5 Things to Know about Cryptocurrency Hard Forks (2021)

If you want to understand what a hard fork is and how it works, this is the guide for you.

In this in-depth post we will cover:

Read on to find out everything you need to know about Hard Forks!


What is a Hard Fork?

In cryptocurrency, a hard fork occurs when a change is made to a protocol that invalidates the past block history. These occur when developers decide to make a radical change, typically against what the majority agrees. When one occurs, the blockchain splits into two: the original and the forked coin.

Below, we’ll jump into some examples of past hard forks, soft forks, cryptocurrency airdrops, and more!


Examples of a Hard Forks

You might’ve seen coins with similar names, which is likely the product of a hard fork.

The two most famous examples of a blockchain hard fork are:

Bitcoin vs Bitcoin Cash Hard Fork

Bitcoin vs Bitcoin Cash

Bitcoin welcomes this type of activity by being built on open-source software.

There’s been a sort of tug of war going on between Bitcoin developers since 2017, which was the main driving force behind the hard fork, ultimately leading to the creation of BCH.

The main driving force that caused this tug was the argument of how large or small each block in bitcoin’s blockchain should be.

The more conservative Bitcoin developers believed that increasing bitcoin’s block size from 1mb to 2mb was more than enough, while others argued that it was too small and wanted to expand it to 8mb, so each block could record more transactions.

A consensus could not be reached, so at bitcoin’s 478,558 block, a hard fork occurred, creating Bitcoin Cash.

Ethereum vs Ethereum Classic Hard Fork

Bitcoin vs BitcoinCash

This hard fork went down differently, and for entirely different reasons.

In June of 2016, there was a hack on the Ethereum DAO in which a third of the supply was stolen. While technically this was not the fault of the Ethereumn blockchain, it caused a huge split in the community.

Should a blockchain rollback hacks?

Or does this violate the integrity and decentralization of the chain?

The Ethereum community decided that it should be rolled back in the form of a hard fork.

The Ethereum Classic community argued that whatever happens happens, and no blockchains can be reversed or rolled back.

While the fundamental tension point between these two groups surrounds this hack, ETH and ETC have slowly diverged their separate ways and now have even more differences.


What happens during a hard fork?

When Bitcoin was first created, its genesis block (first block in the blockchain) was block #1.

However, when Bitcoin Cash was created, it’s genesis block was Bitcoin’s 478,558 block. That is because Bitcoin, as we covered, uses an open-source technology allowing others to copy its code, and then make adjustments where they’d like.

To publish those changes, a new coin would have to be made through the hard fork process.

When a hard fork occurs, all of the previous data transactions and the number of coins mined up to that block also carries over onto the new blockchain for the split coin.

Again, think of this process as a cut and paste. In 2017, since there were around 16.4 million+ Bitcoin mined up to block 478,558, those coins, along with the data in each block, were copied over onto Bitcoin Cash’s new blockchain.

This means that as soon as Bitcoin Cash was created, it already had 16.4+ coins and a long history to view on its blockchain (although that was technically Bitcoin’s history).

Nowadays, there’s many differences between Bitcoin and Bitcoin Cash and the features each one promotes. However, the important take away is that Bitcoin Cash used Bitcoin’s concept as a base to create it’s own.

Regardless of which side you are on, at the time the hard fork took place, anyone hodling Bitcoin was rewarded with Bitcoin Cash. More on this concept (known as airdrops) soon.


What Are Cryptocurrency Airdrops?

cryptocurrency airdrops

A cryptocurrency airdrop is a process in which the new split coin gets distributed to the public. If you’re holding cryptocurrency on an exchange, they’ll usually determine who’ll receive the new coins and what amount. If you have cryptocurrency in your own wallet, there are a few steps you’ll have to make.

Every user’s wallet or public key is snapshotted at a specific time, revealing the amount of the original coins being hodled by the user.

In Bitcoin Cash’s case, users receive a 1:1 ratio of Bitcoin Cash for each Bitcoin they own.

Not All Airdrops Are Created Equal

Some projects have used airdrops as a marketing scheme with the sole intention of “pumping and dumping.”

This is a notorious term in the crypto world. Hype and “FOMO” are created throughout the community via news and certain inside scoops like a “massive” lucrative airdrop that will take place but ONLY if you hodl a certain amount of coins.

Everyone saw how profitable the Bitcoin Cash airdrop was, so of course, they want to get in on the next one that will take them to the Moon!

Unfortunately, again, only to realize that once the masses bought into the coin, rising it price, everyone else who got in at a lower price, usually the criminals behind the project, then dumped their coins.

This has been known to cause a rapid and massive sell-off that causes the price per coin to plummet, leaving those who bought in after the airdrop announcement at a significant financial loss.



Now that you have a better idea of what cryptocurrency hard forks, you’ll be able to prepare and understand what’s going on when the next one happens.