Hard Fork

A hard fork is a change to a blockchain's rules that is not backward compatible: blocks valid under the new rules are rejected by software still running the old rules. If part of the network declines to upgrade, the chain splits permanently into two networks and two assets, as happened when Bitcoin Cash split from bitcoin on August 1, 2017.

Why it matters

Hard forks are how a monetary network's constitution gets tested. Because every holder of the original coin automatically holds coins on both sides of a split, the market gets to price each rule set directly. After the 2017 split, Bitcoin Cash briefly traded near 0.4 BTC per coin during a November rally, then declined for years; it has since traded around or below 1% of bitcoin's price, a verdict on which rules the market considers to be bitcoin.

Bitcoin's culture treats hard forks as a last resort precisely because they put every holder's asset at risk. Upgrades such as SegWit in 2017 and Taproot in 2021 were instead deployed as soft forks, which tighten rules rather than break them and let old nodes continue operating.

In the gold vs bitcoin debate

Gold cannot fork; its properties are set by physics. Critics argue forks prove bitcoin's supply rules are ultimately changeable by humans. Defenders answer that the fork mechanism is exactly what protects the rules: anyone may propose different money, but they must win the market, and every attempt to change the 21 million cap has failed to do so.