A big change to the digital currency protocol that is different from the previous version, or the advent of a digital currency with a new blockchain is regarded as a hard fork. The occurrence of Hardfork is when the new version derived from the previous one does not correspond with it because of a radical change to the network. In these cases ,the nodes must update themselves. If nodes are not updated ,they can no longer log in to the new network, and the updated nodes will no longer accept the blocks that the old nodes extract. To put it simply, if a new update is released for a particular coin and the nodes install it on their system, they won’t have access to the transactions on the previous blockchain. This means that a new currency is created with a new blockchain and nodes. Although the new blockchain has completely different rules, it still recognizes the history of the old blockchain transactions and every user owns exactly the same amount of digital currency in the new blockchain. Blockchains follow the rule of consensus hard forks can be divided into two distinct subsets: planned hard forks and contentious hard forks. A planned hard fork occurs when the upgrade of the blockchain is agreed upon by a large number of miners and members of the group. These forks are usually agreed upon and face very little resistance and opposition. As a result, as the new chain grows and miners and users welcome the new changes, the old chain disappears. In most cases, the old chain name is put on the new chain. An example of planned hard forks is the Monero currency chain which was split in 2017 when a feature called Ring Confidential Transactions was added. This feature obscured the value of each transaction and tightened the privacy of the blockchain, causing the miners and members to embrace it unanimously. Another example of hard forks is the division of the Ethereum blockchain into two different chains. This event took place after one of the applications created on DAO was hacked. Due to the disagreement of the members of the group on the fate of the blockchain after this incident, a hard fork took place and two new chains were created called Ethereum and Classic Ethereum. The classical Ethereum is the first chain that continued to function, and the Ethereum is the chain that was created later. Unlike planned hard forks, which are supported by the majority of members of the group, contentious hard forks cause intense controversy among members. These hard forks include capabilities to upgrade the system, but they do not obtain the consent of the majority of members. For this reason, these hard forks usually lead to the creation of two separate blockchains, the original blockchain and the new one, both of which continue to operate as long as they are supported. The most famous and contentious hard fork ever made is the creation of the Bitcoin Cash chain, which took place in 2017.This change was applied when a group of developers wanted to increase the bitcoin block size from one megabyte to eight megabytes to help solve scale problems. Eventually ,the Bitcoin blockchain was split into two parallel chains with two separate sets of rates. This caused a brief chaos between the miners, who switched from one chain to another, wanting to know which one would be more profitable for them.
A soft fork is a protocol change that is reversibly applied to the blockchain and does not require the blockchain to be bifurcated. This is because these changes are usually related to physical or functional features and do not affect the system structure at all.
Once the new rules have been implemented, the previous chain will continue to operate, and miners will be able to adapt to the new chain changes and move forward. The most obvious example of a successful fork was the addition of the Segregated Witness soft fork at the end of 2017.Although the implementation of this soft fork was debated, the miners widely welcomed its implementation. Seagate Soft Fork was the solution to many of Bitcoin’s emerging problems. In addition to increasing the number of transactions per block, Segway solved a minor problem that prevented developers from creating second-tier protocols and smart contracts and by solving this problem, a new wave of “out-of-chain” solutions such as the Lightning network emerged. In this fork, unlike hard forks, no new coins or tokens are created. By rectification and updates to the original version, the nodes will continue to operate on the previous blockchain.