The Difference Between a Bitcoin Hard Fork and a new Altcoin

With the upcoming Bitcoin hard fork on August 1, a lot of questions are arising regarding its nature. Why does Bitcoin Cash have to be a variant of the main Bitcoin chain and not just be its own altcoin?

Let us discuss what differentiates a hard fork from an altcoin.

WHAT IS A HARD FORK

A hard fork is a permanent divergence from a cryptocurrency's main block chain. This usually occurs when a party is opposed to changes being implemented by the other. On rare occasions, it also occurs when the main chain is comprised and a new chain is created to restore stability. This was the case when Ethereum hard forked during the DAO hack.

WHAT IS AN ALTCOIN

An altcoin is any other cryptocurrency that is not bitcoin. It's pretty much a catch basin for everything other than Bitcoin

WHAT DIFFERENTIATES THEM

The main distinguishing factor is that in a hard fork, you will receive the same number of tokens as you own on the main chain from a specific point in time called a snapshot. In Bitcoins' upcoming hard fork for example, if you have 500 Bitcoins at the time the snapshot was taken, you will receive 500 Bitcoin cash when it goes live on the 1st of August.

A HARD FORK CAN EVENTUALLY BECOME THE MAIN CHAIN

This can be summed up in the old ship paradox. You take one piece at a time off a ship and replace it with another until all parts are replaced. The replaced parts are used to create an identical ship. The question now arises, which is the original ship? Is it the new one with the old parts or the old ship with the new parts?

This happened during the Ethereum hard fork. Majority of the users and miners went over to the new chain and it was recognized as the official Ethereum. The former main chain became the hard fork and came to be known as Ethereum Classic.

DIFFERENT PARTIES MAY CONSIDER A HARD FORK AS AN ALTCOIN

This is where a lot of confusion arises and the reason why it is generally advisable to keep your cryptocurrencies on wallets where you hold your private keys. Some exchanges view Bitcoin cash as just another altcoin and not as a hardfork. In other words if your Bitcoin is in one of these exchanges, you won't receive the equivalent Bitcoin Cash.

Here is a list of wallets and exchanges that will not support Bitcoin Cash as a hard fork:

GDAX
COINBASE
POLONIEX
ITBIT
BITMEX
EXODUS
BITSTAMP

Here is a list of wallets and exchanges that will support Bitcoin Cash as a hard fork:

BITTREX
BITFINEX
KRAKEN
TREZOR
LEDGER

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Keep in mind however that even if your Bitcoin is on a wallet that does not support Bitcoin Cash, as long as you own the private keys, you can export them to a Bitcoin Cash client and you will receive your coins.