Soft fork vs hard fork

A soft fork tightens consensus rules: blocks valid under the new rules remain valid to old nodes, so non-upgraded nodes continue following the same chain (they just don't enforce the new restriction). A hard fork loosens or replaces rules: new-rule blocks are invalid to old nodes, so a persistent split occurs unless every economically relevant node upgrades. P2SH, SegWit, and Taproot were soft forks; the Bitcoin Cash split was a hard fork that created a separate chain and asset.

Nuance: "Backwards compatible" means old nodes accept new blocks — it does not mean old nodes get the new features, or that soft forks are automatically uncontroversial. Whether a change can be structured as a soft fork is an engineering question (SegWit's weight system was specifically designed to add capacity soft-fork-style).

Common misstatements:

• "A hard fork is a big change, a soft fork is a small one." — The distinction is rule-set direction (tighten vs. loosen), not magnitude.
• "Soft forks can't split the chain." — They can cause temporary splits if a hashrate majority mines invalid-under-new-rules blocks; the 2013 and 2015 incidents are related cautionary cases.
• "Every fork creates a new coin." — Only persistent hard-fork splits do; soft forks and abandoned forks do not.