How Does a Blockchain Work?

A blockchain is made up of blocks of data, like train cars linked together. These blocks record every transaction and go all the way back to the very first one. Since blockchains are open-source, anyone can help develop or improve them.

When the community updates the code, a "fork" may happen. This splits the chain into two. One keeps following the old rules, while the other starts following new rules. Both share the same history until the point of the split.

Why Do Forks Matter?

Most cryptocurrencies have developer teams that work on updates, similar to how internet protocols change over time. Forks can fix problems, improve security, or add new features.

Sometimes, developers even use forks to create new coins and new crypto ecosystems.

Soft Forks Explained

Think of a soft fork like a software update. If most users accept the change, the blockchain keeps running smoothly with the new rules. These changes are usually backward-compatible, meaning they still work with older blocks.

Bitcoin and Ethereum have used soft forks to add features without creating a new coin.

What Is a Hard Fork?

A hard fork is a bigger change. The code is changed so much that it’s no longer compatible with the old blockchain. The result: two separate blockchains. One follows the old rules, and the other becomes something new.

Many new cryptocurrencies, like Bitcoin Cash and Bitcoin Gold, were born from hard forks of Bitcoin.

Why Do Forks Happen?

Just like other software, blockchains need updates. Forks happen to:

  • Add new features

  • Fix security issues

  • Settle disagreements in the community about the future of a coin

Forks Keep Crypto Evolving

Ethereum allows smart contracts—small programs that run when certain conditions are met. These contracts power games, finance tools, and much more.

Ethereum is like a computer’s operating system, and its forks (like Ethereum Classic or Ethereum 2.0) are newer versions with added features or better performance.

Old forks may stay active as reliable systems. New forks might offer developers new tools. Over time, forks can merge or grow apart.

A soft fork is like a phone asking you to install a system update. A hard fork is like switching from Windows to Linux—it’s the same idea, but with major changes and a new path.