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A hard fork occurs when two sets of Bitcoin developers and users decide to change the rules by which they run the Bitcoin software making the two sets of nodes incompatible with each other. A soft fork is most often an upgrade to the Bitcoin software that a majority of users agreed to and makes an improvement in some way. The main difference between a soft fork and a hard fork is that a soft fork still works with the rules of Bitcoin and still works with backwards compatibility for all users running any kind of Bitcoin node.