Backward compatibility refers to the ability of a new version of a software or system to work with documents, data, or features from an older version. In the context of cryptocurrencies, it ensures that new updates or changes do not break the functionality that users expect from the older versions.

When a cryptocurrency network undergoes an upgrade, it’s crucial that wallets, exchanges, and other applications built on the network can still interact seamlessly with the blockchain.

This means that users should be able to send and receive transactions without any issues, regardless of whether they are using the latest version or an older one. Maintaining backward compatibility is important for user confidence and network stability.

If new changes render old software unusable, it can lead to a fragmented ecosystem, driving users away and creating confusion. Thus, developers focus on ensuring that improvements do not compromise existing features, ultimately fostering adoption and long-term viability.