Now and again, you may hear about a bitcoin fork and wonder what it means. Well, wonder no more - below is a quick guide to everything you need to know.

What is a fork?

A fork is a technical name when something changes, and different participants need to reach an agreement on common rules. This most often happens when a blockchain splits into two separate paths, this could concern the transaction history of the network, or it could be the result of a new rule which affects what makes transactions valid.

What's the difference between a hard fork and a soft fork?

A hard fork refers to a software upgrade which introduces a new network rule which is incompatible with the existing software. Nodes which are still running the old software see the transaction made using the new rule as invalid, while nodes running the new software see the transactions made using the old software as invalid. If this old software is not updated, the blockchain will fork in two directions.

A soft fork is a change to the blockchain which is backwards compatible. This means that both upgraded and non-upgraded nodes will read the new transactions as valid. However, any blocks mined by non-upgraded nodes will be rejected by their updated siblings.

So there you go, now you know your hard forks from your soft forks.