Even though miners are agreeing to the BIP91 proposal, otherwise known as SegWit2x, Bitmain backed mining firm ViaBTC (based in Beijing) and a few other players intend to go ahead with introducing a fork in the Bitcoin network on August 1st anyway. This fork, known as Bitcoin Cash, will mean that after August 1st, 2017 there will likely be two versions of the Bitcoin blockchain and two separate digital currencies.
So what is Bitcoin Cash (BCC)?
The two biggest changes that differ from Bitcoin include:
- Increased block size to 8 MB.
- It removes SegWit completely (which is the code change that is part of the BIP91 and BIP141 proposals that miners are already signaling).
So at 12:20 PM UTC (8:20 AM EST) on August 1st, the group supporting BCC plans to split off from the Bitcoin chain, creating a new cryptocurrency in the process called Bitcoin Cash (BCC). The end result of this split will be that two separate digital currencies, Bitcoin (BTC) and Bitcoin Cash (BCC) , will co-exist.
You can watch a Bitcoin Cash Hardfork countdown clock here.
Update: Here is an interesting Reddit post explaining why while the fork is set to activate at 12:20 PM UTC, the first BCC block may take up to an hour after that time to actually be mined.
The fork block is the first block connected to a block with MTP of 2017 Aug 1 12:20 UTC.
MTP is the median timestamp of the 11 blocks leading up to and including that prior block.
It’s likely, but assured, that the fork block will happen later than 12:20 wall clock time, because MTP generally lags the wall clock by an hour or so.
Reorgs are also possible.
How does it affect me?
What all this means to you is that if you own 1 Bitcoin now (pre-split), after the split on August 1st you will own 1 Bitcoin (BTC) and 1 Bitcoin Cash (BCC) token.
However, there is a small catch. In order to guarantee you will have access to your coins on both chains, you will need to control the private key of the address that holds your Bitcoin.
The following quote is Coinbase’s stance on the upcoming split:
Customers who wish to access both bitcoin (BTC) and bitcoin cash (BCC) need to withdraw bitcoin stored on GDAX before 11.59 pm PT July 31, 2017. If you do not wish to access bitcoin cash (BCC) then no action is required.
Basically, if all your coins are on an exchange, or somewhere else that you do not have access to the private key(s) that controls the coins, you will be at the mercy of whoever does own the key as to what the end result will be. Some exchanges, such as Coinbase (above), have already stated they do not intend to support BCC, and others such as Poloniex have took a more wait and see approach.
There is a recent bit of history to guide us, and that was with the Ethereum (ETH) chain-split after the DAO hack. While the initial indications (pre-split) were that the chain that would later become known as ETC would soon die off, instead exchanges such as Poloniex agreed to split coins for users and also started to offer them for trade on its platform. Thus very quickly there were two valid and competing chains as a result. Other exchanges such as Coinbase who initially were not going to even bother with ETC, were forced to reconsider after community pressure and the rising value of the ETC tokens.
While this is not guarantee of what will happen with the BTC and BCC split, myself I think a similar pattern of events will happen. How this effects Bitcoin value is anyone’s guess and thus why the volatility of BTC right now.
My best guess is that afterwards, each token will have some value with the combined net equal to roughly what BTC is worth now. So for instance say Bitcoin was valued at roughly $2500 pre-split, afterwards it may be worth $2200 and a BTC token worth $300. While this is clearly just an example to get my point across, as the value of a single Bitcoin can and has traded for hundreds of dollars over the course of a day, there is no way to give it a static value. So even in my example, if that was the case moments after the split, Bitcoin (BTC) could very well end the day at $2500 with BCC ending anywhere from $100 to $500.
In case you think the example is unrealistic, consider that in the futures market BCC is currently trading around $450, meaning it’s worth nearly 18% of bitcoin’s current price ($2,560). I think after the split both coins will stabilize and start establishing their own directions, much the same as ETH and ETC did after that split.
Getting back to what you should do pre-split, my advice would be to transfer any Bitcoin you have off any exchange(s) until it becomes clear how all this will work out.
Now some people plan to take advantage of the situation and want their coins available for trading on that day, so this advice really isn’t for them, but if you really have no idea about all this and just want to protect the value of your coins, then move them off to a wallet where you control the private key now.
Do not wait until the last minute as the Bitcoin network is already congested and your transaction could get delayed.
Theymos, the administrator of the forum Bitcointalk, has put together a post detailing handling the split. In his guide he lists Bitcoin wallets that you have control over the private key, including the Bitcoin Core wallet which is a full-node and requires a lot of hard drive space. Other examples from his list include:
|Electrum||Bitcoin Core||Ledger||Green Address|
|Copay||Bitcoin Knots||Digital Bitbox|
|Bitcoin Wallet for Android||mSIGNA||KeepKey|
|Simple Bitcoin Wallet||Bither|
After the split?
A lot is still uncertain as of right now, but after the split some exchanges have indicated they will make available a way to split the coins for you. Presumably if you send them pre-split coins they will credit your account with equal amounts of both types.
As was the case with the Ethereum split, once it is sorted out there will be instructions posted in various venues on how to split your coins. I will myself follow-up with a post explaining the various options once it becomes more clear.
In the meantime, if you have any significant amount of Bitcoin and you want to ensure you have access to your coins on both chains after the split, please start looking into moving your coins into one of the wallets listed above.
Note, I didn’t provide any links as there have been too many cases in the news of link redirects or website hacking for you to trust any link (even from here) with your money.
Search for the wallet you are interested in Google or another search engine and then confirm that the site you end up on is the legitimate one.
Do this by making sure you DO NOT click on any advertised results returned from your search, and that the link listed is for the main site itself. Also try to pick the root level of the site, and not save time by going into a direct download link. You can easily navigate to the wallet download section once on the legitimate site, which is a lot easier to confirm if the URL is short and clear, such as: https://bitcoin.org.
Once at the site, it will begin with a HTTPS and depending on your browser should have a green lock or some other methods of validating it is secure and the certificates pass. If you see any messages to the contrary or if you get a certificate warning, it would be best to try another site/wallet that is not having these issues.
To be even extra safe, you can simply look at the URL of the google results and type it in yourself. For example, the Desktop based Bitcoin Core wallet is found at the https://bitcoin.org website. Note also that in this example that the correct website is .org and not .com or .net.