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Soft Fork Meaning

May 21, 2023 | Updated Jul 19, 2023
A soft fork refers to a protocol change or modification on a blockchain’s software that invalidates transactions that were previously accepted, which requires miners to update their mining software for older nodes.

What is a Soft Fork in Crypto?

A soft fork is a type of modification to a blockchain that allows implementation of new features or functionalities without causing any drastic structural changes. The modifications or added functionalities are backward compatible, which enables older nodes to recognize and consider newer blocks or transactions that comply with the old rules as valid. However, the fork invalidates older blocks or transactions for nodes that follow the new rules. 

Backward compatibility means that an upgrade or change in the blockchain protocol does not render the previous versions of the existing blockchain invalid. A soft fork’s backward compatibility characteristic differentiates it from a hard fork.

Soft forks only require a majority of the participating miners to agree to add or modify new consensus rules to form a single viable blockchain, while hard forks create a permanent split in the blockchain and force all the miners to comply and update to the new version for it to be functional.

How are Soft Forks Used?

Soft forks are used to upgrade a blockchain, improve functionality, or fix an issue using a hard fork, which sometimes creates rifts in a blockchain’s community. Soft forks can also be initiated by a temporary divergence in the network, where the miners utilizing non-upgraded nodes violate a new rule that their nodes are unaware of.

There are two types of soft forks: user-activated soft forks (UASF) and miner-activated soft forks (MASF). UASFs are instigated when a network’s full nodes coordinate to enact new consensus rules without involving miners. MASFs happen when miners use their hashing power to enforce new consensus rules.

A good example of a soft fork is the Bitcoin P2SH (pay-to-script hash). The upgrade added to the Bitcoin network modified how the blockchain validates transactions. The P2SH soft fork enabled the utilization of more advanced scripting capabilities in Bitcoin, allowing for the creation of multi-signature addresses and more complex spending conditions. It provided greater flexibility and enhanced security for Bitcoin transactions without breaking backward compatibility with older software versions.

Other common soft forks include the Bitcoin SegWit (Segregated Witness) and BIPs.

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