Survival School: How to Avoid Bitcoin Losses During Bitcoin Gold and SegWit2x Hard Forks

Over the next 30 days, Bitcoin will have to survive two hard forks. On October 25, Bitcoin Gold (Bgold) will separate from Bitcoin and create a new cryptocurrency that can be mined on graphics processing units (GPUs). A few weeks after that, a large group of companies wants to hard fork in accordance with the SegWit2x plan defined in the New York Agreement (NYA), which may lead to the emergence of another cryptocurrency.

If everything goes as described above, then in less than a month there will be three independent blockchains and three different coins.. One blockchain will adhere to the current Bitcoin protocol (BTC, or B1X). The second blockchain will follow the Bgold (BTG) protocol. The third blockchain is the SegWit2x protocol (B2X or BTC).

Despite the fairly widespread (and irresponsible in the current balance of power) opinion that these hard forks are essentially the same, there is a huge difference between them, and the situation after the second one can develop unpredictably.. SegWit2x was conceived not as the creation of an altcoin, but as an update to the Bitcoin protocol, so when the hard fork is activated, not just a split of blockchains will occur, but a “battle for true Bitcoin” will begin, the winner of which is not at all predetermined.

On the side of SegWit2x – a significant superiority in hashrate (now about 85%) and the largest infrastructure companies (BitPay, Coinbase, Blockchain.com, Xapo, BTCC and others). On the side of Bitcoin Core – a generally recognized development team, the largest number of “full” network nodes, part of the business and approximately 15% of the hashrate power of today's network. Private users will have to decide on their own which wallet to use and which of the two resulting blockchains to consider real Bitcoin.. The winner in this confrontation may not be determined immediately.

The good news is that the private keys that give access to the current BTC will be valid on all three blockchains.. Therefore, if the private keys to your bitcoins are held by you at the time of the fork, then you will be able to claim your BTC, BTG and B2X (B1X) in all networks. The bad news, however, is that hard forks can be confusing and risky.. If you are not careful, you can lose all your coins at once.

This article has collected the basic steps that will allow you to protect your funds during the upcoming hard forks and ensure that you have BTC, BTG, and B2X (B1X) at your disposal by the end of next month.

What to do before the fork

First of all, keep in mind that forking a network can be quite risky.. Especially in the case of such a controversial hard fork as SegWit2x. Although nothing is clear at the moment, some drama could break out any day that could lead to a sharp drop in the price of the cryptocurrency.. If you don't want to be caught in the crossfire, then make sure that you keep the amount of funds in bitcoin that you are theoretically ready to part with.. If it is extremely important for you to keep them at any cost, transfer the part you need to fiat currencies and ride out the storm in them. However, be prepared for the fact that you will have to bite your elbows, losing the opportunity to earn on hard forks. Yes, this is also possible.

If you want to save your bitcoins and get the first “bonus” – get ready for October 25 – the day the alternative cryptocurrency BTG will appear. Each owner of BTC will receive the same amount of BTG.

If you store your bitcoins on an exchange or any other platform that also stores your private keys, then you should not hope that you will be able to get your BTG, B2X (B1X) and even BTC with a 100% guarantee. No one can be sure what will happen during or after each of the hard forks, and especially the second.

If you want to continue to store your coins on such sites, at least make sure that the particular service you have chosen has issued an official statement regarding their policies during hard forks. If you did not find information in open sources, try contacting the representatives of the site.

However, the best thing you can do to gain unlimited access to your BTC, BTG and B2X (B1X) is to store your private keys yourself.. Then you won't have to be at the mercy of any third party.

If you currently store your bitcoins on any platform, you should withdraw them from there to your own wallet. What type of wallet to use is up to you. But for this specific purpose, it is worth using a service that allows you to quickly get direct access to your keys.. Although in general any wallet that allows you to store your private keys will do.. With all this in mind, here are some basic solutions:

• If you are not going to do anything with your BTC, BTG or B2X (B1X) anytime soon and just want to keep it as a long-term investment, then a paper wallet is fine for that.. However, it is worth noting that this method can only be considered safe if you strictly follow the precautions described here.

• The security of conventional wallets depends on the security of your computer or phone. Since most phones and computers are quite vulnerable, these wallets should not be used to store large amounts.

• Full node wallets like Bitcoin Core or Bitcoin Knots will be the most trusted choice. However, these types of wallets are more resource intensive compared to most other wallets.

• Another option is to purchase a hardware wallet. However, it is a bit more difficult to get direct access to your keys through such wallets.. In addition, it is not entirely clear whether these wallets will allow access to BTG.. With regard to B2X (B1X), few of them have yet given guarantees. While hardware wallets will securely store your private keys, getting all three coins can be quite an interesting quest in the future.

Whatever you choose – make sure you have a copy of the private keys. Many wallets offer to create it during the installation process. Don't skip this step.

After the Bitcoin Gold fork and before the SegWit2x fork

Sometimes a fork of Bitcoin Gold is called a “friendly fork”. Mainly because it has no intention of claiming to be the “real Bitcoin” and also because of plans to implement full replay protection.. This means you won't accidentally send your BTG when you were going to transfer BTC (and vice versa). So even after you have spent your BTC, you can still access your BTG.

Remember that you can take your time to access your BTG. You should not try to do this before a week, as this will become possible if you are not going to sell them immediately. The most conservative option is to ignore this fork until the SegWit2x fork occurs.. Then you will have to go through the process of getting new coins only once, not twice.. However, this requires strong nerves, since the rates of all cryptocurrencies at least until the end of November will be more volatile than usual.

After the SegWit2x fork

Unfortunately, with the second fork, things can be much more complicated.. First, SegWit2x proponents see it as an upgrade to the Bitcoin network itself.. Accordingly, they are not going to give the new network a new name.. Some of them plan to name or list the new coin as Bitcoin and BTC.. They can also refer to the existing BTC as “B1X” or something else.

Of course, each coin will have its own exchange rate.. Since different exchanges will call “BTC” different coins, the exchange rate may change accordingly depending on the site.. Therefore, you should not buy or sell any coins named “BTC” unless you are one hundred percent sure what kind of cryptocurrency it is.

In addition, the SegWit2x hard fork will take place without full replay protection (because, as stated above, this will be a “battle for the true Bitcoin”). This means that after the fork, BTC and B2X (B1X) transactions will look identical and will be valid on both blockchains.. The SegWit2x client (BTC1) is planned to have “voluntary” anti-duplication protection, and the node owner can apply it at his discretion.

So if you spend your coins on the BTC blockchain, it could result in you accidentally spending an “equivalent” amount of B2X (B1X) on another blockchain. It turns out that BTC and B2X (B1X) are inseparable until the final winner in this dispute is determined.

In order not to risk, you should not spend your coins immediately after the SegWit2x fork. First you need to “separate” them, as described below.

Some light (or mobile) wallets will display whichever blockchain has more hash power. This means that the balance displayed in them can refer to both BTC and B2X (B1X) – it will be impossible to distinguish between them.

For your own safety, do not accept any payments through light wallets, because you can receive B2X (B1X) instead of BTC, or vice versa. At the very least, you should make sure that you know for sure what currency your wallet balance is displayed in.

The Electrum and GreenAddress wallet developer servers run on Bitcoin Core, so it doesn't matter to them which network has more hash power (chain length by complexity). If you use wallets on a full node, such as Bitcoin Core or Bitcoin Knots, then there will be no contradictions in them either – they can only work with one blockchain.

Depending on the hash power of each network, transaction confirmation time may vary (on the Bitcoin Core blockchain, it will be slower than usual) and fees may increase. In addition to the block mining speed, this will depend on the number and activity of users in each network.. If we recall the situation after the Bitcoin Cash hard fork on August 1, then a long lull is likely, so there will be no block congestion.

Get your coins

If all three chains survive and you control your private keys, you should be able to access both your BTC, BTG, and B2X (B1X) around mid-November. It should be easy enough to get BTG, given that some wallets will support the new coin.. Most likely, you will just need to enter your private keys (or their passphrase) into such a wallet.

However, this process comes with some security and privacy risks.. It is not yet possible to say exactly what they will be, since it is not clear which wallets will support BTG (there is no certainty at all that such wallets will exist, except for the wallet from the developers themselves). But in general, you should first move your BTC to a new wallet before trying to get BTG.

Getting and using your B2X (B1X) and BTC securely can be somewhat tricky, mainly because there is a risk of replay. For this to be possible, it is necessary that B2X (B1X) and BTC be separated from each other.

Some wallets can split the coins for you, but it is not yet clear which ones will be able to do this.. In addition, exchanges will most likely start offering coin splitting services and take care of all the complexities for you.. You will only need to send your BTC or B2X (B1X) to the exchange, and the service will credit your account with both BTC and B2X (B1X). There may be other solutions for separating coins. By mid-November, wallets with support for both blockchains may already appear.. Most likely, you will need to update your wallet, or download a new one.

It must be remembered that both Bitcoin Core, BTG Full Wallet, and BTC1 most likely use an almost identical codebase.. This means that when installed on the same OS (especially Windows), they may conflict with each other, up to mutual overwriting of data, which can lead to malfunctions and even loss of keys.. Therefore, all three wallets must be installed on different computers or virtual machines. When using similar “light” wallets, conflicts are much less likely, but still possible.

Results

Let's summarize how to secure your bitcoins during both hard forks:

1. Before October 25th, make sure you have full control over your private keys. It is advisable to store them offline or in a Bitcoin Core wallet (or other “full” client), which independently checks incoming blocks and transactions.

2. If you want to sell BTG immediately, after the Bitcoin Gold hard fork, transfer your bitcoins in the original blockchain to a new wallet (not to another address in the same wallet).

3. Upload the private keys from your old wallet to a secure Bitcoin Gold wallet (preferably from the development team) and transfer BTG to wherever you want. For complete security, it must be installed on another computer or in a virtual machine in order to avoid various errors.

4. Keep holding the private keys for the new bitcoin wallet until the SegWit2x hard fork in mid-November.

5. Immediately after the SegWit2x hard fork, avoid any transactions with your coins, as well as buying or selling “BTC” on exchanges or exchanges, regardless of which of the blockchains you (or the owners of the service) consider “real bitcoin”.

6. When the situation clears up – first of all, you should wait for official messages from developers, platforms and services – and transactions begin to take place without significant delays (this may take several days, and possibly more), transfer bitcoins again in the Bitcoin Core blockchain to a new wallet .

7. Upload private keys from previous wallet to SegWit2x wallet. For complete security, it is also desirable to install it on another computer or virtual machine.

Now you can independently manage coins on all three blockchains, if there are still three of them.