A soft fork in cryptocurrency refers to a backward-compatible upgrade or modification to the blockchain protocol. Unlike a hard fork, a soft fork does not result in a permanent divergence and the creation of a new cryptocurrency.
During a soft fork, changes are made to the existing protocol in a way that is compatible with the previous version.
The upgraded software enforces new rules or restrictions, but nodes that have not upgraded can still operate and participate in the network. This means that a soft fork does not split the blockchain into separate chains.
The term "soft fork" implies that the updated protocol is more restrictive than the previous version.
It introduces new rules that tighten or modify the consensus mechanism, transaction validation, or other aspects of the blockchain's operation.
Since the new rules are compatible with the old ones, nodes running the upgraded software will continue to recognize and validate blocks created by non-upgraded nodes.
Soft forks are typically implemented to introduce improvements, enhance security, or fix vulnerabilities in the blockchain network.
They are usually proposed by developers or community members and require consensus among participants to be successfully adopted.
An example of a soft fork is the implementation of Segregated Witness (SegWit) in the Bitcoin network.
SegWit introduced changes to the transaction format and block size limit without creating a separate chain.
Upgraded nodes could still interact with non-upgraded nodes while taking advantage of the new features.
In summary, a soft fork is a backward-compatible upgrade to the blockchain protocol, whereas a hard fork results in a permanent divergence and the creation of a new cryptocurrency.