What are blockchain forks, and why do they occur?

In blockchain technology, forking is a process where the chain splits into two parts (called forks). What happens to each fork depends on the type of forking that occurs and on the consensus reached by the peers on each fork.

A fork can be created by accident or intentionally. Intentionally created forks are further divided into soft forks and hard forks. 

An accidental fork is created when two (or more) miners on the blockchain mine the same block simultaneously, and both blocks are committed. Because the blocks are duplicates and there is a discrepancy in the network, the chain temporarily splits to continue operating without any downtime, and each block forms a fork.

In the case of accidental forks, the network eventually corrects itself as one fork gets longer (as peers choose to add new blocks to this fork) and is considered the correct fork, and the other one is eliminated.

On the other hand, a fork is intentionally created when peers on the network decide to make permanent changes to the underlying technology. The chain splits into two forks – one running on the old rules and the other running on the new rules. Whether both forks continue to exist or only one survives depends on the type of fork and the consensus reached by the peers on the network. A fork that is intentionally created can be one of two types – a soft or a hard fork.

A soft fork is created when the blockchain gets an update that is accepted by all peers on the network, such as a security upgrade that is necessary for the safety of the data on the blockchain. While the chain does split into two forks, the new update implemented on the soft fork is backward compatible, which means it is accepted by the original chain that is still using the old rule. In the case of a soft fork, the updated rules are adopted as a standard, and all peers agree to continue operating over the updated chain.

An example of a soft fork is the fork that was created when Bitcoin underwent the SegWit update that introduced a new class of addresses called Bech32. A node on the network using the older P2SH addresses could still do a valid transaction with a node using the new Bech32 type address, making the update backward compatible. In simpler words, both forks could work with each other.

Sometimes, peers on the network are not in agreement with each other regarding a certain upgrade. For instance, a set of developers may want to implement some changes to improve the blockchain, but not everybody on the network agrees. In such cases, it's possible to modify the cryptocurrency's source code and create a hard fork – permanently splitting the blockchain into two parts or forks. These two chains can now operate independently. The new chain (the one with the update) is called a hard fork because it undergoes a permanent split from the original chain. A hard fork, more often than not, results in a new cryptocurrency.

An example of a hard fork is the fork that was created when Bitcoin's network split to launch Bitcoin Cash to reduce transaction processing time and costs.

Both hard forks and soft forks result from a blockchain split, but they are quite the opposite in nature. The difference between a hard fork and a soft fork is their relationship to the original chain from which each is created.

A soft fork is backward compatible, which means both chains in the split accept the new rules. You can think of a soft fork as an upgrade to the existing chain. Once a soft fork is introduced, developers generally continue on the new chain while the older chain becomes orphaned (it continues to exist but is no longer used).

In contrast, the two chains are not compatible in the case of a hard fork, often leading to a permanent split and the creation of a new cryptocurrency. Both chains can exist and operate independently after a hard fork. 

If you have purchased a cryptocurrency (or you plan on doing so), it's important to stay up-to-date with the latest information, including details about new forks that occur. 

For instance, a hard fork could give rise to a competing cryptocurrency, which may affect the value of your investment, and you might want to take action. Alternatively, the cryptocurrency you hold may cease to exist because a new version replaces it after a soft fork. Users are generally notified and given time to migrate to the latest version in such cases. It's good to be aware and stay ahead of such changes so as to not lose your investment.