Hard forks and soft forks: how blockchains change their rules

A blockchain's rules aren't frozen. Bitcoin has added new address types, Ethereum switched from mining to staking, and smaller chains upgrade regularly. But there's no central server to update. Every node runs its own copy of the rules, and changing them means getting thousands of independent operators to agree.

The two ways of doing that are called soft forks and hard forks. The difference decides whether old software keeps working — and occasionally, whether one coin becomes two.

Rules, nodes and agreement

Every full node checks every block against its rules. A block that breaks them is rejected, no matter who mined it. That's what makes a blockchain hard to cheat — and what makes changing it delicate. If some nodes run new rules and others run old ones, they might disagree about which blocks are valid.

Soft fork: tighter rules, old nodes still follow

A soft fork makes the rules stricter. Blocks valid under the new rules are still valid under the old ones, so nodes that don't upgrade keep following the chain; they just don't enforce the new restrictions themselves.

Bitcoin's big upgrades have been soft forks. SegWit in 2017 changed how signatures are stored, and Taproot in 2021 added Schnorr signatures and a new way of committing to scripts. Old nodes saw these new transactions as valid even without understanding them — which is why Taproot could arrive without splitting the network.

Soft forks are generally seen as safer, because nothing breaks for people who don't upgrade. The trade-off is that new features have to be designed to fit inside the old rules, which can make them more complex.

Hard fork: new rules, old nodes left behind

A hard fork loosens or changes the rules, so blocks valid under the new rules can be invalid under the old ones. Nodes that don't upgrade reject the new blocks and stop following the chain.

When nearly everyone upgrades, a hard fork is simply a coordinated upgrade. Many chains do them on a schedule: Ethereum's major upgrades, Zcash's network upgrades and Kaspa's protocol upgrades are planned hard forks that the whole ecosystem moves through together.

When a meaningful group refuses to upgrade, the result is a chain split: two chains sharing the same history up to the fork, then diverging.

When forks create new coins

Splits have produced some well-known coins:

• Ethereum and Ethereum Classic split in 2016, after a disagreement over reversing the effects of the DAO hack.
• Bitcoin and Bitcoin Cash split in 2017, over how to scale — larger blocks or SegWit and other approaches. Bitcoin Cash continues as its own chain.

After a split, anyone who held coins at the fork holds them on both chains, controlled by the same keys. That sounds like free money, and sometimes is, but it carries risks: replay attacks, where a transaction on one chain can be rebroadcast on the other unless the chains add protection, and scam "claim" tools that ask for your private key. Forks inherit more than balances, too — the same bug can play out differently on each side.

What forks mean for you

• Most forks need nothing from you. Your coins stay where they are; your keys still control them.
• Wallets sometimes need updating. A hard fork that changes transaction or signature formats can make older wallet software build transactions the network rejects. Keep your wallet up to date around announced upgrades.
• Exchanges may pause deposits and withdrawals around a fork. That's normal caution.
• Never enter your recovery phrase into a "fork claim" site. If you want coins on a new chain, move your main funds to fresh keys first, then use reputable wallet software to access the old keys.
• Be patient after a contested split. Wait until replay protection and exchange support are clear.

Forks and SSP

SSP supports chains with very different upgrade styles — Bitcoin's soft forks, scheduled hard forks on chains such as Zcash, and the EVM chains' regular upgrades. When an upgrade changes how transactions are built or signed, SSP Wallet and SSP Key are updated to match.

Zcash is a good example. Each Zcash network upgrade changes a value that every transaction signature commits to, so wallets built for the old rules produce signatures the network refuses. Because SSP needs two signatures, SSP Wallet and SSP Key both have to be updated for the new rules — and the network won't accept a transaction until both are.

The practical takeaway: keep both apps updated, especially around announced network upgrades.

The honest summary

A soft fork tightens the rules so old nodes still follow along; a hard fork changes them so everyone has to upgrade. Most hard forks are planned, uneventful upgrades. A few become chain splits that turn one coin into two.

For holders, forks rarely require action — keep your wallet updated, be wary of anything asking for your recovery phrase to "claim" forked coins, and let the dust settle before moving funds around a contested split.