How a fork works
A fork is a change to a blockchain’s rules that splits its history into a new path. A soft fork is backward-compatible, tightening rules in a way old nodes still accept. A hard fork is a clean break: nodes must upgrade, and if a community disagrees, the chain can split into two separate coins, each with its own history up to the fork point and a separate future after it.
Worked example
A blockchain community disputes a major upgrade. Those who back it run the new software; those who reject it keep the old. At the fork block, the chain splits into two coins sharing one history. Anyone who held the original now holds an equal balance on both chains. Bitcoin Cash splitting from Bitcoin is the classic example: one ledger became two, each going its own way.
Forks and trading exposure
A contentious hard fork creates uncertainty, duplicated coins, and often sharp volatility, because the market must price two assets where there was one. On Volity you take exposure to established coins as spot or CFDs without managing wallets or claiming forked balances yourself. Understanding forks explains sudden supply changes and the origin of many coins that began as splits.
Why it matters
Forks are how blockchains evolve and occasionally fracture, so they explain where new coins come from and why governance disputes can move prices hard. Watch upgrade debates on coins you hold. Related: smart contract and L1 vs L2.
Learn more in our crypto trading guide.
