What Happens To Your Bitcoins During A Hard Fork?

During the hard fork, what do what do you do with your bitcoins, and where and how do we store bitcoins?

There is a process in Bitcoin, when there is a disagreement or change in the rules, whereby Bitcoin can split into two systems that operate in parallel.

This is unprecedented. It doesn’t happen (on a planned basis, anyway) very often. In fact there’s a lot of effort to avoid it, because it can have severe monetary consequences for those who attempt to do it. But, there is always a possibility that it might happen.

If it does happen, the ledger is replicated on both sides, meaning that if you have a key that controls certain value (coins), that key will control that value (those coins) on both sides, because both sides will have the same ancestry.

At first you may think, ‘Whoa. Does that mean I have twice as many coins?’ Yes and no.

It does mean you have twice as many coins, but one thing I can almost guarantee you is that they’re now worth half as much or less than what a single coin was before. We’ve actually seen some of the cryptocurrencies that do ponzi schemes in this space. They make massive announcements to rooms full of people, “You now have double the amount of coins!”

Are you aware that people generally don’t understand money?

What they should do is scream back, “You crooks! Inflation is terrible! Doubling the amount of coins means they’re worth less than half because you’ve now broken your promises!” Instead they say, “Yay, I have double the amount of coins!” Because when they were six years old, Mommy couldn’t answer the question “Why can’t we all have more money?”

“Double the amount of coins” is not a good thing. It will damage the price of Bitcoin temporarily.

However, I think in the long run, we will see that bitcoin also survives these kinds of attacks and activities. The reason it will survive is because it’s designed to be a resilient, self-healing, anti-fragile system which does not work only when things are going okay.

It’s a system that’s designed to work when it is being attacked, always being attacked. The assumption is that it is being attacked all the time.

The reason Bitcoin survives to this day is not because it hasn’t been attacked, but because it has been attacked every single day for eight years, survived and improved, and grown stronger because of these attacks. It has a reactive immune system.

Hard fork is nothing more than a network-based attack, and if it happens, it will be resisted by the immune system, and Bitcoin will survive it… Or some mutated, evolutionary outcome of Bitcoin that is now resistant to that particular attack will evolve out of it.

Either way, even if this destroyed the fundamental technology of Bitcoin, it would give us the most valuable lesson of all, which is how to build the next version to resist exactly that attack, and improve on it.

Where to store and how to store bitcoins when hard fork happens?

What happens to your bitcoin? If it’s your bitcoin, nothing happens.

The question is, is it your bitcoin? That is answered best by whether you control the keys.

If you control the keys directly, then after the fork you can decide what to do with them. I would expect a cooling-off period where people don’t do too many transactions because they’re waiting to see how this plays out.

So sit still, hold tight, and wait until things clarify themselves. Your coins aren’t going anywhere. They’re not being invalidated in any way.

If you have coins on an exchange, and you are significantly worried about the event of a fork because you have an “investment” and it scares you… First of all, you’ve invested too much. Secondly, it would probably be a good idea to remove your money before the fork to an address that you control, so that you can have the ability to decide what to do with it.

Not all exchanges will support both sides of the fork.

About the author

Satoshi Nakamoto

We developed bitcoin. This post is derivated from aantoop yt video with same headline under cc by license.

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