Although soft and hard forks allow upgrades in the network, they have different mechanisms. Let us look at their distinguishable features and functions:
Table of Contents
What Is A Soft Fork?
A soft fork in blockchain refers to an update to the blockchain's backward compatible protocol. This means that previously valid blocks and transactions are not invalidated; instead, new rules are introduced that are compatible with the old protocol. Nodes that have yet to upgrade to the new protocol will still recognize the new blocks as valid, but they will not benefit from the new features or stricter rules introduced by the soft fork.
Soft forks are intentional (human-installed) changes that require consensus among the network participants, typically the miners, to enforce the new rules. Old nodes can still participate in the network and add blocks according to the old rules, but those blocks will also comply with the new rules set by the soft fork. This backward compatibility ensures a smoother transition and less disruption to the network.
Key Takeaways
- A soft fork is an intentional upgrade to a blockchain protocol where new backward-compatible rules are introduced.
- For a soft fork to be implemented, the consensus of the majority of miners is required.
- Once the soft fork is deployed, non-upgraded nodes can still participate in the network
- but will not be able to create blocks that violate the new rules, as the upgraded nodes will reject these blocks.
- The primary difference between soft and hard forks is that the latter authorizes old and new protocol types.
- However, the former deny adding outdated blocks to their system.
Soft Fork Explained
A soft fork in blockchain allows the network participants to form a consensus (general agreement) and add new rules to the blockchain. These forks help improve the network by introducing updates that reduce the risk of inefficiencies and vulnerabilities within the ecosystem. When most miners agree to an upgrade, the entire network will follow the new rules created. These rules are also known as protocols. For example, the SegWit (Segregated Witness) soft fork was an update to Bitcoin that received acceptance from 99.95% of participants. It improved transaction efficiency by increasing the block size limit and reducing certain types of bugs.
In soft forks, the consensus of all miners is optional. Even if a majority agrees, the new rules can be enforced. Notably, previously validated blocks and transactions are preserved. Old nodes (systems) can still adhere to the network after the soft fork, but they will recognize and follow the new rules when adding new blocks. If a network reduces the block size limit to 4MB, for instance, blocks larger than this limit will be rejected, while blocks within the limit will be accepted.
There are two types of soft forks: Miner Activated Soft Forks (MASF) and User Activated Soft Forks (UASF). When a soft fork is implemented primarily with the support and agreement of miners, it is known as MASF. Conversely, when nodes and users push for an upgrade without initial majority support from miners, it is termed a User Activated Soft Fork (UASF).
Sometimes, non-upgraded nodes may need to familiarize themselves with the new rules introduced by a soft fork. This could lead to temporary inefficiencies in the blockchain. Therefore, miners must ensure that blocks and transactions conform to the new rules to maintain network security and efficiency. These new rules could involve changes such as new block sizes or validation criteria.
Examples
Let us look at some real-time examples of soft forks to comprehend the concept in the easiest way possible.
Example #1
Suppose YUDT is a DeFi (decentralized finance) platform providing blockchain financial solutions. It also has a crypto token that miners receive to verify block transactions. However, a minor glitch was discovered in the solutions provided to firms during transfers. To address this, miners with significant influence decided to update the network. They created new rules through significant consensus, which included changing the security code. All old blocks would remain valid, but new transactions would need to follow the updated rules for validation purposes.
As part of the new upgrade, the YUDT platform enabled fund transfers via a scripted hash instead of a public key. This change significantly increased the security and efficiency of the network. If the network had rejected a soft fork, the YUDT application might have continued to experience errors and bugs. A similar use case occurred with Bitcoin's Pay-to-Script-Hash (P2SH), where transactions were made more flexible and secure by allowing the use of scripts instead of public keys.
Example #2
The resurrection of the OP_CAT opcode, once removed from Bitcoin by Satoshi Nakamoto due to security concerns, has sparked significant community discussion and interest in development. Originally deleted for potential memory issues, OP_CAT's ability to concatenate string values is now seen as a valuable tool for building advanced Bitcoin smart contracts. Recent proposals, including a 13-line draft Bitcoin Improvement Proposal (BIP) by developers Ethan Heilman and Armin Sabouri, aim to reintroduce this opcode under strict conditions to prevent memory bloat through a soft fork. This revival is motivated by increasing demand for more complex scripts, successful implementations in Bitcoin forks, and the exploration of quantum-secure transactions. While still in the early stages, this proposal highlights the evolving nature of Bitcoin's scripting language and the community's commitment to consensus and technological advancement.
Advantages And Disadvantages
The soft fork provides an upgrade to the entire blockchain protocol. However, there are certain limitations to it. Let us look at them:
| Advantages | Disadvantages |
|---|---|
| Unlike hard forks, it does not split the blockchain into two. | The nodes have to adhere to the new rules. Otherwise, they cannot add blocks. |
| It increases the efficiency, scalability, and functionality of the blockchain protocol. | In many instances, the miners unaware of the new upgrade may still follow old rules. As a result, they get ignored by new nodes. |
| There is no major consensus required to upgrade the protocol. | It might impact the price of cryptocurrency in the market. |
| Participants can still choose to ignore the upgrade and continue with old nodes. | These forks are risky as they might contain malicious elements. |
| They are easy and quick to execute in the system. |
Soft Fork vs Hard Fork
| Basis | Soft Fork | Soft Fork |
|---|---|---|
| 1. Meaning | A type of software upgrade where miners adhere to new rules and discard old and invalid nodes. | A hard fork is an upgrade that creates a parallel chain that allows miners to add blocks on the original and upgraded protocol. |
| 2. Compactibility | As old nodes can view new nodes, it is also backward compatible. | It is non-backward compatible. Thus, a separate chain gets created for old and new protocols. |
| 3. Consensus | Here, follow-up of all miners is not necessary. Even a consensus of the majority can create new rules for the network. | It requires the consensus of all network nodes. |
| 4. Duration | It happens quickly as compared to hard forks. | Hard forks are gradual changes brought into the system's network. |
| 5. Splits | There is a single chain that works on new rules. | It creates a split that works on different rules. |
| 6. Power | It utilizes less computational power for upgradation. | It consumes high power as it works on two chains. |
| 7. Block creation | These forks do not allow miners to create blocks with old protocols. | Here, users can still add blocks using old plus new rules. |
Frequently Asked Questions (FAQs)
1
Which cryptocurrencies have opted for a soft fork?
2
Which factors evaluate the impact of the soft fork?
3
What is the difference between soft forks and accidental forks?
4
How do soft forks affect cryptocurrency?
