Over the past couple of weeks, you might have seen news on an impending hard fork of Bitcoin Cash. You are probably asking what is a hard fork. Well not to worry you are not the only one and you are asking the right question.
We will start by simplifying what a hard fork is, how they are different from soft forks and what they mean for you.
What is a fork?
It will first help to understand that the blockchain is a system that allows multiple parties to verify and agree that a certain transaction or event has occurred, hence based on consensus. The transactions are bundled in a block and linked together to form a chain which give us the blockchain. A fork occurs when a blockchain splits in two due to:
- Discovery of the blocks at the same time thus resulting in two possible ways the chain can continue. The decider would be the next block that would be discovered because the block it would be linked to would now form the longest chain and other people would add to the longest chain.
- Change in the rules by developers of the codebase. This is the one that has the most impact and gets the most attention. This results in a permanent change of the codebase and it could be to add a new feature, improve in functionality, righting a wrong, or changing a core rule.
There are two types of forks that either of the above could result in;
It happens when the upgraded software is able to work with an old version. Think of it like your Microsoft word document, a document produced with an MS Word 2006 can still be open on MS Word 2018. The same in context, the old software would still be compatible with the newly upgraded software, it might, however, suffer from reduced functionality, then you are incentivized to upgrade to the latest version.
When this happens, the new resulting blockchain isn’t compatible with older versions of the software, rendering older blocks invalid. This is the case for the impending Bitcoin Cash fork. This would result in a new chain and new coins. Those who refuse to update their software are excluded from the system and cannot verify transactions. (Note: the participants we refer to are miners whose role is to validate/verify transactions on the blockchain). This usually arises when the developers of the system do not agree on a change to the system then they decide to go their separate ways and hope the best chain wins. You can read all about the different factions and opinions here.
Most cryptocurrencies are open source projects and as an open source project, anyone can go to their Github and create a fork of the currency. It is, however, one thing to fork a coin, it is a totally different thing to get other participants to join you in your adventure. That is where the problem usually lies.
What does the hard fork mean to you?
That depends, do you hold Bitcoin Cash (BCH)? If no, there is an easy answer: nothing. You can carry on winning. However, if you do hold Bitcoin Cash, it could mean free coins from the new chains. To participate in the bounty, you need to be sure your exchange or wallet supports the fork. More on how to get your free coins here.
At Quidax we will be sitting out the hard fork. Eventually one of the new chains would be dominant which we will support. If you would like to get all hard forked coins we would advise you move your BCH to a wallet that supports the fork. We would be suspending all BCH deposits and withdrawals from 6 am CET on 15/11/2018. Please ensure all deposits and withdrawals are finalised ahead of that time. During the hard fork, your BCH would be held securely, once the hard fork is complete and the network is secure we would resume deposits and withdrawal.