- 2023 Oct 04
Bitcoin employs the SHA-256 algorithm, which is part of the SHA-2 family of hashing algorithms. This same algorithm is also utilized by its fork, Bitcoin Cash (BCH), along with several other cryptocurrencies.
How Is Bitcoin’s Technology Upgraded?
A hard fork signifies a substantial modification to the protocol, rendering previously deemed invalid blocks and transactions as valid. Consequently, all users are mandated to perform an upgrade. For instance, if users A and B hold differing views on the validity of an incoming transaction, a hard fork could validate the transaction for users A and B while excluding user C.
A hard fork represents a protocol enhancement that lacks backward compatibility. This necessitates that every node, which denotes a computer linked to the Bitcoin network employing a client responsible for validating and transmitting transactions, must undergo an upgrade before the new blockchain associated with the hard fork becomes operational. The new blockchain will reject any blocks or transactions from the old blockchain. The old blockchain, although it remains in existence, will persist in processing transactions; however, it might encounter compatibility issues with newer Bitcoin clients.
On the other hand, a soft fork signifies a modification to the Bitcoin protocol that invalidates only previously accepted blocks and transactions. Given that older nodes recognize the new blocks as valid, a soft fork maintains backward compatibility. This type of fork solely necessitates the majority of miners to upgrade for the enforcement of the new rules.
Prominent examples of cryptocurrencies that have experienced hard forks include Bitcoin’s hard fork, resulting in the creation of Bitcoin Cash, and Ethereum’s hard fork, leading to the emergence of Ethereum Classic.
Bitcoin Cash has undergone additional hard forks subsequent to its initial divergence, notably resulting in the creation of Bitcoin SV.