Definition
A change to a blockchain's protocol. A soft fork is a backward-compatible upgrade. A hard fork creates two separate, incompatible chains — often resulting in a new cryptocurrency being created.
Why It Matters
Forks determine how blockchains evolve. Hard forks can create entirely new coins (like Bitcoin Cash from Bitcoin) and affect the value of holdings.
Example
In 2017, a disagreement over Bitcoin's block size led to a hard fork creating Bitcoin Cash (BCH). Bitcoin holders received an equal amount of BCH at the time of the fork.
Related Terms
Blockchain
Consensus
Bitcoin
Node