August 1st is almost upon us and the great Bitcoin “hard fork” is about to confuse the heck out of the casual cryptocurrency observer. Here’s what you should know.
Quite simply, if you are using an exchange that is explicitly in support of the Bitcoin Cash or you control your own private keys then you are fine. If you are keeping your bitcoin on an exchange, like Coinbase, that does not support Bitcoin Cash, then you should transfer your bitcoin immediately unless you don’t want to deal in Bitcoin Cash.
Bitcoin Cash is an slowly rolling upgrade to the current Bitcoin network that should make things move far more quickly on the network. What’s happening tomorrow is the implementation of Bitcoin Improvement Proposal (BIP) 91 or BIP 91, a move that will put Bitcoin on the path to support SegWit2x, an improved method for managing transactions. In theory all holders of Bitcoin will receive the same amount of Bitcoin Cash tomorrow.
Isn’t this kind of goofy? Sure, but that’s how changes are introduced into this technology, creating a so-called “hard fork.” This is less than ideal in the buttoned up world of finance but seemingly just fine for cryptospeculators.
How much will Bitcoin Cash be worth?
“Bitcoin proper will be basically unaffected by the creation of the new cryptocurrency, and all holders of Bitcoin will get equivalent funds in Bitcoin Cash on the day of the fork,” wrote David Morris on Fortune. “A futures market for Bitcoin Cash has already emerged, and currently values it at around 13% of Bitcoin’s price. That means that when the split happens, something like $6 billion in new market value will be created from thin air.”
“Thin air” is a prospect that would excite some of us and worry others. Regardless, it’s happening.
You need to host your own wallet.
I am using a Trezor hardware wallet and Electrum to hold the minimal amount of BTC for which I’m responsible. Your results may vary and I don’t actively endorse either of these products. The cynic in me doesn’t trust any tool or exchange.
The following shows how to create and send your BTC to an Electrum wallet on your computer. Keep track of your seed, friends. Please be careful. Send tests before you send your full amount.
Name Your Wallet
Pick your type. I recommend Standard.
Create a new seed
REMEMBER THIS SEED. DO NOT STORE IT DIGITALLY.
TYPE IN THE SEED AGAIN. DID YOU STORE IT IN EVERNOTE? BAD IDEA.
Enter a difficult password.
Find your Receive address and send your BTC there.
You should be. This shows a healthy respect for a technology whose hallmarks are transparent obfuscation and active campaigns of Fear, Uncertainty, and Doubt (FUD). If you’ve put your life savings into Bitcoin then I hope you’ve been following this far more closely than a single post the day before the fork. If you own one or two please move your Bitcoins to a local wallet and wait it out.
Featured Image: Bryce Durbin