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Crypto Terms:  Letter S

What is Soft Fork (Blockchain)?

Meaning:
Soft Fork (Blockchain) - the modifications made to a blockchain in order to add or remove functionality without initiating any fundamental structural changes.
easy
2 minutes

Let's find out Soft Fork (Blockchain) meaning, definition in crypto, what is Soft Fork (Blockchain), and all other detailed facts.

Soft fork refers to making modifications to a blockchain in order to add or remove functionality without making any fundamental structural changes. 

For nodes that decide to follow the new consensus rules, prior transactions or blocks are made invalid. Though for the nodes that continue to follow the old consensus rules, new transactions and blocks are left valid. Thus, a soft fork is backward-compatible, which distinguishes it from the more well-known hard fork, which terminates forward compatibility for all nodes that follow old consensus rules.

One of the most important aspects of crypto soft forks is that they don't require all miners on the network to agree to run the new code, only the majority of miners need to do that. This enables network upgrades to be completed more quickly and without generating a major schism in the community. 

A soft fork could also be the result of a miner's error if old nodes break new regulations that they are unaware of. A hard fork is the only way to reverse a soft fork.

The blockchains of Bitcoin and Ethereum have used multiple soft forks over the years to upgrade the network, solve faults, or add functionality. This helped them avoid the more contentious hard fork option that requires compelling all miners to agree on new consensus rules, which risks dividing the network. 

An example of a soft fork would be Ethereum’s Metropolis-Byzantium fork which functioned like an operating system upgrade.

hard peg<\/strong><\/a> technique, on the other hand, does not allow for any <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-volatility/">volatility, and the value of the pegged cryptocurrency is always proportional to its peg.<\/p>\n<p>The soft peg technique is an exchange rate mechanism used to maintain the value of a currency against a fixed currency or reserve currency. Besides soft peg, there are other techniques such as the above-mentioned hard peg or a flexible peg.<\/p>\n<p>A soft peg approach has a number of advantages. Foreign currency markets can benefit from soft pegging in terms of <strong>stability and consistency<\/strong>. It is very useful to nations with incredibly volatile currencies or high <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-inflation/">inflation rates.<\/p>\n<p>The Chinese government used soft pegging to keep its economy stable throughout times of high inflation and to keep it from trading substantially less than its official exchange rate.<\/p>\n<p>In addition, soft pegs seek to address this issue by tightly connecting cryptocurrencies to more dependable <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-fiat/">fiat currencies<\/strong><\/a>, such as the US dollar or gold. Consumers will be able to utilize their crypto tokens in a similar way to regular cash by securing their value in this manner.&nbsp;<\/p>\n<p>Soft pegs are popular in today's cryptocurrency exchanges. In comparison to conventional currencies such as the US dollar, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin has traditionally been pretty unpredictable. It indicates that the value can go up and down dramatically at any time.<\/p>\n<p>This helps traders who wish to profit from short-term price changes, but it causes complications for individuals who wish to use their cryptocurrency as a daily means of payment.<\/p>\n<p><a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-tether-usdt/">Tether <strong>is also an illustration of a cryptocurrency that has both hard and soft pegs<\/strong>. It has a hard peg of $1 and a soft peg that permits it to go up or down by 2%.<\/p>","definition":"a strategy of maintaining the value of a currency against a reserve currency by utilizing an exchange rate mechanism.","status":"published","meta_title":"What is Soft Peg? Definition & Meaning | Crypto Wiki","meta_description":"Soft Peg meaning: Soft Peg - is a strategy of maintaining the value of a currency against a reserve currency by utilizing an exchange rate mechanism.","meta_keywords":null}" :prev-section="{"id":735,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Initial_coin_offering","level":"easy","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2023-12-17T12:16:07.000000Z","slug":"what-is-soft-cap","title":"What is Soft Cap?","section":"S","keyword":"Soft Cap","content":"<p><strong>Soft Cap<\/strong> is a term used within the crypto sector when a project decides to launch an <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-initial-coin-offering-ico/">initial coin offering (ICO)<\/strong><\/a>. It outlines the minimum amount of capital to be raised during the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-crowdfunding/">crowdfunding. There&rsquo;s no system or guidelines that are applicable to every project. A soft cap is usually based on speculations.&nbsp;<\/p>\n<p>It&rsquo;s not a requirement for a project to establish a soft cap, however, it can be beneficial for the project&rsquo;s team to set their expectations for the fund-raising by announcing what they have in mind for the received investments. <strong>Generally, it&rsquo;s enough to fill in potential investors on where their money will be spent and why it&rsquo;s needed for this project.<\/strong> But keep in mind that there are plenty of projects that have managed to raise the appropriate amount of capital without defining a soft cap.<\/p>\n<p>Investors are able to get a clearer picture of a specific project and its team&rsquo;s competencies by having a look at a soft cap, a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-hard-cap/">hard cap<\/strong><\/a>, and other ICO metrics. If a project has a healthy balance between its soft cap and hard cap and well-established reasons for an ICO, it shows that the team behind this project is experienced and competent.<\/p>\n<p>If a project does not reach its soft cap, then there are two options that the project&rsquo;s team can choose. They can either return all of the money or <strong>keep the money and continue developing the project<\/strong>.<\/p>\n<p>On the opposite side of the soft cap is the hard cap. It defines the maximum amount of funds that can be raised during an ICO.<\/p>","definition":"determines the lowest amount of funds that can be raised during an initial coin offering (ICO).","status":"published","meta_title":"What is Soft Cap? Definition & Meaning | Crypto Wiki","meta_description":"Soft Cap meaning: Soft Cap - determines the lowest amount of funds that can be raised during an initial coin offering (ICO).","meta_keywords":null}" :model="{"id":704,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Fork_(blockchain)","level":"easy","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2023-12-17T12:17:36.000000Z","slug":"what-is-soft-fork-blockchain","title":"What is Soft Fork (Blockchain)?","section":"S","keyword":"Soft Fork (Blockchain)","content":"<p><strong>Soft fork<\/strong> refers to making modifications to a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchain in order to add or remove functionality without making any fundamental structural changes.&nbsp;<\/p>\n<p>For <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-node/">nodes that decide to follow the new <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-consensus/">consensus rules, prior transactions or <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-block/">blocks are made invalid. Though for the nodes that continue to follow the old consensus rules, new transactions and blocks are left valid. Thus, a soft fork is backward-compatible, which distinguishes it from the more well-known <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-hard-fork-blockchain/">hard fork<\/strong><\/strong><\/a>, which terminates forward compatibility for all nodes that follow old consensus rules.<\/p>\n<p>One of the most important aspects of crypto soft forks is that they don't require all miners on the network to agree to run the new code, only the majority of miners need to do that. This enables network upgrades to be completed more quickly and without generating a major schism in the community.&nbsp;<\/p>\n<p>A soft fork could also be <strong>the result of a miner's error<\/strong> if old nodes break new regulations that they are unaware of. A hard fork is the only way to reverse a soft fork.<\/p>\n<p>The blockchains of <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum have used <strong>multiple soft forks over the years<\/strong> to upgrade the network, solve faults, or add functionality. This helped them avoid the more contentious hard fork option that requires compelling all miners to agree on new consensus rules, which risks dividing the network.&nbsp;<\/p>\n<p>An example of a soft fork would be Ethereum&rsquo;s Metropolis-Byzantium fork which functioned like an <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-operating-system-os/">operating system<\/strong><\/a> upgrade.<\/p>","definition":"the modifications made to a blockchain in order to add or remove functionality without initiating any fundamental structural changes.","status":"published","meta_title":"What is Soft Fork (Blockchain)? Definition & Meaning | Crypto Wiki","meta_description":"Soft Fork (Blockchain) meaning: Soft Fork (Blockchain) - Soft Fork \u2013 the modifications made to a blockchain in order to add or remove functionality without initiating any fundamental structural changes.","meta_keywords":null,"author":{"id":1,"user_id":1,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2023-05-11T07:18:20.000000Z","title":"Editor-In-Chief","slug":"aaron-s-editor-in-chief","description":"<p>Having completed a Master&rsquo;s degree on Economics, Politics &amp; Culture for the East Asia region, Aaron has written scientific papers with a comparative analysis of the differences between US&rsquo; Western and Japan&rsquo;s Collective forms of capitalism, 1945-2020.<\/p>\n<p>With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He&rsquo;s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain &amp; Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","image_id":2641,"referral_token":"05TMu2NysXOCn525","referred_by":null,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-01-09T15:22:21.000000Z","full_name":"Aaron S."}}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","status":"published","modified_content":null},{"chapter_id":2,"order":4,"slug":"coin-vs-token","title":"Coin VS Token: How Do They Differ?","status":"published","modified_content":null},{"chapter_id":2,"order":5,"slug":"what-are-stablecoins","title":"What are Stablecoins, Altcoins & Wrapped Coins?","status":"published","modified_content":null},{"chapter_id":2,"order":6,"slug":"what-is-a-bitcoin","title":"Bitcoin: the Pioneer of the Crypto World","status":"published","modified_content":null},{"chapter_id":2,"order":7,"slug":"what-is-ethereum","title":"The Ultimate Blockchain for dApp Creation: Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":8,"slug":"what-is-cardano-in-crypto","title":"What is Cardano and What is It Used For?","status":"published","modified_content":null},{"chapter_id":2,"order":9,"slug":"what-is-shiba-inu-coin","title":"Shiba Inu: the Dogecoin 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Crypto","status":"published","modified_content":null}]},{"id":3,"title":"Crypto Exchanges","slug":"crypto-exchanges","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-exchanges.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-exchanges-101.jpg","rating":80,"sections":[{"chapter_id":3,"order":1,"slug":"how-do-cryptocurrency-exchanges-work","title":"How do Cryptocurrency Exchanges Work?","status":"published","modified_content":null},{"chapter_id":3,"order":2,"slug":"dex-vs-cex","title":"DEX VS CEX: Two Sides of the Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":3,"order":3,"slug":"crypto-day-trading","title":"Crypto Day Trading: The Difference Between Buying, Trading, and Swapping","status":"published","modified_content":null},{"chapter_id":3,"order":4,"slug":"kyc-crypto","title":"KYC & AML: The Key to Complying With Legal Industry 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Wallet?","status":"published","modified_content":null},{"chapter_id":4,"order":2,"slug":"hot-wallet-vs-cold-wallet","title":"Hot Wallet VS Cold Wallet: Which One to Pick?","status":"published","modified_content":null},{"chapter_id":4,"order":3,"slug":"non-custodial-wallet","title":"What are Non-Custodial Crypto Wallets?","status":"published","modified_content":null},{"chapter_id":4,"order":4,"slug":"what-is-metamask","title":"Metamask: The Leading Non-Custodial Wallet","status":"published","modified_content":null},{"chapter_id":4,"order":37,"slug":"how-safe-is-cryptocurrency","title":"The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?","status":"published","modified_content":null}]},{"id":5,"title":"NFTs","slug":"nfts","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-nfts.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/nfts-101.jpg","rating":100,"sections":[{"chapter_id":5,"order":2,"slug":"how-to-trade-nfts","title":"NFT Trading: The Ins and Outs","status":"published","modified_content":null},{"chapter_id":5,"order":3,"slug":"buying-nft","title":"Tips and Tricks of Choosing the Right NFTs","status":"published","modified_content":null},{"chapter_id":5,"order":4,"slug":"how-to-store-nft","title":"How to Store NFTs: Best Practices","status":"published","modified_content":null},{"chapter_id":5,"order":5,"slug":"how-to-create-an-nft","title":"How to Create Your Own NFTs?","status":"published","modified_content":null},{"chapter_id":5,"order":6,"slug":"how-to-make-passive-money-with-nft","title":"Making Passive Money with NFTs","status":"published","modified_content":null}]},{"id":6,"title":"dApps & Defi","slug":"dapps-and-defi","updated":true,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-dapps.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/dapps-defi-101.jpg","rating":80,"sections":[{"chapter_id":6,"order":1,"slug":"what-are-nfts","title":"What are Non-Fungible Tokens (NFTs)?","status":"published","modified_content":null},{"chapter_id":6,"order":1,"slug":"what-is-defi","title":"What is Decentralized Finance (DeFi)?","status":"published","modified_content":null},{"chapter_id":6,"order":2,"slug":"what-is-defi-2-0","title":"DeFi 2.0: The New Version of Decentralized Finance","status":"published","modified_content":null},{"chapter_id":6,"order":3,"slug":"what-are-dapps-in-crypto","title":"What Are dApps and How Do They Work?","status":"published","modified_content":null},{"chapter_id":6,"order":4,"slug":"defi-dapps","title":"Picking the Right dApps: Dos and Don'ts","status":"published","modified_content":null},{"chapter_id":6,"order":5,"slug":"what-is-web-3-0","title":"Web 3.0: The Future of the Internet","status":"published","modified_content":null},{"chapter_id":6,"order":6,"slug":"what-are-smart-contracts","title":"What is the Core Purpose of Smart Contracts?","status":"published","modified_content":null},{"chapter_id":6,"order":7,"slug":"what-is-a-dao-in-crypto","title":"The Notion of a Decentralized Autonomous Ogranization (DAO)","status":"published","modified_content":null},{"chapter_id":6,"order":8,"slug":"what-is-staking-in-crypto","title":"What is the Goal of Staking Crypto Assets?","status":"published","modified_content":null},{"chapter_id":6,"order":9,"slug":"what-is-liquidity-pool-in-crypto","title":"What is a Liquidity Pool and How Does It Work?","status":"published","modified_content":null},{"chapter_id":6,"order":10,"slug":"what-is-automated-market-maker","title":"Automated Market Maker: the Cornerstone of the Decentralized Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":6,"order":11,"slug":"what-is-yield-farming-in-crypto","title":"The Main Yield Farming 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Cryptocurrencies?","status":"published","modified_content":null},{"chapter_id":7,"order":2,"slug":"how-to-invest-in-crypto","title":"Investing in Crypto: What Investing Options Do You Have?","status":"published","modified_content":null},{"chapter_id":7,"order":3,"slug":"ico-vs-ido","title":"ICO vs IDO vs IEO: Which One is the One?","status":"published","modified_content":null},{"chapter_id":7,"order":4,"slug":"what-is-an-airdrop","title":"What are Crypto Airdrops and How to Get Them?","status":"published","modified_content":null},{"chapter_id":7,"order":5,"slug":"how-to-get-free-crypto","title":"How to Get Free Crypto Assets?","status":"published","modified_content":null},{"chapter_id":7,"order":6,"slug":"how-to-arbitrage-crypto","title":"What is Crypto Arbitrage: The Main Principles","status":"published","modified_content":null},{"chapter_id":7,"order":7,"slug":"what-is-a-perpetual-contract","title":"Perpetual Contracts: Futures Contracts Without an Expiration 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Analysis","slug":"crypto-analysis","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-analysis.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-analysis-101.jpg","rating":100,"sections":[{"chapter_id":8,"order":1,"slug":"what-is-bullish-and-bearish","title":"Bearish and Bullish Markets: Do They Matter?","status":"published","modified_content":null},{"chapter_id":8,"order":2,"slug":"best-technical-analysis-indicators-for-crypto","title":"5 Best Crypto Technical Analysis Indicators You Must Know About","status":"published","modified_content":null},{"chapter_id":8,"order":3,"slug":"what-is-candlesticks","title":"Technical Analysis: What are Candlesticks, Trendlines, and Patterns?","status":"published","modified_content":null},{"chapter_id":8,"order":4,"slug":"how-to-track-new-crypto-coins","title":"Crypto Tracking: How to Track Your Favorite Coins & Tokens?","status":"published","modified_content":null},{"chapter_id":8,"order":5,"slug":"how-to-research-crypto","title":"Crypto Research Fundamentals & Social Signals: Your Daily Trading Strategy","status":"published","modified_content":null},{"chapter_id":8,"order":46,"slug":"portfolio-diversification-definition","title":"Portfolio Diversification: The Whats, the Whys, and the Hows","status":"published","modified_content":null}]},{"id":9,"title":"Mining","slug":"mining","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-mining.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-mining-101.jpg","rating":80,"sections":[{"chapter_id":9,"order":1,"slug":"what-is-crypto-mining","title":"Crypto Mining: What It is and How Does It Work?","status":"published","modified_content":null},{"chapter_id":9,"order":2,"slug":"what-is-a-mining-pool","title":"Mining Pools: Is Collective Mining Better Than Solo Mining?","status":"published","modified_content":null},{"chapter_id":9,"order":3,"slug":"what-is-staking-crypto","title":"An Advanced Look into What is Staking Crypto","status":"published","modified_content":null},{"chapter_id":9,"order":4,"slug":"what-is-proof-of-stake-vs-proof-of-work","title":"Proof-of-Work VS Proof-of-Stake: The Differences That Matter","status":"published","modified_content":null},{"chapter_id":9,"order":5,"slug":"what-is-crypto-mining-rig","title":"Crypto Mining Rig: What It is and How to Build One?","status":"published","modified_content":null}]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/crypto-101-glossary.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}]" current-chapter="S" current-section="what-is-soft-fork-blockchain">