Causes and consequences of hard fork in cryptocurrencies

A hard fork is a procedure for introducing serious modifications that radically change the principles of the network’s functioning. Moreover, the updated system becomes incompatible with the previous software.

Why is a hard fork needed?

There can be many reasons for making a “hard fork”. They are associated with the manifestation of system shortcomings that reduce performance. For example, without a hard fork it is impossible to increase the size of one block.
BTC was the first to face the need to perform a Hard Fork. At first, users of the mentioned platform did not experience any problems with transactions.

Carrying out hard forks has a positive or negative impact on the development of cryptocurrency systems.

Advantages of Hard Fork:

High-quality hard forks eliminate existing defects in the platform’s operation that reduce the speed of operation.
A chance for users to increase capital. Users, in addition to tokens, receive additional coins from the emerging branch of the network.
Disadvantages of hard forks:

During a “hard fork”, no one knows how innovations will affect the quality of the system’s functioning, and which of the two branches will become the main one.
Such transactions often cause divisions in the cryptocurrency community.
The introduction of hard forks increases the volatility of digital money. This may result in loss of investment from network participants.