Ethereum Hard Fork Explained

An Ethereum Hard Fork will take place this week.

This is a community response to the DAO hack that has gained so much press attention.

For an explanation of the DAO Hack and exactly what happened you can read here. We’re not going into that in this post.

Instead, we’re going to explain simply and concisely what the hard fork is and how it works. We’ve had a lot of people ask about this.

What is a Hard Fork

This is a change in the protocol rules of Ethereum that are non-backwards-compatible.

This means that older versions of a client will not accept any blocks created by an updated version of the client, until they upgrade.

So everyone on the network has to upgrade. Then there is not a separate chain processing blocks using the old software.

So that’s it essentially, a Hard Fork is just a change in the protocol rules. It is a software upgrade that is not backwards-compatible.

Ethereum Hard Fork and How it Works

After any Hard Fork, in theory, there are 2 separate blockchain branches.

On one version you have ‘old’ miners, running an older version of the software. And on the other version you have ‘new’ miners, running a new version of the software, with the rule changes.

The hard fork will replace The DAO smart contract that previously existed.

Ethereum Hard Fork

It will result in a direct transfer of Ether tokens from Smart Contracts controlled by the attacker. The Ether will be returned to the original holders of those tokens.

If you are running a local client like Mist or Geth, you must upgrade your software.

You can probably see already that the entire process is based on consensus. Specifically, it relies on the consensus of the miners.

If a majority of them do not upgrade to the new software, then the hard fork chain becomes the minority chain.

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