Classically, a fork means the further development of an open source software. Naturally, this software is freely available to everyone and everyone has the possibility to make their own copy of the software and modify it for their own purposes. Even the computer code of a public block chain, like Bitcoin, is open source and can be modified locally by developers, as described above. The block chain system consists of a network of several participants that execute the code on their computers. All modifications must match and be approved by the participants. This prevents an inexperienced programmer or a malicious attacker from changing the rules of the network unnoticed. There is a differentiation between software, hardware and block chain forks. With a software fork, the existing code is copied, modified if necessary and then reloaded. Thus a software fork has its own beginning, i.e. its own Genesis block. An example of this is Litecoin: Litecoin took the Bitcoin code, changed some parameters according to their needs, such as higher money supply and shorter block times, and started with a new genesis block. So if you had Bitcoin before, you still only had Bitcoin.

Only active Litecoin network users have received Litecoin. With blockchain forks there are so-called chain splits. When processing the code, a chain split splits the existing block chain – and the network. One block chain becomes two block chains. Both blockchains have the same origin and therefore the same genesis block. For example, if the participants in the block chain disagree, the result is a split. E.g. if one part wants to scale outside the block chain and the other part wants to increase the block size and thus scale on the block chain. A solution would be to encapsulate larger blocks from the existing Bitcoin network. One Bitcoin block chain suddenly becomes two: the old Bitcoin block chain and the new Bitcoin Cash block chain.

Bitcoin and Bitcoin Cash have completely the same history, but since the split, the networks are no longer compatible with each other. A hard fork refers to a change in the rules, which is a backwards non-compatible update of the consensus rules. So if you want to participate in the hard fork, you have to follow the new rules. All users who still follow the old rules are not in the new network. Unanimity with the new rules is symbolized in the block chain cosmos with appropriate software. In order to “comply with the new rules”, the participants must update their crypto software. In contrast, a soft fork is a backwards-compatible change to the consensus rules. Not the whole network has to participate in a soft fork, the consensus is not broken.