A hard fork is a blockchain protocol upgrade that is not backwards-compatible. Nodes running the old software reject blocks created under the new rules, and vice versa. The result is two separate chains sharing a common history up to the fork block, after which they diverge permanently. Each chain has its own transactions, consensus rules, and community. Hard forks happen when developers need to make major changes that cannot be achieved through backward-compatible updates, like increasing block size, changing the hashing algorithm, or fixing critical vulnerabilities. When a split occurs, the original cryptocurrency usually keeps trading under its old ticker while the new chain issues its own token. Bitcoin Cash forked from Bitcoin in 2017 over a block-size disagreement. Ethereum forked after the 2016 DAO hack to reverse stolen funds, creating Ethereum and Ethereum Classic. Hard forks carry economic and governance risk because a contentious split fractures the community and weakens network effects.
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