Hard and Soft ForksUASF
A fork is a change to a blockchain’s rules. A hard fork is not backward-compatible, so nodes that do not upgrade can split into a separate chain; a soft fork tightens the rules in a way old nodes still accept.
A fork is a change to a blockchain's rules. A soft fork tightens the rules so old software still follows along; a hard fork changes them so old software is left behind, which can split one coin into two.
- Category
- Cryptocurrency and Blockchain
- Reading time
- 4 min
- Also called
- Hard fork, Soft fork, Chain split
- Updated
Forks in plain words
A soft fork is backward-compatible, so nodes on the old and new software can keep running side by side.1
The difference is compatibility: older nodes still accept blocks after a soft fork, but they reject blocks after a hard fork until they upgrade.2
A hard fork can split the network for good into two chains — one followed by nodes that upgraded and one by nodes that didn't.3
A hard fork forces every participant onto the new rules by a set date; anyone who doesn't upgrade risks losses.1
How a rule change rolls out
Propose
Developers publish the new rule.
Classify
Decide if it only tightens rules (soft) or loosens them (hard).
Signal
Later soft forks waited for 75% or 95% of hash rate to signal readiness.3
Or set a flag day
Flag-day activations are known as User Activated Soft Forks.3
Activate
Old nodes accept soft-fork blocks as valid.3
Split if needed
In a hard fork, non-upgraded nodes may end up on a separate chain.3
Worked examples
Example 1 — Coins after a split
4 units, split valueA hypothetical holder owns 2 coins before a hard fork splits the chain.
| Original chain | 2 coins |
| New chain | 2 new coins |
| Total units | 2 + 2 = 4 coins |
A hard fork creates permanently divergent chains, so the same history exists on both.3
Example 2 — Value does not double
−$10Hypothetically the coin was $100 before. After the split, the old chain trades at $80 and the new one at $15.
| Before | 2 × $100 = $200 |
| After | 2 × $80 + 2 × $15 = $190 |
| Change | $190 − $200 = −$10 |
Because everyone had to upgrade by the deadline, the split added little value for holders.1
Example 3 — Signalling threshold
ActivatedHypothetically 2,016 blocks are in a signal window and the threshold is 95%.
| Blocks needed | 2,016 × 0.95 ≈ 1,916 blocks |
| Signalled | 1,950 blocks |
Passing the threshold lets the soft fork activate under miner signalling.3
Hard fork vs soft fork
| Aspect | Hard fork | Soft fork |
|---|---|---|
| Compatibility | Not backward-compatible | Backward-compatible |
| Old nodes | Must upgrade or split off | Keep following the chain |
| Chain split risk | Yes, can be permanent | Low if majority upgrades |
| Rule direction | Can make invalid blocks valid | Only makes valid blocks invalid |
Why forks matter to traders
Exchange halts
An Exchange may pause deposits during a fork.
Price swings
Forks can trigger Volatility.
New coins
A split creates a new Trading Pair.
Risk control
Advantages and disadvantages
Advantages
- Lets networks upgrade.
- Soft forks avoid disruption.
- Hard forks allow bigger changes.
Disadvantages
- Hard forks can split communities and value.
- Replay and wallet risks after a split.
- Exchanges may pause services.
- Tax treatment of forked coins differs by country.
Going deeper
Read as far as you need. Each level builds on the one before it.
Rule changes
Beginner
Consensus changes come as soft forks or hard forks; soft forks let old and new software co-exist.1
Why soft forks stay unified
Intermediate
As long as upgraded nodes are the majority, older nodes still accept the same blocks, so there is no split.3
Activation methods
Advanced
Some soft forks used a flag day (UASF), while later ones waited for 75% or 95% of hash rate to signal.3
Common mistakes
Assuming free money
Split coins rarely add up to the old value.
Moving coins during a fork
Transactions may be replayed or stuck.
Confusing a normal fork
Short forks from simultaneous blocks are routine.
Ignoring tax rules
Forked coins are treated differently by country.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- A fork is a rule change.
- Soft forks are backward-compatible.
- Hard forks can split the chain.
- Activation can use signalling or a flag day.
- Tax treatment of forked coins differs by country.
Frequently asked questions
Do I get free coins in a hard fork?
Is every fork a split?
Are forked coins taxed?
Further learning
- Exchange
How venues handle forks.
- Volatility
Price swings around forks.
- Hedging
Protecting a position.
- Trading Pair
New pairs after a split.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Bitcoin Core (bitcoin.org). Statement from Bitcoin Core -- 2016-01-07 (opens in a new tab) Checked .
- NIST. Blockchain Technology Overview (NISTIR 8202) (opens in a new tab) Checked .
- Bitcoin Project (developer.bitcoin.org). Block Chain developer guide (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.