Upgrading Bitcoin’s Technology

Bitcoin technology can be upgraded through two main methods: hard forks and soft forks.

Hard Fork: This involves a significant change to the protocol that validates previously invalid transactions, requiring all users to upgrade their systems. For instance, if two users disagree on a transaction's validity, a hard fork can establish it as valid for some users but not for others. Hard forks are not backward compatible, meaning all nodes must upgrade to the new version for it to function, while the old version continues to exist but may not work with newer clients. Notable examples include Bitcoin's split into Bitcoin Cash and Ethereum's division into Ethereum Classic.

Soft Fork: This modifies the protocol such that some previously valid transactions become invalid while still allowing old nodes to recognize new blocks as valid. Soft forks are backward compatible and only require a majority of miners to upgrade to implement the new rules.