By Gayan Samarakoon
[this article first appeared in here]
What’s a Bitcoin fork?
A fork is basically an alteration of the current Bitcoin protocol changing the rules. As an example, if you were playing an online game and wanted to change the rules, all other players will need to agree on the rule change. If successful, the changes are implemented and the game continues as normal. However, if the consensus was not large enough then two versions of the game are created (version #1 = old rules, version #2 = new rules). This is now a fork in the game. The same analogy applies to Bitcoin’s code.
Post forking there is an “original Bitcoin” and a “new Bitcoin.” For example, Bitcoin Cash changed the block size from 1 MB to 8. The supporters switched to a new coin “Bitcoin Cash”, and those who preferred the original rules kept using the original Bitcoin.
There are also soft forks, that allow the new rules to be compatible with the old rules.
Reasons to care about a fork:
- Switch over to the new rules and the new coin because it’s better than using the original Bitcoin.
- The fork could impact the Bitcoin community, Bitcoin’s adoption, and Bitcoin’s price.
- Profit from the fork by selling the new coins that are delivered to every Bitcoin holder as every Bitcoin holder gets free coins at a hard fork. This doesn’t happen automatically and the new coins must be claimed. Each new coin also has a different claiming mechanism.
The dangers of Bitcoin forks:
- The more recent forks seem similar to each other, whilst the main reason behind the creation being “marketing buzz” than an ideology. Bitcoin forks have become the new ICOs with many seeking out free coin.
- Quick money for developers: Some forks aren’t true copies of Bitcoin’s history. The developers receive a large amount of the new coin, which they sell at market once the coin starts trading.
- Scams: Some forks are simply just scams. An example of a reported scam is Bitcoin Platinum. Scams can come in the form of forks that are created to short Bitcoin’s price (e.g., Bitcoin Platinum) or something more elaborate such as forks that are created to steal users’ real Bitcoins(e.g., Bitcoin Gold fake wallet).
Hence, claiming coins from a fork has a considerable amount of risk.
How to safely claim coins from a fork
- Read about the project.
- Find out who the developers are, and their track record.
- Examine their roadmap and how far along they have come.
- Check reviews about the project, and the team.
The claiming process is quite complicated, and there is a risk of losing the coins.
For example, a forked coin must implement replay protection. It means the network can separate the new coin from the original. If the coins are left on an exchange that supports the fork then the exchange will often extract the new coins for the user.
However, the one rule to always follow before claiming any coin is to move the Bitcoin to a new wallet with a new seed phrase to reduce the chances of losing existing Bitcoin.
Warning: claiming and selling fork-coins involves considerable risks and requires some advanced knowledge. By attempting these procedures, you accept all of these risks:
- Working with and exposing your Bitcoin private keys.
- Installing and running certain software.
- Trading and possibly identifying yourself on various exchanges.
The rule when Claiming Bitcoin Forks: Claiming all these forks require using the private keys of the Bitcoin wallet, which contain the BTC at the time when the coin is forked. So transfer all bitcoins to a new hardware wallet to maintain security standards while claiming!
Three Important factors needed for profiting from Bitcoin Forks
- Fork Height: This is the time and date (measured in Bitcoin block height) when the fork took place. A Bitcoin address that received bitcoin value after the fork won’t receive any fork-coins.
- Reward Ratio: Fork-coins are awarded in direct proportion to the amount of bitcoin in each address (e.g. 1.582 fork-coins for 1.582 BTC), however, this ratio can vary.
- Exchange Deposit Availability: Very few exchanges will allow deposits of minor forks. Hence preparatory research must be undertaken on how to exit from the new coin holdings.
Claiming the Bitcoin Forks
Export your Private Keys:
To claim most fork-coins, it’s necessary to export the private keys from the old wallet. In most cases, a file will be generated that contains all addresses and their respective private keys. Certain wallets, especially hardware wallets, won’t allow you to export the private keys. In such cases, it’s necessary to enter your hardware wallet’s seed phrase into a tool (such as Ian Coleman’s BIP39 Tool ). Another option is to import the seed into a compatible HD wallet, such as Electrum. The tool or wallet will regenerate the private keys and their addresses, which allows this info to be imported to the fork-coin in the correct format.
Check the Balance of your Addresses and Make a List:
To save time, only import private keys that contain a value. Use findmycoins.ninja and btcdiv.com sites to check the claimable fork-coin balance of your old Bitcoin addresses. Record all valid addresses and private key combinations.
Two Reliable “Do It Yourself” Claiming Methods:
1. BitPie & Bither: BitPie & Bither are two Bitcoin wallets that allow for claiming several fork coins. There’s seems to be a partnership between the two, while it seems Bither rejects non-BitPie addresses when claiming. Bither is featured on the Bitcoin.org site, indicating some reliability.
2. Ymgve’s Fork Claimer: Ymgve has an excellent script, supports SegWit addresses, has lower mining fees than BitPie/Bither, and accepts any address for sending. The coins may be sent directly to the exchange’s deposit account. However, the script requires the use of the command line and hence, more complicated.
Bitcoin Forks Claiming Services:
As an alternative to the DIY approach, there are services that charge a percentage (usually around 5%) of the fork-coin profits to handle the process. The following list all seem to have received a lot of positive feedback. Besides CoinPanic, they’ll require your private keys.
- Reddit user Camku.
- Nbysy is another Redditor who offers a fork-coin service, with good feedback.
- CoinPanic is a service, that doesn’t demand your private keys for claiming.
- Loyce has a claiming service on the BitcoinTalk forum, with positive feedback.
37 Bitcoin Forks in 2017–2018
Originally published at ICOEdge.