diff --git a/chain/src/pipe.rs b/chain/src/pipe.rs
index 1450bc9db..f226997b4 100644
--- a/chain/src/pipe.rs
+++ b/chain/src/pipe.rs
@@ -132,6 +132,34 @@ fn validate_header(header: &BlockHeader, ctx: &mut BlockContext) -> Result<(), E
 		return Err(Error::Orphan);
 	}
 
+	// check version, enforces scheduled hard fork
+	if !consensus::valid_header_version(header.height, header.version) {
+		error!("Invalid block header version received ({}), maybe update Grin?",
+			header.version);
+		return Err(Error::InvalidBlockVersion(header.version));
+	}
+
+	if header.timestamp >
+		time::now_utc() + time::Duration::seconds(12 * (consensus::BLOCK_TIME_SEC as i64))
+	{
+		// refuse blocks more than 12 blocks intervals in future (as in bitcoin)
+		// TODO add warning in p2p code if local time is too different from peers
+		return Err(Error::InvalidBlockTime);
+	}
+
+	if !ctx.opts.intersects(SKIP_POW) {
+		let cycle_size = if ctx.opts.intersects(EASY_POW) {
+			global::sizeshift()
+		} else {
+			consensus::DEFAULT_SIZESHIFT
+		};
+		debug!("Validating block with cuckoo size {}", cycle_size);
+		if !(ctx.pow_verifier)(header, cycle_size as u32) {
+			return Err(Error::InvalidPow);
+		}
+	}
+
+	// first I/O cost, better as late as possible
 	let prev = try!(ctx.store.get_block_header(&header.previous).map_err(
 		&Error::StoreErr,
 	));
@@ -144,13 +172,6 @@ fn validate_header(header: &BlockHeader, ctx: &mut BlockContext) -> Result<(), E
 		// time progression (but not in CI mode)
 		return Err(Error::InvalidBlockTime);
 	}
-	if header.timestamp >
-		time::now_utc() + time::Duration::seconds(12 * (consensus::BLOCK_TIME_SEC as i64))
-	{
-		// refuse blocks more than 12 blocks intervals in future (as in bitcoin)
-		// TODO add warning in p2p code if local time is too different from peers
-		return Err(Error::InvalidBlockTime);
-	}
 
 	if !ctx.opts.intersects(SKIP_POW) {
 		// verify the proof of work and related parameters
@@ -166,16 +187,6 @@ fn validate_header(header: &BlockHeader, ctx: &mut BlockContext) -> Result<(), E
 		if header.difficulty < difficulty {
 			return Err(Error::DifficultyTooLow);
 		}
-
-		let cycle_size = if ctx.opts.intersects(EASY_POW) {
-			global::sizeshift()
-		} else {
-			consensus::DEFAULT_SIZESHIFT
-		};
-		debug!("Validating block with cuckoo size {}", cycle_size);
-		if !(ctx.pow_verifier)(header, cycle_size as u32) {
-			return Err(Error::InvalidPow);
-		}
 	}
 
 	Ok(())
diff --git a/chain/src/types.rs b/chain/src/types.rs
index 47ca289d2..636c60870 100644
--- a/chain/src/types.rs
+++ b/chain/src/types.rs
@@ -72,6 +72,8 @@ pub enum Error {
 	OutputNotFound,
 	/// output spent
 	OutputSpent,
+	/// Invalid block version, either a mistake or outdated software
+	InvalidBlockVersion(u16),
 	/// Internal issue when trying to save or load data from store
 	StoreErr(grin_store::Error),
 	/// Error serializing or deserializing a type
diff --git a/core/src/consensus.rs b/core/src/consensus.rs
index 66eebb80b..9ac9af1c4 100644
--- a/core/src/consensus.rs
+++ b/core/src/consensus.rs
@@ -81,6 +81,29 @@ pub fn exceeds_weight(input_len: usize, output_len: usize, kernel_len: usize) ->
 		kernel_len * BLOCK_KERNEL_WEIGHT > MAX_BLOCK_WEIGHT
 }
 
+/// Fork every 250,000 blocks for first 2 years, simple number and just a
+/// little less than 6 months.
+pub const HARD_FORK_INTERVAL: u64 = 250_000;
+
+/// Check whether the block version is valid at a given height, implements
+/// 6 months interval scheduled hard forks for the first 2 years.
+pub fn valid_header_version(height: u64, version: u16) -> bool {
+	// uncomment below as we go from hard fork to hard fork
+	if height <= HARD_FORK_INTERVAL && version == 1 {
+		true
+	/* } else if height <= 2 * HARD_FORK_INTERVAL && version == 2 {
+		true */
+	/* } else if height <= 3 * HARD_FORK_INTERVAL && version == 3 {
+		true */
+	/* } else if height <= 4 * HARD_FORK_INTERVAL && version == 4 {
+		true */
+	/* } else if height > 4 * HARD_FORK_INTERVAL && version > 4 {
+		true */
+	} else {
+		false
+	}
+}
+
 /// The minimum mining difficulty we'll allow
 pub const MINIMUM_DIFFICULTY: u64 = 10;
 
@@ -292,4 +315,27 @@ mod test {
 		);
 	}
 
+	#[test]
+	fn hard_fork_1() {
+		assert!(valid_header_version(0, 1));
+		assert!(valid_header_version(10, 1));
+		assert!(!valid_header_version(10, 2));
+		assert!(valid_header_version(250_000, 1));
+		assert!(!valid_header_version(250_001, 1));
+		assert!(!valid_header_version(500_000, 1));
+		assert!(!valid_header_version(250_001, 2));
+	}
+
+	// #[test]
+	// fn hard_fork_2() {
+	// 	assert!(valid_header_version(0, 1));
+	// 	assert!(valid_header_version(10, 1));
+	// 	assert!(valid_header_version(10, 2));
+	// 	assert!(valid_header_version(250_000, 1));
+	// 	assert!(!valid_header_version(250_001, 1));
+	// 	assert!(!valid_header_version(500_000, 1));
+	// 	assert!(valid_header_version(250_001, 2));
+	// 	assert!(valid_header_version(500_000, 2));
+	// 	assert!(!valid_header_version(500_001, 2));
+	// }
 }
diff --git a/core/src/core/block.rs b/core/src/core/block.rs
index c14c7643b..e8f060c66 100644
--- a/core/src/core/block.rs
+++ b/core/src/core/block.rs
@@ -27,14 +27,6 @@ use ser::{self, Readable, Reader, Writeable, Writer};
 use global;
 use keychain;
 
-bitflags! {
-    /// Options for block validation
-    pub flags BlockFeatures: u8 {
-        /// No flags
-        const DEFAULT_BLOCK = 0b00000000,
-    }
-}
-
 /// Errors thrown by Block validation
 #[derive(Debug, PartialEq)]
 pub enum Error {
@@ -61,6 +53,8 @@ impl From<secp::Error> for Error {
 /// Block header, fairly standard compared to other blockchains.
 #[derive(Clone, Debug, PartialEq)]
 pub struct BlockHeader {
+	/// Version of the block
+	pub version: u16,
 	/// Height of this block since the genesis block (height 0)
 	pub height: u64,
 	/// Hash of the block previous to this in the chain.
@@ -73,8 +67,6 @@ pub struct BlockHeader {
 	pub range_proof_root: Hash,
 	/// Merklish root of all transaction kernels in the UTXO set
 	pub kernel_root: Hash,
-	/// Features specific to this block, allowing possible future extensions
-	pub features: BlockFeatures,
 	/// Nonce increment used to mine this block.
 	pub nonce: u64,
 	/// Proof of work data.
@@ -89,6 +81,7 @@ impl Default for BlockHeader {
 	fn default() -> BlockHeader {
 		let proof_size = global::proofsize();
 		BlockHeader {
+			version: 1,
 			height: 0,
 			previous: ZERO_HASH,
 			timestamp: time::at_utc(time::Timespec { sec: 0, nsec: 0 }),
@@ -97,7 +90,6 @@ impl Default for BlockHeader {
 			utxo_root: ZERO_HASH,
 			range_proof_root: ZERO_HASH,
 			kernel_root: ZERO_HASH,
-			features: DEFAULT_BLOCK,
 			nonce: 0,
 			pow: Proof::zero(proof_size),
 		}
@@ -109,13 +101,13 @@ impl Writeable for BlockHeader {
 	fn write<W: Writer>(&self, writer: &mut W) -> Result<(), ser::Error> {
 		ser_multiwrite!(
 			writer,
+			[write_u16, self.version],
 			[write_u64, self.height],
 			[write_fixed_bytes, &self.previous],
 			[write_i64, self.timestamp.to_timespec().sec],
 			[write_fixed_bytes, &self.utxo_root],
 			[write_fixed_bytes, &self.range_proof_root],
-			[write_fixed_bytes, &self.kernel_root],
-			[write_u8, self.features.bits()]
+			[write_fixed_bytes, &self.kernel_root]
 		);
 
 		try!(writer.write_u64(self.nonce));
@@ -132,18 +124,19 @@ impl Writeable for BlockHeader {
 /// Deserialization of a block header
 impl Readable for BlockHeader {
 	fn read(reader: &mut Reader) -> Result<BlockHeader, ser::Error> {
-		let height = try!(reader.read_u64());
-		let previous = try!(Hash::read(reader));
+		let (version, height) = ser_multiread!(reader, read_u16, read_u64);
+		let previous = Hash::read(reader)?;
 		let timestamp = reader.read_i64()?;
-		let utxo_root = try!(Hash::read(reader));
-		let rproof_root = try!(Hash::read(reader));
-		let kernel_root = try!(Hash::read(reader));
-		let (features, nonce) = ser_multiread!(reader, read_u8, read_u64);
-		let difficulty = try!(Difficulty::read(reader));
-		let total_difficulty = try!(Difficulty::read(reader));
-		let pow = try!(Proof::read(reader));
+		let utxo_root = Hash::read(reader)?;
+		let rproof_root = Hash::read(reader)?;
+		let kernel_root = Hash::read(reader)?;
+		let nonce = reader.read_u64()?;
+		let difficulty = Difficulty::read(reader)?;
+		let total_difficulty = Difficulty::read(reader)?;
+		let pow = Proof::read(reader)?;
 
 		Ok(BlockHeader {
+			version: version,
 			height: height,
 			previous: previous,
 			timestamp: time::at_utc(time::Timespec {
@@ -153,9 +146,6 @@ impl Readable for BlockHeader {
 			utxo_root: utxo_root,
 			range_proof_root: rproof_root,
 			kernel_root: kernel_root,
-			features: BlockFeatures::from_bits(features).ok_or(
-				ser::Error::CorruptedData,
-			)?,
 			pow: pow,
 			nonce: nonce,
 			difficulty: difficulty,
diff --git a/core/src/genesis.rs b/core/src/genesis.rs
index d32b3b8ce..a5e070569 100644
--- a/core/src/genesis.rs
+++ b/core/src/genesis.rs
@@ -29,6 +29,7 @@ pub fn genesis() -> core::Block {
 	let empty_hash = [].hash();
 	core::Block {
 		header: core::BlockHeader {
+			version: 1,
 			height: 0,
 			previous: core::hash::Hash([0xff; 32]),
 			timestamp: time::Tm {
@@ -42,7 +43,6 @@ pub fn genesis() -> core::Block {
 			utxo_root: empty_hash,
 			range_proof_root: empty_hash,
 			kernel_root: empty_hash,
-			features: core::DEFAULT_BLOCK,
 			nonce: global::get_genesis_nonce(),
 			pow: core::Proof::zero(proof_size), // TODO get actual PoW solution
 		},