What is a hard fork in Bitcoin?

A hard fork in Bitcoin refers to a significant and non-backward-compatible change or upgrade to the Bitcoin protocol, resulting in a permanent divergence in the blockchain and the creation of two separate and incompatible chains. Unlike soft forks, which maintain compatibility with older versions of the software, hard forks require all nodes to upgrade to the latest version to avoid splitting the network.

Here's how a hard fork typically works in Bitcoin:

1. **Protocol Upgrade**: A hard fork involves making changes to the Bitcoin protocol that introduce new features, alter consensus rules, or modify the structure of blocks and transactions. These changes are incompatible with the previous rules and may result in a divergence in the interpretation of what constitutes a valid block or transaction.

2. **Consensus Split**: When a hard fork is activated, nodes running the updated software enforce the new rules, while nodes running older versions of the software continue to follow the old rules. This creates a split in the network, with two groups of nodes following different consensus rules.

3. **Creation of New Chain**: Blocks produced by nodes following the new rules form a new blockchain, often referred to as the "forked" or "upgraded" chain. Meanwhile, blocks produced by nodes following the old rules continue to form the original blockchain.

4. **Community Consensus**: For a hard fork to be successful, it requires widespread consensus and support from the Bitcoin community, including miners, developers, businesses, and users. Without broad agreement on the necessity and implications of the fork, it may result in a contentious split and the creation of competing chains.

5. **Legacy Chain**: Nodes that do not upgrade to the new software continue to follow the old rules and operate on the original chain. This chain is sometimes referred to as the "legacy" or "non-upgraded" chain and may coexist alongside the forked chain.

Examples of hard forks in Bitcoin's history include the creation of Bitcoin Cash (BCH) and Bitcoin SV (BSV) from the original Bitcoin (BTC) blockchain. These forks introduced changes such as increased block size limits and different consensus mechanisms, leading to permanent divergences in the Bitcoin network.

Overall, hard forks are a mechanism for introducing significant changes or upgrades to the Bitcoin protocol but require careful consideration and community consensus to avoid disrupting the network and ecosystem.