Hard fork

Backwards compatibility runs one way only, and a hard fork points the wrong way down it. Old software treats the new blocks as illegal and keeps building its own chain, so unless adoption is close to unanimous the outcome is two coins where there was one. That is how Bitcoin Cash came into existence at block 478,558 on August 1, 2017.

How it works

A hard fork widens the set of blocks a node will accept, and widening is the direction that cannot be hidden.

Consider a change that permits a block of eight megabytes. Upgraded nodes accept both small and large blocks. Un-upgraded nodes accept only small ones. As long as nobody mines a large block the two groups are indistinguishable, and the split exists only on paper. The instant a miner publishes one, the groups have different chain tips and nothing in the protocol will ever bring them back together, because neither side is willing to reverse a block it considers perfectly valid.

That is why hard forks need coordination in a way soft forks do not. The change is scheduled at a block height or a wall clock date, announced far ahead, and everyone is expected to have upgraded before it. Miss the deadline and your node is not merely running old software, it is following a chain that the people you trade with have abandoned.

A hard fork that is meant to produce a lasting second chain also needs replay protection. Without it, a signed transaction is valid on both chains, so spending on one can be rebroadcast on the other and spend the matching coins there too. Bitcoin Cash solved this by requiring a new signature hash type, SIGHASH_FORKID, which makes its transactions structurally invalid on bitcoin and bitcoin's invalid on it. Splits that skipped this step left users losing coins to accidental replays.

Bitcoin itself has changed its rules this way only in its earliest years, under duress. The value overflow incident of August 15, 2010 produced a block that created 184 billion coins out of an arithmetic bug, and the repair required a patched client plus a deliberate reorganization back past it. The chain split of March 2013 was resolved by a scheduled cutover documented in BIP-50. Nothing since has come close, and there is no mechanism to force one: a hard fork on bitcoin is a proposal that succeeds only if the entire economy chooses to follow it.

Why this matters when you buy bitcoin

Two practical questions arise whenever a hard fork is announced, and only one of them is about your coins.

The first is custody. Coins in a wallet whose keys you hold exist on both sides of any split automatically, because both chains inherit the same ledger up to the fork block. You do not claim them, register them, or connect anything to a website. If you want to access the second asset you import the same seed phrase into software that follows the second chain, and you do it on a device that holds nothing else, because that software is written by people you have no reason to trust.

The second is your exchange. Coins held on a platform are the platform's decision, not yours. In 2017 some of the exchanges we review credited Bitcoin Cash to customer balances, some enabled trading weeks later, and some never listed it at all, all while deposits and withdrawals were suspended. None of that is contractual anywhere. If a split matters to you, the coins need to be off the platform beforehand.

The scam layer is worse than the protocol risk. Fake fork airdrops are one of the oldest patterns in our scam guide: a site announcing a new chain, a claim form, and a field for your recovery words. No split has ever required them. Anything that asks for a seed phrase to release forked coins is stealing the original coins.

Bitcoin Cash, the hard fork that actually happened

Bitcoin Cash is the clean case study because everything it did was published in advance and everything it needed went wrong somewhere else first.

The specification set an activation time on August 1, 2017 and a rule that the first block after it must exceed one megabyte, guaranteeing the split rather than leaving it to chance. Block 478,558 was that block. The new rules raised the base limit to eight megabytes, declined SegWit, and added SIGHASH_FORKID so the two chains could never replay each other's transactions.

The lasting lesson is what happened next. Having established that a group can leave with a copy of the ledger, Bitcoin Cash was itself hard forked again by a faction that disagreed with its direction, and the successor chains have kept splitting since. A hard fork is not a one time event in a project's life; it is a precedent that the next disagreement can invoke.

Hard fork vs altcoin

A hard fork inherits a ledger; an altcoin starts with an empty one. Litecoin launched as its own chain with no balances at all, so nobody woke up owning any. Bitcoin Cash launched with every bitcoin balance as of block 478,558 already credited on its chain, which is why holders were suddenly told they owned something. After the split the distinction stops mattering technically, since both are separate assets with separate rules and separate prices, but it matters entirely for how the coins were distributed.

Hard fork vs soft fork

The difference is direction, and direction decides who is forced to act. A hard fork makes previously invalid blocks valid, so every node must upgrade or drop off the chain the rest of the economy is on. A soft fork makes previously valid blocks invalid, so an un-upgraded node keeps following the same chain without noticing anything changed. One demands universal action on a deadline; the other asks nothing of anyone who is not mining.