It is quite likely that there will be a coin-split in a bitcoin market. The blockchain and the network may split into two if a large number of miners shift to Bitcoin Unlimited and take a decision to mine bigger blocks that are more than one megabyte, whereas, a few users keep on using the current protocol of Bitcoins.
If the split happens, there will be two kinds of Bitcoin tokens that are as follows:
BTC – These tokens follow the current bitcoin protocol
BTU – These tokens, however, will be following the protocol of new lead, i.e., Bitcoin Unlimited.
But there is good news; every bitcoin in the blockchain will be copied onto the chain of Bitcoin Unlimited. The reason behind it is that both BTCs and BTUs would initially be stuck together. You will have to separate them one way or the other, or else, there are chances that you may end up losing either BTCs or BTUs.
Therefore, you must learn to secure your position during the coin-split and safely move to the other side without losing your BTCs and BTUs. The situation before and after the split has been discussed in detail below.
Situation Before the Split – The Current Scenario
You have to be prepared for a coin-split, because this situation is highly risky. There is quite probable that a cyber-battle may be initiated between BTC and BTU as a result of this split, which can cause the bitcoin exchange rate to decline sharply down to zero. Therefore, the first thing you need to do is to be sure that you are not holding more than you are willing to lose. In case you wish to keep your money invested in the market, it is very important that you exercise control over your investment before it is too late and you end up losing your money.
Create Your Own Wallet
If your bitcoins are stored in a custodian wallet, such as Xapo, Circle, or Coinbase, it is possible that you may not instantly receive coins on either side of the chain. Although, a number of exchanges have said that you might, there is no certainty or guarantee that you would. There is one exchange, i.e., GDAX, that has explicitly stated that you might not be able to do so.
If you have signed up for any of these services, you must create a new wallet where you can transfer your bitcoin. This wallet will now keep your private keys. You can print private keys on a paper wallet if you are planning to keep BTC and BTU as long term investments or you can get a hardware wallet as it will ensure the security of your private keys.
Situation After the Split
You will be able to secure the coins on both sides of the chains if both the BTC and BTU chains survive and you secure control of the private keys.However, it is going to be difficult to use coins on one side of the fork without accidentally using the same amount of coins on the other side. But you can avoid it by mining brand new coins right after the coin-split occurs as new coins cannot exist in both the chains. Therefore, when you will combine new with old ones, it will successfully separate both BTC and BTU.
Moreover, some exchanges would also offer coin-splitting services to its clients and make it easier for them to split the BTCs and BTU. Furthermore, after the coin-split, it is quite likely that there will be wallets for both coins and you might be required to upgrade your current wallet and download a new wallet.
In years to come, if you plan to use the funds in your paper wallet, do remember that it consists of both BTC and BTU. For now, it is not yet fully clear what the future will look like, but it is highly likely that you will have plenty of options to secure your coins when it happens.
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