What is a fork?

Picture a road that splits in two: up to the junction everyone follows the same route, but after it they may head in different directions. That’s roughly how a fork works on a blockchain. The nodes, meaning the computers that take part in the network, follow rules about which blocks and which transactions they consider valid.

A fork can happen temporarily without those rules changing. On Bitcoin, for example, two miners may find different valid blocks at the same height of the chain almost simultaneously. For a short while, different nodes see a different continuation. Once one branch accumulates more total computational work, the network converges on it. This doesn’t mean a new coin was created.

When the rules change

With upgrades, there are two main categories. A soft fork tightens what the rules allow: blocks that follow the new rules are also accepted by old nodes, even though those nodes don’t check the new restrictions. A hard fork introduces changes that aren’t compatible with the old rules. Nodes that want to follow the new version need to upgrade.

A hard fork doesn’t necessarily lead to two permanent networks. But if some participants carry on with the old rules and others with the new ones, two chains can emerge that share a common history up to the point of the split.

Why it matters

For anyone holding crypto, a fork can change how the network works, what it can do or the software you need. We find it useful to distinguish a coordinated upgrade from a split caused by disagreement. The word “fork” on its own doesn’t tell us whether there’s a problem or whether a second coin will appear.

What to watch out for

If two chains exist, access to any corresponding coins depends on their rules and on the wallet or exchange you use. In some splits, a transaction can be replayed on the other chain if there’s no replay protection. Never enter your seed phrase into an unknown app that promises “free coins from the fork.”