, the network splits into two separate protocols, and each branch may use a different currency. All account balances are copied from the original chain to the new chain. For instance, if a user held 20 BTC before the fork, that user would then hold 20 BTC on the original chain and 20 new BTC on the new chain.
Soft Fork
For example, if the original block size is 2MB, and half of the network nodes introduce a stricter rule limiting block size to 1MB, blocks larger than 1MB will be treated as invalid by the upgraded nodes. However, old-version nodes can still receive and broadcast blocks. In this situation, the new network can still cover all nodes without being restricted by different rule versions. Bitcoin’s Segregated Witness (SegWit) is a typical example of a soft fork. This upgrade introduced a new block and transaction format in a clever way. Nodes that have not been upgraded can still receive block information, but they do not take part in validating the new transaction format.