What is a soft fork?
In blockchain technology, a soft fork is a change in the software protocol where only previously valid transaction blocks are rendered invalid. Since older nodes will recognize new blocks as valid, a soft fork is backward compatible. This type of fork only requires the majority of miners to upgrade to apply the new rules, as opposed to a hard fork which requires all nodes to upgrade and agree on the new version.
Understand the use of soft forks
New transaction types can often be added as soft forks, requiring only participants (e.g. sender and receiver) and miners to understand the new transaction type. This is done by making the new transaction appear to older customers as a “pay anyone” transaction (of a special form) and having miners agree to reject blocks including these transactions unless the transaction is validated according to the new rules. This is how pay-to-script hashing (P2SH) was added to bitcoin.
A soft fork can also occur sometimes due to a temporary discrepancy in the blockchain when miners using unupgraded nodes violate a new consensus rule that their nodes don’t know about.
Soft forks do not require any node upgrades to maintain consensus, since all blocks with the new soft forked-in rules also follow the old rules, so old clients accept them. Soft forks cannot be reversed without a hard fork because, by definition, a soft fork only allows the set of valid blocks to be a proper subset of what was valid before the fork. If users move to a post-soft fork client and for some reason the majority of miners revert to the pre-soft fork client, post-soft fork client users would break the consensus as soon as a block does not follow . new rules from their customers. For a soft fork to work, the majority of mining power must be running a client that recognizes the fork. The more miners who accept the new rules, the more secure the network is after the fork. If you have 3/4 of the miners recognizing the fork, 1/4 of the blocks created are not guaranteed to follow the new rules. These 1/4 blocks will be valid for old nodes that are unaware of the new rules, but they will be ignored by new nodes.
Soft forks have been used on bitcoin and ethereum blockchains, among others, to implement new and improved features that are backwards compatible.