The paper “A Wild Velvet Fork Appears! Inclusive Blockchain Protocol Changes in Practice” by Alexei Zamyatin, Nicholas Stifter, Aljosha Judmayer, Philipp Schindler, Edgar Weippl and William J. Knottenbelt, in cooperation with the Imperial College Centre for Cryptocurrency Research and Engineering (IC3RE), was accepted for publication at the 5th Workshop on Bitcoin and Blockchain Research at the Financial Cryptography and Data Security Conference 2018.
The loosely defined terms hard fork and soft fork have established themselves as descriptors of different classes of upgrade mechanisms for the underlying consensus rules of (proof-of-work) blockchains. Recently, a novel approach termed velvet fork, which expands upon the concept of a soft fork, was outlined in . Specifically, velvet forks intend to avoid the possibility of disagreement by a change of rules through rendering modifications to the protocol backward compatible and inclusive to legacy blocks.
We present an overview and definitions of these different upgrade mechanisms and outline their relationships.
Hereby, we expose examples where velvet forks or similar constructions are already actively employed in Bitcoin and other cryptocurrencies. Furthermore, we expand upon the concept of velvet forks by proposing possible applications and discuss potentially arising security implications.