With the Bitcoin Cash (BCH) fork complete and its blockchain slowly trying to get started, trading has already begun on a couple of exchanges, most notably Kraken and ViaBTC.
If you have been keeping up with current events, you may also know that if you possessed Bitcoin prior to the BCH fork you will now own Bitcoin Cash (BCH) at a 1:1 ratio to any Bitcoin you held. If you did not know or have not been keeping up, well congratulations you too also have some Bitcoin Cash!
This of course assumes you have access to the private keys that contain the BTC, such as in your own wallet that you control. If you have your funds on an exchange they control the keys to your exchange wallet (which is actually their wallet they just let you deposit coins in it) you will need to inquire with them as to if they will be supporting Bitcoin Cash or not. I know as of this writing Kraken has credited all users that held a pre-fork BTC balance with an equal amount of BCH, and those users can currently trade between the two pairs.
So now you may be wondering how you can claim your newfound Bitcoin Cash (BCH) bounty if you had BTC stored in a wallet you control. There were prior indications that coin splitters may be made available, or that some exchanges would credit BTC and BCH for any pre-fork BTC deposited with them, but this is yet to materialize and may never happen. So in this post I will go over the basic steps currently needed to separate your Bitcoin Cash (BCH) from your Bitcoin (BTC).
One quick note before we begin, you may have noticed I am using BCH for the Bitcoin Cash ticker symbol. While the Bitcoin Cash community wanted to use BCC and recommended that ticker, since it was already in use by another cryptocurrency, Bitconnect Coin, many exchanges have been using BCH instead. Kraken is one of the exchanges currently using the BCH notation for the trading symbol, and since that is one of the few exchanges trading Bitcoin Cash currently, I will follow their lead and begin referring to Bitcoin Cash using the BCH ticker for short.
I will not recommend any specific wallets here as there is always the possibility that a wallet could contain malicious code. This is probably more true with any new BCH wallets, as it is still brand new and not enough testing or code review has been performed yet compared to more established clients.
Desktop Wallets linked from the Bitcoin.org website are shown in the image above. These may, or may not, be safer than other wallets you may find, again please do your own due diligence as I am just providing information. You can also use a hardware wallet for any of these steps, although you may need to consult the hardware wallet manufactures website for details on how to perform this.
But with that said, I would definitely recommend only downloading wallets that are linked by the respective coin website(s) over one you may find elsewhere.
For Bitcoin the official* website is: https://bitcoin.org
For Bitcoin Cash the official website is: https://bitcoincash.org
*Note that while Bitcoin.com is a site with Bitcoin related information, it is not the official site. Both coins have .org address for their official websites, so double check the URL before you download anything. Also never follow links, manually type the address in to be extra safe.
Basic steps to split your coins BTC and BCH coins
- Launch your current wallet and let it completely sync with the network. This helps to ensure any outstanding transactions are all accounted for.
- Backup your wallet private keys. You can do this by either using a GUI client or finding the Bitcoin data directory (typically C:\Users\<your user name>\AppData\Roaming\Bitcoin) and coping the wallet.dat file itself to someplace safe. You may want to give the backup file a descriptive name to avoid confusion later on, i.e. Pre-BCH_Fork_Backup.dat or something similar.
- Transfer (send) all your Bitcoin (BTC) to a new wallet with a new private key (don’t just make a new address). This could even be to an exchange wallet as a temporary means if you trust the exchange. If you have many coins you might want to transfer them to a few different wallets just to spread out the risk. Note that the since the Bitcoin Cash (BCH) network has implemented replay protection you can move your Bitcoin without affecting your ability to access your BCH in the following steps.
- Wait until your Bitcoin transaction is fully confirmed in the new wallet (or on the blockchain). Normally 6 confirmations are enough on the BTC network, but it doesn’t hurt to wait for more (i.e. 15). Bitcoin.org is currently recommending waiting for 30 confirmations due to the fork. Be sure to complete all of the steps above (1-4) before moving on to the next step.
- Install a Bitcoin Cash (BCH) wallet and enter the private keys of the original wallet (you can use the backup you made in Step 2). You can do this by installing the BCH wallet client and shutting it down when it start to sync to the network. Then copy the file you made above to the BCH data directory and rename it to wallet.dat. Note that this will overwrite the existing wallet.dat file but since it is a new wallet it doesn’t have any coins associated to it anyway. To ensure the most secure method for protecting your BTC, the new BCH wallet should be installed on a different machine than the one that has your new Bitcoin wallet on it. In fact, to offer the utmost security, the old computer that had the original wallet should be wiped and everything installed fresh before using it again. If you plan to sell your BCH right away you could simply install it on your original Bitcoin wallet machine at this point (assuming you transferred your BTC to a wallet on a different machine), transfer the BCH out and then wipe the machine.
- Relaunch the Bitcoin Cash wallet client and you should now see your Bitcoin Cash amounts corresponding to the same amount of Bitcoin you had prior to you sending it away in Step 3.
- This step is optional, but if you plan to hold on to your BCH you may want to move all of your BCH to a new BCH wallet with a new private key. This helps to prevent the private key from being compromised since it was previously used with your BTC wallet, it also may help to avoid accidentally sending future coins to the wrong address.
While these steps may seems complicated, the process is actually simple when we break it down.
- Your key(s) now contain both BTC and BCH, you need to separate these to spend them.
- You need to move your BTC to a new key on the BTC chain using a BTC wallet (or exchange).
- You then re-use the old key (that still has the BCH on it) with a newly installed BCH wallet to gain access to them.
- You need to move your BCH to a new key on the BCH chain using a new BCH wallet (or exchange).
- Now that they are separated and each coin associated to new keys, you can delete your old wallet to avoid security concerns.
- For the most security, wipe your old machine completely and install a new wallet from the official website(s). Transfer your coins to a new address (key) on the new wallet. For a lot of coins it would be recommended to use two different machines.
I should note that you can also substitute hardware wallet (i.e. Trezor or Ledger Nano) for any of the steps above that reference a machine or wallet, as these act as a self contained wallet. To key takeaway is you want to get your old and new coins associated with brand new keys on their respective chains. I would avoid mobile or web based wallets though, not that they wouldn’t work, but I feel they are less secure. Again, I cannot stress this enough, you need to choose the wallet and platform you are most comfortable with and trust, after all it is your money, not mine or anyone else’s.
Also be sure you keep a copy of the original wallet backup you made above in case you would accidental reuse one of your original BTC addresses in the future. While you technically could go back to using those old address (keys), the best practice (and my recommendation) is not to and just move everything to new wallets, with new keys that have been freshly generated, to avoid potential problems later on.