Hardfork Mania

lacriptoguia (25)in #bitcoin • 8 years ago (edited)

First was ICO mania, now in 2017 we have Fork mania. Both were good opportunities to make some money but both include some level of risks. It's a hard fork really free-money? and how to take advantage of this?

What is a Hardfork?

Forks are common events in Blockchain technology. The chain it is supposed to be a line of blocks, but there are some cases where branches or forks appears, there are a few types of forks:

Temporary forks.

When two or more miners finds a solutions at almost the same time a fork can appear. In this case different groups of nodes can be working at the same time with different versions of the Blockchain. But at some point the nodes will realize that there are two versions of the chain, the solution in this case is to take as valid the longest chain, and if both have the same size, then take as valid the first one. The blocks of the other chain will be discarded and the orphans transactions will return to pending line. That's why a bitcoin transaction usually take up to six confirmations to be consider as irreversible. This is the mechanism used to avoid double spending.

Permanent forks.

Another type of fork is when some nodes update the software to a version that creates new blocks in a different format that may or not be compatible with previous ones, while other part of the network keeps using the old version of the sofware.

There are two kinds of permanent forks:

Hardforks.

A hardfork occurs when one part of the networks uses a software that creates new blocks incompatible with previous ones.

Softforks

It is also possible that the new software generates changes in the block format but keeping a backward compatibility, in this cases different parts of the network can run different software versions while keeping only one chain.

Bitcoin Cash vs Segwit

There is no doubt that Bitcoin is the most powerful and popular cryptocurrency of the market. It is also the most secure due the fact that is the one with the longest chain and the strongest support of the community, miners and companies.

In August. 2017, was implemented a new version of the software: SegWit, which corrected some vulnerabilities and the block information was optimized. In parallel occurred a hard fork because some part of the community decided to create a new version of the software that solved the problem of slow transactions changing the size of a block from 1MB to 8MB., that produced a twin chain called "Bitcoin Cash" (BCH).

Besides the conflicts in the community, BCH was an opportunity to have "free coins". At the moment of the fork the Bitcoin holders receive the same ammount of coins in both versions og the chain, doubling the quantity of Bitcoins between Bitcoin Alpha and Bitcoin Beta. Right now the price of BCH is $557 and BTC is $7128, so if you had BTC at the moment of the fork and decide to change them now, you will receive 8% of free money in Bitcoin.

How to claim your Bitcoin Cash?

If you haven't claimed your BCH yet and you have access to your private keys, you can use BTC.com to create a new wallet from your private key and claim your free BCH. Then you can transfer them to an exchange or keep them as you will.

If you had your BTC in an exchange that supports BCH then you will see your BCH balance in your wallet, otherwise you need to contact support to check the status of your Bitcoin Cash.

Bitcoin Gold

Bitcoin Gold looks like a Donald Trump parody with their slogan: "Make Bitcoin Decentralized Again".

Bitcoin Gold or BTG promises to change the encryption algorithm of Bitcoin to Equihash, which will allow mining in regular computers with srong GPUs (Graphic Cards). That will make BTG ASIC resistant which means that having a specialized equipment for mining will make no difference when competing for mining.

The BTG hard forks happened in block #491407, on October 24. Bitcoin Gold is still on development phase, but some exchanges are operating BTG internally. In this way if you had BTC before October 24, you can claim your BTG if you had your Bitcoins there, some of this exchanges are:

HitBTC
Binance
YoBit
Bleutrade
BitStar
Bitfinex

If you have your private keys, then you will be able to claim your BTG when the team finishes development and they activated the wallets for that.

For more information visit Bitcoin Gold official site: https://bitcoingold.org/

As always in the cryptocurrency world, you need to be very careful when giving your privates keys to someone, so remember to always use official sites.

Core vs Segwit2x and the quest for the Bitcoin name.

Despite the controversy, both BCH and BTG has been friendly forks comparing to the next fork between Bitcoin Segwit2x vs Bitcoin Core. This fork will happen sometime in the middle of november.

This fork, politics apart, can be seen as a fight between core developers of Bitcoin and miners and companies that signed the New York Agreement (NYA).

Both sides claim the legacy of Satoshi Nakamoto and both says that the other part is at the service of dark and selfish interests. But even if you decide to keep an agnostic position in this fork the truth is that your money can be at risk either way. For a fork to be successful it needs Replay Protection which is something that at this point none of the sides have implemented yet.

What is "Replay Protection"?

When the chain is divided in two, the transactions that are valid in one chain can be valid in the other, so the developers needs to create a solution for that to protect the users from loosing their coins in the other chain without their authorization.

The best advice in this case is to wait a little after the fork and check the news about the results and the hashing power in both sides. But there are already a few exchanges that shown support for SegWit2x and will honor the Bitcoins in both chains, for a list of the position for main exchanges visit:

https://blog.coinigy.com/2017/10/comprehensive-list-of-exchange-segwit2x-stances/