A fork occurs when a blockchain's protocol is changed, creating a divergent version of the chain. Forks can be planned upgrades or contentious splits within the community.
Types of Forks
Soft Fork: A backward-compatible upgrade where old nodes can still validate new blocks. Non-upgraded nodes may not understand new features but won't reject new blocks. Example: Bitcoin's SegWit upgrade.
Hard Fork: A non-backward-compatible change that creates a permanent split. Old nodes reject new blocks, so all nodes must upgrade or remain on the old chain. Example: Ethereum Classic splitting from Ethereum after The DAO hack.
Notable Forks
Bitcoin Cash (BCH): Forked from Bitcoin in 2017 over disagreements about block size.
Ethereum Classic (ETC): Forked from Ethereum in 2016 after the community voted to reverse The DAO hack.
Ethereum's Merge: A planned hard fork transitioning from PoW to PoS.
What Happens to Holders
In a hard fork, holders of the original coin typically receive an equal amount of the new forked coin. Both chains continue independently, each with their own value determined by the market.