What is the difference between soft forks and hard forks?

The nuanced dynamics of hard forks and soft forks tend to come up during protocol upgrades. Hard forks relax protocol rules, while soft forks tighten them. The key distinction lies in compatibility – soft forks are backward-compatible, allowing both older and updated nodes to participate, while hard forks are backward-incompatible, excluding non-upgraded nodes.

Bitcoin (BTC) has firmly adhered to the soft fork tradition for over a decade, prioritizing network stability and avoiding consensus splits. This dogma ensures ongoing participation of older nodes but introduces challenges, including the existence of "zombie nodes" relaying information without a full understanding, and the accumulation of technical debt, complicating future upgrades.

Bitcoin Cash (BCH), in contrast, embraces hard forks for cleaner protocol upgrades, requiring all participants to upgrade for continued engagement. This approach aligns with Bitcoin Cash's goal of becoming a scalable electronic cash system. Despite the slightly higher risk of accidental chain splits, hard forks are deemed necessary for network improvements and global adoption. Annual hard forks provide a cleaner development environment, reducing complexity and facilitating ongoing enhancements. Bitcoin Cash's willingness to embrace hard forks showcases its commitment to flexibility and evolution to meet the demands of a growing user base.

Learn more in our deep dive into the differences between BTC and Bitcoin Cash.