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Standard Cryptocurrency Hard Forks Explained

Published: 10/10/2018
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What is it for?

Introduction

 

In the previous articles, we figured out that hard forks are natural for blockchain, examined their peculiarities within blockchain, tangle, and hashgraph solutions, discussed the key difference between hard and soft forks and special hard fork cases. Now it is time to dive deeper into standard and variative examples of hard forks.

 

Standard cases of hard forks

 

Let’s have a look at several examples of the behavior of network participants amid standard hard forks:

 

  1. A new block created according to new rules arrives to the network.
    1. Upgraded nodes accept it and attach to their blockchain copies. The new blockchain grows.
    2. Old-fashioned nodes drop this block, and their blockchain copies are not updated. The old blockchain is stable.
  2. A new block created according to old rules arrives to the network.
    1. Upgraded nodes accept it and attach to their blockchain copies. The new blockchain grows.
    2. Old-fashioned nodes accept it and attach to their blockchain copies. The old blockchain grows as well.

 

It’s worth remembering that blocks from different forks are incompatible. Since each block contains the hash of the previous block, we cannot attach a new block to both chains simultaneously, because it cannot have two hashes inside. Moreover, if two chains co-exist, the same transaction output will likely be used in both of them. The attempt to use the same transaction output in two chains will lead to double spending.

 

For these reasons, both chains must be considered as totally incompatible and result in separate mining, separate participants, no cross-chain hopping, etc.

 

Behavior of network users amid hard fork

 

This fork will remain stable until old-fashioned blocks stop being added to blockchain. Once the first block is generated in accordance with new rules and gets attached to the chain, the split point appears. The reasons for such a situation are quite interesting and are based on several blockchain features:

 

  1. The longest chain is the only valid one;
  2. The chain with wrong blocks will be declined by nodes;
  3. The more hashrate is possessed by a group of participants, the higher chances to find a new block.

 

In simple terms

 

As soon as the blockchain separation happens, there are two groups of participants. One of them mines only old-standard blocks. Another group mines blocks of both standards. Obviously, they cannot mine on the top of each other’s blockchains after the split point. In the natural fork, one of the groups would be absorbed by another in accordance with the Longest Chain Rule. Yet, some other issues come here.

 

If the old-fashioned chain becomes longer, it can overcome the new one and force new nodes to drop their chain. It is possible, if the integral hashrate of old nodes is greater than the integral hashrate of new nodes. Every time a new fork happens, it will be processed by the network in the same way as the natural one. Split and then minor separate mining occur — and finally the old standard wins.

 

If a new chain becomes longer, these two chains will co-exist. The new chain will always be ahead due to higher mining capacity, while the old chain will never overcome the new one. At the same time, the old-standard nodes will never accept the new chain because of the blocks created in accordance with new rules.

 

Conclusion

 

The problems that arise amid hard forks are serious yet avoidable. In spite of the hash rate proportion required to launch a new chain, we sure can forecast results and outcomes of the split. Anyway, a simple and obvious solution exists.

 

Since each block contains some service data, we can simply add one more detail there. The version number implies the automatic decline of incorrect blocks. This solution is related to special cases of hard forks, described in the previous article.

 

In the next article we will discuss the concept of a soft fork and its key features and peculiarities.

 
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