What The Fork — Everything You Need To Know About Bitcoin’s Upcoming Forks

Over the next few weeks, Bitcoin is set to undergo two more forks, potentially resulting in the creation of two more currencies sharing the Bitcoin name and some of its history.

Here, I explore what a fork is in general, and look at the specific cases that are coming up, as well as giving some tips on how best to respond to these chain splits.

In the video, I mention coin.dance, a website that shows how many miners are signalling support for Bitcoin2X. Find that site here: https://coin.dance/blocks.

Don’t want to watch? Read a summary of the video below:

What Is A Fork?

Whilst its name may suggest that a fork always refers to a blockchain split, this ins’t the case.

In reality, a fork is actually just a protocol change that makes blocks that would previously have been valid invalid, necessitating software upgrades for all the nodes if they want to continue operating the chain.

The name ‘fork’ comes from the fact that the upgrades create a permanent divergence from the old rules.

Generally, a short time after upgrading, any nodes that aren’t running the longest blockchain will realise this and swap to the main one again, and the chain can then function as before.

On some occasions, not all the nodes will choose to upgrade to the new protocol and two blockchains will exist simultaneously with a shared history up until the moment of the fork.

A good example of this happening was with the divergence of Ethereum from Ethereum Classic.

Ethereum underwent a hard fork following the DAO hack, with the intention of returning stolen Ether to those who lost it. However, there was a philosophical disagreement within the community over whether this was the right thing to do, with some choosing not to upgrade to the new software. The result was the chain splitting, with Ethereum breaking away and Ethereum Classic continuing the old protocol.

Bitcoin Gold

Bitcoin Gold will fork from the Bitcoin blockchain on October 25th. So, what is it?

What Is Bitcoin Gold?

Bitcoin Gold is essentially just bitcoin, with a few changes made to the way it’s mined. Bitcoin Gold’s creators feel that mining has become too centralised, and this is an effort to open the mining space up to everyone again.

Decentralising Mining

In Bitcoin’s early days, it could be mined by just about anyone. But its become increasingly difficult to mine, requiring more and more computing power to succeed.

To be more competitive, miners turned to specialised hardware.

Normla graphics cards that can be bought relatively cheaply were replaced with ASIC (Application-Specific Integrated Circuit) cards. These are far more expensive, and made by only a handful of manufacturers. This means that fewer people are able to get in on the mining game.

So, mining has shifted away from the individuals who use Bitcoin to a small number of professional datacenters.

To try and reduce this centralisation, Bitcoin Gold will change Bitcoin’s code to include an ASIC-resistant proof-of-work algorithm called Equihash, which is already used in ZCash.

Equihash can’t guarantee ASIC chips won’t be used, as specialised chips can be created for any algorithm, but it is reasonably resistant to them. Then, as a further deterrent to using ASIC cards, Bitcoin Gold plans to change the mining algorithm if they find ASIC chips are being produced for Equishash.

How Does This Affect You?

In many ways, it doesn’t.

On October 25th, Bitcoin Gold will split from the main Bitcoin Blockchain. Then, on November 1st, you’ll be able to access an equal amount of Bitcoin Gold as Bitcoin that you had at the time of the split.

Bitcoin gold is planning on implementing strong replay protection when they fork the blockchain. This means that any transaction made with Bitcoin gold shouldn’t accidentally be repeated on the Bitcoin blockchain.

So, you don’t need to worry about loosing any Bitcoin if you choose to sell your Bitcoin Gold.

Bitcoin Gold’s Problems

There are still a number of unanswered questions that Bitcoin Gold has to face. There’s numerous details yet to be explained, and (as far as I’m aware) there isn’t even an official wallet for it yet.

Support for Bitcoin Gold seems to be lacking. There are few mining pools or exchanges showing any interest in Bitcoin Gold, and if it doesn’t pick up any support, it’s dead in the water.

My Opinion

To me, much of the reaction to Bitcoin Gold has been making a great deal of fuss about nothing.

The coin itself seems rather pointless, and I don’t expect it to have much value when it hits the market.

I don’t understand why anyone would choose to use Bitcoin Cash. If you want a transactional currency, there’s so many others out there that do the same thing, and even do it better. If you’re worried about mining centralisation, there’s alcoins out there that have already tackled this issue.

Bitcoin Gold looks to be a coin that everyone will have, that anyone can mine, but nobody will want. And that doesn’t add up to being a very valuable currency.


What Is Bitcoin2X

This is a far more complicated, contentious fork.

The fork brings about the second part of the Segwit2X upgrades that began with August’s hard fork. Both parts of the upgrade were controversial in the Bitcoin community, with different factions pushing for different solutions to Bitcoin’s scaling issues. And, whilst Segwit2X was a compromise eventually settled on by many of the biggest and most powerful players in the Bitcoin community, it seems not all miners are going to be supporting the Bitcoin2X fork.

You can use the website CoinDance (https://coin.dance/blocks) to monitor how many miners are intending to support this fork. At the moment, it’s around 85%.

A Messy Divorce

Significant issues will come about if the number of miners supporting Bitcoin2X drops significantly. In this case, Bitcoin will be split again, but this supporters of both post-fork chains can claim to be the ‘real’ Bitcoin.

A split like this could be incredibly mess, with different sites and exchanges backing different chains. Two different sites could be offering ‘Bitcoin’, and could be referring to different chains.

And, because Bitcoin2X views itself as just a standard protocol upgrade, its developers won’t include strong replay protection. This means that any transactions made on either chain after the fork could result in coins on the other chain being sent as well, in a sort of echo effect.

Staying Safe

Because of the lack of replay protection, it’s best not to make any transactions shortly after the fork occurs.

Wait until the dust has settled, and you can be sure transactions won’t be accidentally repeated, before sending Bitcoin to anyone.

Claiming Your Coins

If all three coins survive the turbulence and uncertainty to come, then you’ll have equal quantities of each (assuming you don’t buy or sell any bitcoin between forks).

Claiming them should be relatively simple. It’s just a case of entering your private key into a wallet for each of the new coins. Of course, make sure the wallet you’re using is reputable and safe — there’s always a risk that fake wallets get made in an attempt to steal people’s private keys.

The need to import your private key into wallets to claim coins is why it’s so important to hold Bitcoin in a wallet that gives you access to your private key. The best option is always a hardware wallet (like the Ledger Wallet found here: https://www.ledgerwallet.com/r/57d5), but many other wallets will suffice.

There’s also a chance that your wallet of choice will support one, or both, of the currencies created. It’s unclear right now who’s supporting what, so it’s best for you to look up your wallet provider’s plans.

One More Thing

So far, I’ve looked at what forks are, the details of each specific case, and how to stay safe and claim coins after the forks. But is it possible to benefit from these forks?

Lessons From The Past

Before the Bitcoin Cash fork in August, we saw Bitcoin’s value dramatically falling due to uncertainty in the market. Then, just ahead of the split, as people realised they’d be gaining ‘free’ coins, and Bitcoin’s value shot up.

We’ve already seen Bitcoin’s value increasing ahead of the Bitcoin Gold fork, and the question now becomes ‘will this increase continue until the Bitcoin2X fork?’.

The answer to that is unclear. It depends if people’s greed and excitement over the ‘free’ new coins outweighs the fear of the utter chaos a chain split could bring.

If I had to guess, I’d say that Bitcoin’s price will dip at least a little ahead of the Bitcoin2X hard fork. But, these markets are crazy and unpredictable, so I may well be wrong.

How To Profit

Whether Bitcoin’s price goes up or down before the fork isn’t entirely relevant, however. I say this, because I think there are far greater gains to be made by investing in altcoins ahead of the fork.

It seems likely that even if Bitcoin’s price continues to runs up all the way until the Segwit2X fork, it’s price will almost certainly drop after it. And the money that was tied up with Bitcoin has to go somewhere. I believe that much of it will flow back to altcoins, which have been dipping relative to Bitcoin of late.

Particular winners will probably be the coins seen as strong, safe alternatives to Bitcoin. This means the large-cap coins like Litecoin, and especially (I suspect) the ‘newer’ large-caps like Neo and OmiseGo — currencies that had a lot of optimism and support before Bitcoin’s recent run-up.

Of course, all of this is just my opinion. It shouldn’t be taken as investment advice in any way.

However, I hope this has been useful and informative to you.

Let me know your thoughts and opinions on the upcoming forks in the comments below, and share your strategies for benefitting from the forks.

Thanks for reading or watching.

Sign up using this link to get $10 free bitcoin with your first bitcoin purchase over $10: https://www.coinbase.com/join/5974d220e9f0bb00af0b77c8

Secure your holdings with a Ledger hardware wallet: https://www.ledgerwallet.com/r/57d5

Exchange cryptocurrencies with ease using Changelly: https://changelly.com?ref_id=026adb0c01eb


Follow me on Steemit: https://steemit.com/@josephharris

Subscribe on YouTube: https://www.youtube.com/channel/UC9TH8kVY62aXG1oN0rSeOng?view_as=subscriber


Liked this content? Support the channel by donating here:

Bitcoin Adress: 1AcphpSbAHxYWScst3vmjSXeM6nKyfv5jY

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

Obligatory Disclaimer: Any statements I make in these videos and articles are just my opinion, and should not be taken as investment advice. Please do your own research in addition to watching these videos, make sure you are 100% happy with anything you choose to invest your money in, and never invest money you can’t afford to loose.