I've read a lot of articles online about the blockchain technology and most of them are way to simple or way to difficult for a common man with little or no technical knowledge. So I've decided that I'm going to write a series of posts which will explain concepts related to the blockchain technology in simple language which even a layman can understand. Hence, the name "Layman Series"
Introduction: What is a fork?
A fork in the blockchain is basically when the developer chooses to make a new improvised version of the same code and the new line of blockchain gets separated from the original one hence causing a fork in the blockchain.
If this is confusing, let us use Microsoft Word for example. Microsoft frequently releases new versions of Word. Each version attempts to be backwards compatible and retain the ability to read and edit older documents. However, often older versions of Word have great difficulty in reading documents created in one of the newer versions. So if you create a document in Word 2007 and your buddy edits and saves it in Word 2013, you may have problems reading it. Despite the assumption that its going to be the same document, you two have created a fork in your document. - Source
Since, you cannot force the people using the software to use a specific one(the old one or the new chain) it's upto the users to decide which one they want to use. If the software is open source then they can make their own fork and post it in the community.
Types of Forks: Soft & Hard
Soft Fork:
In contrast with the hard fork, a soft fork is where the upgraded version of the coin is compatible with the previous version. In this case blocks mined by the old version of the software do recognise as valid those mined by the newer version of the software. In other words, the changes made to the protocol are backwards-compatible.
Hard Fork:
A hard fork is one where nodes still running on an older version of the bitcoin core do not recognise the blocks mined by the newer version of the software. In other words, the change to the protocol is not backwards-compatible.Indeed, this form of forking is the most likely to lead to a different set of blockchain and ultimately separate currencies.It is important to note that when the word hard fork is used it does not necessarily mean that the blockchain is splitting into two. It is also used to indicate that a change in the protocol may require all nodes in the network to upgrade.Otherwise, those running on the old version will recognise as invalid blocks mined by those operating in the new version of the software, and the vice versa. What can also happen is users might find they have coins on both the blockchains and they would need different wallets to control them.
What happens to your coins during a Hard Fork?
During a hard fork you need to be careful and shouldn't make any transactions when the fork is taking place. If you do, your transactions can get lost and you will never be able to get it back.
Why not to store your coin in exchanges:
I hope this was helpful. Let me know if you want me to write on a specific topic. Happy investing!