Bitcoin Cash (BCH) Hard-Fork — Complete Guide — Bitcoin Cash ABC Vs. Bitcoin Cash SV
Below is a complete guide to the upcoming Bitcoin Cash (BCH) hard-fork prepared by XBT.net. Discover which exchanges support the fork and how to claim your new coins.
The fourth biggest cryptocurrency by market capitalization, Bitcoin Cash (BCH), is going to see a ‘split’ in its currency, referred to as a hard-fork, on Wednesday, November 15th.
The community of developers behind BCH separated into two opposing camps. On one side, Bitcoin ABC, strongly advocated by the well-known BCH evangelist, Roger Ver, and on the other side, Bitcoin SV (Satoshi Vision), promoted by the self-proclaimed Satoshi Nakamoto, Craig Wright.
What is a hard-fork?
A hard-fork is an event that splits the blockchain into two chains with the same history, which means that all assets stored on the network are duplicated to the new chain. Forking happens often in cryptocurrencies as every upgrade that developers want to implement into the system has to happen through it.
The new, upgraded blockchain continues to serve as the successor of the original, while the one with the old set of rules stops being supported.
However, if developers do not reach a consensus about the upgrade, they may decide to part ways, and a hard-fork splits the main chain into two new chains with the same history, who both continue to be operable and supported.
Such is the case with the upcoming Bitcoin Cash hard-fork.
How to claim your new coins?
OPTION 1 — cryptocurrency exchange (easy way)
The easiest way to claim both cryptocurrencies that will come out of the fork is to keep you Bitcoin Cash (BCH) on an exchange that will support both chains after the fork.
Although you won’t be in full control of your funds (no private keys) while your assets sit on the exchange, this method is ideal for non-technical users. This way, all technicalities are dealt with by the exchange who employ sophisticated engineers who know what they are doing.
At press time, a good number of top exchanges have announced the support for the hard-fork, some in different ways than others:
- Coinbase – supporting fork
- Binance – supporting fork
- OKEx – supporting fork
- BitForex – supporting fork
- Huobi – supporting fork
- Bitfinex – supporting fork – pre-fork chain split trading enabled
- Bittrex – supporting fork
- Poloniex – supporting fork – pre-fork chain split trading enabled
- Upbit – Haven’t specified if both chains will be supported
All users entrusting their coins to exchanges supporting both Bitcoin ABC and Bitcoin SV chains can, after the exchange provides them with new assets, transfer them into their private wallet. Note that you can only withdraw the new asset (Bitcoin SV) to wallets that add support for it.
OPTION 2 — Using wallet (technical way)
If your funds are being held in a ‘private’ wallet (you control private keys) prior to the hard-fork, you can claim both versions of the coin through the new wallet released by the forked chain’s development team.
Ledger Nano S
Top hardware wallet providers have also announced their policies regarding the Bitcoin Cash fork. Ledger stated that they will suspend all BCH transactions and wait to see which of the chains becomes technically and economically stable before resuming the service.
Trezor announced that their system runs Bitcoin ABC nodes, but if the other side emerges to be the dominant one after the fork, they will reevaluate their position.
However, while claiming their assets themselves, users have to be aware of the replay attack risk.
The replay protection
Since the replay protection hasn’t been implemented by any opposing side in the Bitcoin Cash hard-fork, users are in danger of being hit by a replay attack.
What is a replay attack?
A replay attack is when a transaction from one chain is ‘replayed’ onto the newly forked chain by a malicious actor. Say you have 10 Bitcoin ABC at the time of the fork, you will have an equivalent amount of Bitcoin SV.
Now if you send 5 Bitcoin ABC to your friend Bob, Bob can use the same transaction information to maliciously send himself 5 Bitcoin SV. However, you can take certain steps to protect yourself against such an attack.
To protect yourself, you will want to send your Bitcoin ABC after the fork has occurred to a new Bitcoin ABC address you control before claiming your new coins. This way, the address in question at the time of the fork will only ‘contain’ Bitcoin SV and your Bitcoin ABC are no longer at risk.
To take an extra precaution, users are strongly adviced not to make transactions a few days before and after the hard-fork snapshot takes place to ensure the network is stable.
BCH price surge prior to fork
Since it became obvious that this hard-fork will not be consensual, investors rushed in to buy BCH to be able to claim both assets.
Therefore, as can be seen in the BCH/USDT chart below, the price of Bitcoin Cash surged from $425 to $647 in 5 days, recording over 50% gain for traders who took their positions in time.
Next few days were marked by the retracement of more than 20% from the recent peak. However, today we have witnessed a new rally of 8% that got erased rather quickly as the markets turned red.
It will be interesting to see where the price of BCH (or of its derivatives) will go after Wednesday, and which of the forks will prevail as the legitimate successor of Bitcoin Cash in the eyes of the community.