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Bitcoin Hard Forks: How Do I Prepare?

In the coming weeks, there are two new hard forks for Bitcoin in the planning. On October 25, Bitcoin Gold will divide Bitcoin to create a new currency. A few weeks later, a large group of Bitcoin users plan to implement a heavy fork with SegWit2X. This plan is also known as the "New York Agreement". It is likely that a new currency will be created by the beginning of November.

In short, Bitcoin will probably be split into:

  • Bitcoin
  • Bitcoin Cash
  • Bitcoin Gold
  • Bitcoin SegWit2X

HOW DO I GET MY BITCOIN GOLD AND BITCOIN SEGWIT2X?

During a hard fork, all private keys and associated coins are copied to the new blockchain. This means that when you own your private key, you will have the same amount of coins on both the old and the new blockchain.

A hardware wallet, such as the Ledger Nano S / Blue, TREZOR, or KeepKey, is a kind of storage medium dedicated to private keys. Therefore, when using a hardware wallet for storing your coins, you always own your own private key. In cases of a hard fork, this private key will also be included in the new blockchain, which will always entitle you to those new coins.

Even if Ledger, TREZOR, or KeepKey do not directly support a new currency in their software, you will always be able to claim your new coins. To do so, just load your private key into a wallet that offers support for the new coins. It is very important to think carefully about the security of your private key. For example, when you enter your Bitcoin private key on your computer, it no longer enjoys the protection that a hardware wallet can offer. It may be necessary to create a new wallet on your hardware wallet. When you have multiple coins on your hardware wallet, this can cause some troublesome situations, so think carefully before you begin this process and consider whether each step can potentially compromise the security of your coins. In addition, save your old private keys when creating a new wallet. If you've overlooked something, it's always useful to have access to your old wallet.

Ledger / TREZOR / KeepKey

Recently, Bitcoin Cash has been created with a hard fork. For this hard fork, all three wallets - TREZOR, Ledger and KeepKey have released tools to easily access the new currency.

Customers often ask us whether you can access Bitcoin Gold in a similar way with your Ledger / TREZOR / KeepKey. In this case, the manufacturers have not yet issued an official [Update - Statements have been released - see bottom of this post] notice on this subject. However, as explained earlier, without official support, it will still be possible to claim the new currency.


REPLAY ATTACK

One key thing to be aware of is that you could be vulnerable to a replay attack with hard forks. In a replay attack, a transaction from one blockchain can be copied to another. This is because you sign both transactions using the same private key. For example, if you send 10 BTC to the original Bitcoin blockchain, someone else could copy your transaction to the new blockchain and run the same transaction of 10 coins on the new blockchain.

With replay protection, such a problem could be solved. The makers of Bitcoin Gold announced that there would be replay protection, but at the moment it has not yet been implemented in code. Bitcoin Cash and Bitcoin SegWit2x also have no protection for this type of attack. To avoid it, you will need to split your coins first. Many wallets can do this automatically for you, for example, the Ledger Bitcoin wallet. Pay attention: Do not trust any services that offer to divide your coins. It's a scam!

IN SUMMARY

  1. Make sure you are always in possession of your private keys. If you have your Bitcoin on a Ledger, TREZOR, or KeepKey hardware wallet, you're good.
  2. Take additional precautions when buying, selling or transferring Bitcoin during the period when a hard fork will take place. Many exchanges also temporarily stop trading during the hard fork.
  3. If you want to claim your Bitcoin Gold or SegWit2X manually in another wallet, first make sure you split your coins. This prevents a replay attack. Do not rely on services that offer to do this for you.
  4. Be cautious when loading your private key onto third-party software. Remember that this may affect the security of the coins on your hardware wallet. If necessary, create a new wallet for your coins instead. Always keep your old private keys.

UPDATE 25/10/2017

Information about Bitcoin Gold is still very limited. The lack of replay protection is seen by several parties as a problem.

Ledger has a document that is constantly being updated. You can find this one here .

Trezor has also issued a statement on Bitcoin Gold. This message can be found here .

KeepKey’s information can be found here.