In this article, you will learn about what is a hard fork in crypto and Ethereum hard fork. A fork in a blockchain can occur in any crypto-technology platform—not only Bitcoin. That is because blockchains and cryptocurrency work in basically the same way no matter which crypto platform they're on. An Ethereum hard fork had happened due to a DAO Heist too.
What is a Hard Fork in Crypto?
In blockchain technology that underpins cryptocurrencies, a hard fork or (hardfork) refers to a radical change to the protocols of a blockchain network. In simple terms, a hard fork splits a single cryptocurrency into two and can result in the validation of blocks and transactions that were previously invalid, or valid. As such, it requires that all developers upgrade to the latest version of the protocol software.
While hard forks create a permanent chain split with the old version of the blockchain software no longer compatible with the new version, soft forks do not create a new blockchain and so are backwards-compatible.
Ethereum Hard Fork
The DAO Heist
In 2016, about a year after the Ethereum network was launched by Vitalik Buterin, an organization launched an investor-directed venture capital fund on the Ethereum network. This organization was called “The DAO” and was the first “Decentralized Autonomous Organization”, so It is also known as the Genesis DAO.
Decentralized Autonomous Organization
Generally speaking, decentralized autonomous organizations are a type of virtual cooperative which has its rules encoded as a computer program that is transparent and controlled by the members of the organization, who vote on business decisions. assets are held on a blockchain. So effective DAO is crowdfunding based on a series of smart contracts built upon a crypto blockchain.
The Hack
On June 17, 2016, before the DAO programmers were able to fix the loopholes, an unknown hacker or group of hackers exploited the smart contract that allowed them to siphon over 3.6 million of the 12.7 million Ether that was raised, worth about USD 70 mill By that time, from the Genesis DAO.
The Ethereum community noticed the abnormal transfer and started debating how to respond to this attack. Since the Ethereum network was still quite new at this point and the entire 12.7mm Ether represented approximately 17% of the total amount of Ether outstanding at that point, Buterin himself got involved and suggested a soft fork and a piece of code that would effectively prevent the hacker from moving the funds.
Ethereum Classic
Shortly after, someone claiming to be the hacker released an open letter to the Ethereum community, stating that since the smart contract codes control the DAO, everything he did was legitimate. He also threatened legal action against anyone who attempted to 6mm. . The hacker also allegedly offered a collective reward of 1mm Ether and 100 BTC for miners not to comply with any soft forks.
After much deliberation and debate, eventually the community decided on a hard fork in order to overwrite the blockchain history and restore the stolen Ether to the original investors, reversing all the transactions done on the entire Ethereum blockchain.
Not all nodes followed the main branch, so the hard fork created a new blockchain and crypto, Ethereum Classic.
This created a huge amount of embarrassment for the fledgling Ethereum, but the hard fork changed the perception that cryptocurrencies were immutable.
Bottom Line
Hard forks refer to a rule change that comes with wide-ranging implications on the entire protocol of the blockchain network. A fork can be started by the developers of the blockchain or by community members. This article supports the knowledge about what is a hard fork in crypto and Ethereum hard fork.
