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Glossary

Fork

A fork in blockchain refers to a divergence in the blockchain’s history, where the network splits into two separate paths. Forks occur when nodes no longer agree on the current state of the ledger or the rules that define valid blocks. They can be used to implement upgrades, fix bugs, or resolve disagreements within a community. Forks are typically categorized as hard forks or soft forks.

Famous examples include the Bitcoin–Bitcoin Cash split and Ethereum–Ethereum Classic, which resulted from disagreements about network direction or governance.

How Forks Work

  • Protocol Change Introduced – Developers propose updates to the blockchain’s consensus rules or logic.
  • Node Behavior Splits – Some nodes adopt the new rules, while others continue with the old version.
  • Chain Splits (Hard Fork) – In a hard fork, two incompatible chains may emerge if consensus isn't reached.
  • Backward Compatibility (Soft Fork) – In a soft fork, updated nodes remain compatible with older nodes.
  • User Coordination Required – Community consensus is often needed to avoid chaos or duplicate assets.

Key Features

  • Governance Tool – Forks are often the primary method for enacting protocol changes.
  • Network-Wide Impact – Affects all participants — validators, users, developers, and apps.
  • Two Main Types – Hard forks are permanent splits; soft forks are backward-compatible updates.
  • May Result in New Tokens – In hard forks, each chain can have its own native cryptocurrency.
  • Can Be Planned or Contentious – Some forks are scheduled upgrades, while others emerge from disputes.

Benefits of Forks

  • Enables Innovation – Allows blockchains to evolve by adding new features or improving performance.
  • Bug Fixes and Security – Critical issues can be patched via a fork.
  • Dispute Resolution – Forking gives communities a way to pursue different visions.
  • Custom Chains – Developers can fork open-source code to launch new blockchains or L1s.
  • Decentralized Governance – Forks reflect the will of users, developers, and stakeholders.

Risks and Challenges

  • Network Fragmentation – Forks can split the user base, liquidity, and development efforts.
  • Confusion and Misinformation – Users may not understand which chain to support or which token to use.
  • Replay Attacks – Without proper protections, transactions can be copied across chains.
  • Brand Dilution – Competing forks can hurt a blockchain’s reputation and trust.
  • Market Volatility – Forks can create uncertainty, leading to sudden price swings.

Use Cases of Forks

  1. Bitcoin Cash (BCH) – A hard fork of Bitcoin created in 2017 over disagreements about block size.
  2. Ethereum Classic (ETC) – A split from Ethereum after the DAO hack in 2016.
  3. Protocol Upgrades – Ethereum’s London upgrade was a soft fork that introduced EIP-1559.
  4. Custom Blockchain Projects – Teams fork networks like Cosmos SDK or Substrate to build new chains.
  5. Layer 1 Restarts – Forking can be used to relaunch or reset a chain with new parameters.
  6. Community Disputes – When governance fails, forking enables different factions to go their own way.

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