Crypto BasicsBeginner

What is a hard fork and what happens to your coins

A hard fork is a permanent rule change that can split a blockchain in two. Your old coins stay put, and forked coins you control count as income.

Vahe HakobyanEditor-in-chief Updated Oct 5, 20263 min readFact-checked

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What happens to my coins?Hard fork vs soft fork Why blockchains hard fork Taxes and forked coins Notable hard forks FAQ

Key takeaways

Your old coins stay on the original chain.
A soft fork creates no second chain.
Coins you cannot access are not income.

Short answer

A hard fork is a permanent change to the rules of a blockchain. Software built for the old rules cannot follow the new ones, so the network can end up with two separate chains. Developers use it to add features, fix a bug, or settle a dispute.

Every computer on a blockchain runs the same software and follows the same set of rules. When developers want to change those rules, the community has to decide together which version to run.

What happens to my coins?

When a chain splits, the coins you already hold stay on the original chain. The new chain copies those balances, so you hold matching coins there if you control the keys. An exchange may credit them for you.

Before you claim forked coins

Find the split time.
Move your coins to a new wallet.
Only then import the old keys or recovery phrase into fork software.

Hard fork vs soft fork

A soft fork changes the rules in a way older software still accepts, so no new chain appears. A hard fork breaks that compatibility, and the chain can split.

Fork types compared
Hard fork	Soft fork
Older software cannot follow	Older software still works
Can split the chain	Creates no new chain

Why blockchains hard fork

A project hard forks when a change cannot work under the old rules. Developers have used permanent forks to add features and fix catastrophic bugs. A hard fork also fits changes that a soft fork cannot carry.

Taxes and forked coins

The IRS treats cryptocurrency as property. New coins you control from a fork are ordinary income at receipt, and that value becomes your cost basis. Coins you cannot access or control are not income. You owe tax on a gain when you later sell, trade, or pay with them.

Notable hard forks

Two cases are widely known. In each, a disagreement grew too large to settle with a soft fork.

2016: Ethereum split after The DAO hack, creating Ethereum Classic.
2017: Bitcoin split over transaction speed, creating Bitcoin Cash.
Not every hard fork splits a chain; a coordinated upgrade can pass without one.

Frequently asked questions

No. You get them only if the new chain copies your balance and you control the keys.

Find out when the split would happen. To claim forked coins, move your coins to a new wallet first, then import the old keys or recovery phrase.

A planned fork can be delayed or dropped before it activates. Undoing a split chain is not practical.

No. The fork is the rule change, and a split is one possible result of it.

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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.