Infographic: Three Steps to Successfully Handling a Bitcoin Hard Fork
2017 was the year Bitcoiners finally decided to settle their differences by making miners and users choose sides. In November, the blockchain will face its second* contentious “hard fork” for the year. What does that mean? Basically, someone changes the code and the blockchain heads in two different directions. Whichever one gains the most support from miners’ hashing power then “becomes” Bitcoin. What does that mean for you? Here’s Bitsonline‘s handy visual guide.
A Hard Fork Is Like an Election
Hard forks are common in open-source software projects. They’re basically elections — if you want to implement the changes you want, fork the code and users choose their favorite version.
In Bitcoin’s case, the dominant chain also takes the $122 billion USD market cap — and that’s why it’s getting so much attention. Also like elections, there’s plenty at stake and emotions run high — and they often don’t settle the issue permanently.
When Bitcoin hard-forked in August 2017, it created a new coin called “Bitcoin Cash” (BCH or BCC). Though the “minority” chain, it’s still worth $634 USD today. Users who understood the issue, and knew what they were doing, literally scored free money.
There’s a chance something similar will happen after November 16th, when Bitcoin forks to choose between “SegWit2x” (S2X) and staying as-is. We can’t predict which will win or what happens to the other side. But this guide will put you in the best position to protect your existing coins (and maybe even score something for free).
So here goes…
*We’re only counting the scaling-related hard forks here. Other so-called “hard forks”, such as the one to create Bitcoin Gold, are considered outsider projects that merely copy Bitcoin’s code, and not fundamental ideological decisions like the forks related to segregated witness (SegWit) and block size.
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Image via Bitsonline and the Blockchain Institute of Technology