What is a Hard Fork in the Blockchain?

By Nicholas Rossolillo – Updated Sep 14, 2025 at 11:31 PM

Key Points

Hard forks create new blockchains that exist alongside the original, often enhancing security or functionality.
Investors should track hard forks in cryptocurrencies they own, as they may receive new tokens.
While hard forks can improve blockchain tech, they may also cause investor confusion and security risks.

Cryptocurrencies such as Bitcoin (BTC +0.85%) and Ethereum (ETH +0.30%) are built on a type of software called blockchain. Like any other type of software, changes can be made to a blockchain network to improve its functionality. When that occurs, it’s known as a “fork” as in “a fork in the road,” or when a path splits in two different directions.

man's finger connecting abstract dots in air - hard fork, network, blockchain — Source: Getty Images

What is a hard fork in the blockchain?

A “hard fork” in a blockchain is when the software rules are altered, creating a second and separate blockchain running parallel to the original. This is different from a “soft fork,” in which a change occurs that updates the entire blockchain network and the current software remains backward-compatible with earlier versions.

How a hard fork works

To understand how a hard fork works, consider how blockchain technology works. A blockchain is a digital ledger distributed among many users that contains blocks of data regarding past transactions and other events. Along with data on a blockchain’s transaction history is a set of instructions -- called “protocols” in software parlance -- that dictate how the blockchain network functions.

Blockchain

Blockchain technology is a transaction ledger on a massive scale, fortified by strong encryption and advanced security protocols.

Because a blockchain is decentralized, any changes to its protocol need to be voted on and approved by its community of users. To make major changes to an existing network or resolve disagreements in how a blockchain should be developed, a hard fork might be voted on to create an entirely new blockchain. From there, developers can choose between the two blockchains when building new projects.

Hard forks can occur for a number of reasons, including improving security of a blockchain network, speeding up transaction processing times, or adding support for additional functions.

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Hard forks and crypto investing

As with all software technology, hard forks aren’t uncommon in the blockchain and cryptocurrency industry. Radical changes are often proposed to improve a blockchain network’s performance and security, sometimes resulting in a new cryptocurrency token once the fork is executed. For a cryptocurrency investor, staying up to speed on these proposed changes in your crypto holdings is important since it can result in new coins or tokens being distributed into your account.

Bear in mind that the cryptocurrency industry is young and quickly evolving. Changes in blockchain protocol can have a drastic impact on the value of crypto holdings you own. Invest in this space with caution, especially if you are new and still learning how blockchain works.

About the Author

Nicholas’ investing experience began when he opened up a retirement account shortly after finishing high school. His work experience in financial services began in 2007 in an internship position with a national brokerage firm in Arizona. While his career path led him into civil engineering and related fields, he stayed personally involved and active in the investment realm. He eventually returned to a career in investments and financial services in 2012, running a branch office for the same national brokerage firm, this time just outside of Spokane, WA. During the Great Recession, he began developing a flexible and global investing approach that could evolve with a tumultuous and ever-changing world. Wanting to offer that approach to investment management to his clients paired with a financial planning and consulting business, he founded Concinnus Financial in 2014. Nicholas grew up in a small town on the Northern California coast just a few minutes from the Oregon border. Growing up in a rainy, quiet little town, he developed a love of music and can play several instruments. He now lives with his wife Kasey and their two Humane Society-rescued dogs. Together they enjoy the outdoors all four seasons of the year, cooking, and craft beer and wine.

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@nrossolillo

Nicholas Rossolillo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

Pros and cons of hard forks

There are a lot of benefits to a hard fork. It may satisfy security issues or provide upgrades to the performance of a blockchain network. A hard fork might alter the rewards for mining a cryptocurrency and how miners function. Hard forks might also give some participants in a blockchain community the opportunity to part ways if they have a different vision for their blockchain project.

However, there are disadvantages to hard forks, including:

Confusion among investors as a new but similar cryptocurrency spins off from the original.

Hackers may be able to take advantage of weaknesses in the blockchain network after a hard fork, such as a 51% attack or a replay attack.

The old version of a blockchain may continue to exist after a fork even though it may contain security or performance flaws the hard fork was designed to fix.

Soft fork vs. hard fork

A soft fork can be thought of as a minor upgrade to software, similar to updates that frequently occur on a smartphone. If updates aren’t downloaded right away, functionality on devices is usually still valid. Soft forks in blockchain operate in a similar fashion. The update is backward-compatible with older versions of the blockchain software.

This contrasts with a hard fork, in which the upgrade is no longer compatible with older versions of the blockchain. Something similar occurs when a new operating system software upgrade is pushed to a computer, rendering older versions obsolete.