Segwit vs. Bitcoin Unlimited and Bitcoin’s Fork Explained Simply

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There’s been a lot of talk in the Bitcoin community lately about stuff like a “fork”, “segwit” and “Bitcoin Unlimited”. Many people don’t understand what all of this is about but it’s creating a lot of stress due to misleading or partial information that is being spread.

In this post I will aim to clarify the uncertainty and give a better view of what’s going on mainly for newbies and non technical people. Hopefully, once you finish reading this post you will know what’s going on in the Bitcoin community these days and will be able to better prepare yourself for the different outcomes.

 

long post

A short disclaimer before I begin – I’m not a technical person and I have little technical background. The information I bring here today is what I’ve managed to collect after weeks of research from around the web. I may sometimes oversimplify technical issues in order to easily explain them.

I believe there are only a handful of people who understand this issue and its technical aspects completely. If you do find a mistake in this post I encourage you to let me know in the comment section below and I will look into it. Let’s begin…

What the hell is a fork?

A fork is a technical word used by developers working on open source projects. It basically means a  “software update”. Every time you update a program on your phone or computer you have forked from the older version.

Bitcoin has introduced two new fork concepts:

1. Hard fork – A mandatory software update that conflicts with the older version. Your program won’t run if you don’t update it. An example can be finding a critical bug that allows people to exploit the software therefor everyone is required to update their program in order to continue using it.

If you don’t update – you can’t use the program. Also, there is no way to reverse a hard fork once created in case some unexpected bugs or issues comes along. If that’s the case you’ll just have to do yet another hard fork and revert back to the old version. (source)

2. Soft fork – A software update that doesn’t conflict with the existing software, isn’t mandatory and allows the network to adjust to the new features implemented on the go. While a soft fork is in place even computers running the old program will still be able to use the program.

After a while when most of the computers running the program have updated to the new software a hard fork is implemented for the remaining minority if needed. If the soft fork doesn’t work out, has bugs or people don’t adopt it – it’s completely reversible and you can go back to the older version. (source)

Most programs you use today are controlled by a single entity. So whenever they want to “fork” from their original program they issue an update in the form of a soft fork. For example, when Apple issues an update to iTunes – you probably won’t have to update, but it’s advised that you do. After a certain period of time however you won’t be able to continue to use iTunes if you haven’t updated it.

Bitcoin on the other hand is decentalized and has no central authority. That’s why when you have some controversial issue that requires an update, like we will discuss shortly, people can argue on how the update should be carried out. As long as Bitcoin users don’t reach a wide consensus on what’s the right way to go, no update (or fork) will occur.

What’s this Block size debate everyone is talking about?

Transactions in the Bitcoin network are added to the Blockchain via blocks. Each block holds a finite number of transactions. Let’s say a block can be only 1mb (1,000,000 byes) in size, and the average transaction is 500 bytes, then on average each block will be able to hold ~2000 transactions.

This can create an issue since blocks are created on average every 10 minutes. This means that in one hour you’ll confirm an average of 12,000 transactions. If you compare this to credit card companies that confirm 2,000 every second then you can understand why the Bitcoin network is considered to be slow on confirmations.

It’s important to note though – that if a credit card transaction goes through there are still 6 months in which that transaction can be reversed while in Bitcoin, once a transaction is confirmed 6 times (takes an hour on average) it is irreversible.

Whether or not Bitcoin should process more transactions in a given period of time isn’t the question here – everybody wants that. The question is how to go about that. Two camps have formed around this issue with two different solutions:

Camp A (aka Bitcoin Core) –  Wants to keep the 1mb Block size limit. They propose to optimize the code in a way that will make transactions smaller and use other various techniques in order to increase Bitcoin transaction volume through the use of a soft fork.

The main solution proposed by this camp is called “Segregated Witness” or Segwit in short. It’s an upgrade that fixes a lot of Bitcoin bugs and also opens the opportunity for future scaling via the lightning network (which I won’t go into in this post). Here’s a short video we made about Segwit a while ago – however it only focuses on lowering the transaction size and not on many other important issues Segwit solves:

 

Camp B (Bitcoin Unlimited) – Wants bigger blocks. They propose to increase the block size limit to whatever is needed (initially 2mb) in order to expedite confirmations on the network. However, if you decide to increase the block size to more than 1mb you are causing a hard fork by definition (since you are changing Bitcoin’s rules).

This means that if you you need to get everybody who want to continue to use Bitcoin to update their software  – and as you can tell from the number of “update-required apps” you have on your phone – that doesn’t always happen.

To sum things up:

Segwit Pros

  • Fixes an important issue called Malleability bug in the Bitcoin protocol
  • Shrinks transaction size in way that is equals to having a 2-3mb block size
  • Additional security and efficiency gains for the Bitcoin protocol
  • Initiates through a soft fork

Segwit Cons

  • Not a long term solution (eventually we will need bigger blocks)

Bitcoin Unlimited Pros

  • Increases the capacity of Bitcoin transactions
  • Long term solution – the block size in basically unlimited

Bitcoin Unlimited Cons

  • Requires a hard fork = irreversible
  • Puts more control into the hands of miners (who get the decide on the block size)
  • Small development team with questionable track record
  • Hasn’t been tested yet

Source

Even though I’ll try to state the facts as objectively as possible you may notice that it seems as if Segwit has the upper hand. I’ll address that personally in the end of this post but in the meantime if any Bitcoin Unlimited supporters feel that anything that’s written here doesn’t reflect the truth please let me know.

It’s also important to note that this debate is not new and it has been going on in the Bitcoin community almost since its inception. Even Satoshi referred to it in his previous writings on the Bitcointalk forum in 2010.

Segwit is represented by the Bitcoin Core team – the team that has been in charge of maintaining and updating Bitcoin’s protocol since it began. This team consists of 25 full time developers and over 100 contributors, it is partially funded by a company called Blockstream. Of course this team has changed over time and some of the early developers have even left the team due to this debate and other issues (e.g. Mike Hearn and Gavin Andresen).

Bitcoin Unlimited is represented by Roger Ver. Roger is an early Bitcoin investor and has been said to have around 300,000 Bitcoins (this has never been confirmed). He invested in companies such as Blockchain.info, Bitpay, Kraken and more.

What will the community choose – Segwit or Bitcoin Unlimited?

That’s a very good question. It’s so good that we can’t really answer it because the community is split in half. Some think we should go with Bitcoin Core’s Segwit (BTC) and others with Bitcoin Unlimited (BTU). But while no decision is made Bitcoin blocks are running out of capacity and today you have to wait hours and sometimes days for your transaction to get confirmed.

Another “side effect” is that transaction fees are getting higher and higher since people are willing to pay more to get their transactions confirmed faster. This is causing less people to adopt or use Bitcoin on a daily basis, and that’s something that is needed in order to get Bitcoin to become mainstream.

Even though the debate has been going on for several years now, it seems that for the first time we have reached a boiling point. Bitcoin unlimited has gained notable support and might just say “we’re activating Bitcoin Unlimited and creating our own version of the Blockchain” and that is what everyone is afraid of (the dreaded fork).

In order to better understand how and when this fork will happen I want to first address the different players we have in the Bitcoin ecosystem:

Miners – The people who operate expensive computers that confirm Bitcoin transactions. Without them no transaction would ever be inserted into the Blockchain (i.e. no blocks would be mined). When changing the Bitcoin protocol the developers usually wait for 95% of the miners  to reach an agreement on protocol changes and only then the changes are put into effect. At the moment Segwit and Bitcoin Unlimited are both far away from that milestone.

miner support

As you can see, at the time of writing 37.2% of miners are supporting (aka signalling) Bitcoin unlimited and 31.2% are supporting Segwit.

If these 37.2% that support Bitcoin Unlimited suddenly decide to start mining Bitcoin unlimited blocks a hard fork will occur and two Blockchains will now be available – the Bitcoin Core blockchain (BTC) and the Bitcoin Unlimited blockchain (BTU).

Wallets, exchanges and full nodes – Miners are only validating transactions that nodes on the network create. When I say nodes, I mean computers running fully independent Bitcoin wallets that are sending, receiving and broadcasting Bitcoin transactions.

These nodes belong to Bitcoin wallets, exchanges and individuals who want to independently verify and broadcast their Bitcoins without any reliance on a 3rd party. While the miners confirm transactions, nodes create transactions – so one can’t live without the other.

18 Major exchanges have signed a document stating that they will label Bitcoin Unlimited as BTU and Bitcoin Core as BTC or XBT if a fork happens. The two coins will be treated separately but I think the most interesting part of the one page document is this:

However, none of the undersigned can list BTU unless we can run both chains independently without incident. Consequently, we insist that the Bitcoin Unlimited community (or any other consensus breaking implementation) build in strong two-way  replay protection. Failure to do so will impede our ability to preserve BTU for customers and will either delay or outright preclude the listing of BTU.
So this gives Bitcoin Core at least the technical advantage initially (I will discuss the replay attack that is quoted above shortly).

Today 82.84% of the nodes on the network are Bitcoin Core nodes, out of these nodes 71.11% support Segwit. On the other hand only 11.17% of the nodes support Bitcoin Unlimited.

node support

Nodes decide for themselves what software to run regardless of miners. So theoretically there could be a situation where a majority of the miners start mining Bitcoin Unlimited but a majority of the nodes continue to use BTC. If this were to happen for example an exchange (i.e. node) that runs only BTC will not accept coins created from the alternate chain.

On the other hand, if a large percentage of miners drop out of the network, the difficulty to mine BTC will increase dramatically as a lot of miners have suddenly disappeared. This will create even slower confirmation times and higher fees until the mining difficulty adjusts.

Every 2016 blocks that are mined the protocol adjusts the difficulty so that blocks will be mined every 10 minutes on average. This means that in time the network will revert to the “normal” 10 minute block time but it can take weeks or even months to achieve that.

To sum things up – at the current status quo a fork is really bad for Bitcoin and will create a lot of confusion.

If a fork occurs, what will happen to:

My Bitcoins

Depending on where you hold your Bitcoins one out of three things can happen:

  1. All of your Bitcoins will become BTC only
  2. All of your Bitcoin will become BTU only
  3. You will have doubled your coins and get an equal amount of BTC and BTU

The reason I can’t say for sure what will happen to your specific coins is because it depends on which wallet you hold them on. If you don’t hold the private keys to your wallet and allow some other wallet to hold your keys for you – you are basically letting them choose what will happen with your coins.

For example, Coinbase recently announced that they will only support BTC initially. On the other hand Breadwallet declared that they will continue to connect to the chain that is the most popular amongst miners. You will not see your balance on the less-popular chain, and your bitcoin balance as shown in the breadwallet app will not change. TREZOR announced that they will show both BTC and BTU.

Every wallet has a different policy, if you want to make sure you have both BTC and BTU available you should keep your coins in a local wallet that allows you control over the private keys. I will elaborate a bit more on this later.

Exchanges are similar to wallets in the sense that you don’t have control over your private keys – so it’s probably best to get your money out of the exchange if you don’t need it for day to day trading.

Replay attack

One thing worth mentioning although I won’t go into it in detail is something called a “reply attack”. In case a fork does occur and you get both BTC and BTU a hacker can use information from one of your coins to steal the other.

For example – You have 4 Bitcoins, you hold them in an independent wallet, the fork occurs and now you have 4 BTC and 4 BTU.  You decide to sell you BTC, but then discover that your BTU is also gone. This can be the result of a reply attack. The way to avoid it is to:

  1. Make sure the wallet you are using has implemented replay attack counter measures
  2. Don’t spend any Bitcoins until you’ve verified point #1

Bitcoin’s Price

Assuming Bitcoin forks and splits into two coins, BTC and BTU, then the price of each of these coins will probably be worth a lot less than the current price. How low can it go? Nobody knows. But imagine that you’ve just doubled the supply of Bitcoins everyone has.

One assumption is that a lot of people will start selling the coins that they don’t support, which will in turn drive the price down. Roger Ver for example, agreed to trade up to 130K BTUs for BTCs from an anonymous Bitcointalk user.

To sum it up, no one really knows what the price will be after a fork for BTC or BTU but there seems to be an overall agreement that the price will drop substantially (at least at first).

Altcoins

Another question everyone is asking is what will happen to the price of Altcoins like Ethereum, Dash or Monero if a fork occurs. Some people think it’s better to get their money out of Bitcoin and into an altcoin that doesn’t pose all of this drama and potential risk.

I’m sorry to disappoint you, but I don’t think I can answer that question. In the past few weeks altcoins have been gaining a lot of traction as the option of forking Bitcoin seems realer than ever, but that’s not to say they will continue to rise and that they are properly valued at the moment.

Aahhhhh I’m confused! What should I do with my coins?

No matter who you support (BTC or BTU) you should make sure your coins are on a self hosted wallet (one that you control the private keys to). Examples of such wallets are Electrum and Exodus.

If you have a substantial amount of Bitcoins use TREZOR or Ledger for maximum security. This way if a fork does happen you will own both currencies and won’t need to succumb to any exchange or wallet desires.

Now that your Bitcoins are safe here are you options:

  1. Do nothing – If you believe that the fork isn’t going to happen or that in the long run things will straighten themselves out through market forces you can just ride out the storm. Once the dust settles you’ll still have all of your coins (assuming you moved them to a self hosted wallet).
  2. Convert your Bitcoins into altcoins – If you don’t want to be part of the drama but still need to use cryptocurrencies you can convert your Bitcoins into reputable altcoin like Ethereum, Monero or Litecoin.
  3. Sell all of your Bitcoins – If you are holding an amount in Bitcoin that you can not afford to risk at any cost perhaps it would be best to sell all of them right now and not take any part in this. Once the drama is over you’ll be able to buy Bitcoins again. However, no one really knows when the drama will end or what will be the price when that happens.

Personally I’m going for option #1. This is my own opinion and please do not take it as investment advice, form your own opinion by educating yourself. I am making sure to get all of Bitcoins out of wallets like Coinbase and even Blockchain.info (which Roger Ver is one of their investors) and I’m storing them on several hardware wallets.

I don’t think a fork will happen, but if it will I will just hold on to both coins until I see who the market decides is the winner. Personally, after watching hours of debates and reading numerous articles on the matter I’m in favor of Segwit.

Why?

Because it seems to me their team has more experience, their solution is less risky and mainly because I don’t think we need to solve ALL of Bitcoin’s future issues at the moment. Bitcoin Unlimited is stating that it is a long term solution, however we don’t really know what Bitcoin will become yet,

Bitcoin is still in its early stages. We need to allow it to grow but not decide on its future just yet. I see it very similar to Facebook in the way it was allowed to evolve and not limit itself to just a social network for students.

The ugly side of the fork

Now that you know about the technical aspects of the fork, Segwit and Bitcoin Unlimited it’s time to touch upon the political aspects of it. The whole issue is pretty ugly and both sides carry some of the blame in my opinion.

The dark side of Bitcoin Core:

The Bitcoin Community knowledge center is mainly its subreddit (r/bitcoin) and the Bitcointalk forum. Since both of these sites are run by moderators who do not agree with the block size increase solution, they have started moderating threads discussing any such option.

Thus you can see posts and comments being regularly deleted under the claim that a coin that uses bigger blocks isn’t the “real” Bitcoin and should be considered as an altcoin. Since these sites don’t discuss altcoins the post is deleted.

This has enraged many users (and myself) since it doesn’t go hand in hand with the censorship resistance Bitcoin represents. You can read more about the heavy moderation and its implications here. This was also the cause for the creation or r/btc – a subreddit created by Bitcoin Unlimited supporters what opposes censorship.

It’s important to state that even though Bitcoin Core or Blockstream are not directly related to these sites they have not publicly denounced this forced censorship as well.

The dark side of Bitcoin Unlimited:

Bitcoin Unlimited is spearheaded by Roger Ver. Even though I believe Roger’s main cause for wanting an increase in the block size is to “save Bitcoin”, his persona is questionable. I mean, if more transactions per block is so important to you why not just approve Segwit to begin with and then we can discuss increasing the block size.

Seems to me that the issue is more political than technical.

Roger owns Bitcoin.com – a very strategic domain name (not to be confused with Bitcoin.org the official Bitcoin site). On his website which is heavily promoted online (trust me, I’m a marketer) he promotes his own agenda. Of course this is completely his right since it’s his site – however it’s a bit annoying that he is masking this agenda under Bitcoin’s name.

Another example is that roger is funding out of his own pocket a mining pool for Bitcoin Unlimited. Miners who join that pool don’t have to pay mining fees (usually around 2.5%) from their profits and they get an additional 10% on their earnings.

If you go through Roger’s bio you’ll notice he is a business man and he is heavily invested in Bitcoin. It just seems that he is using a lot of his money to try and change public opinion by marketing and financial incentives instead of actually creating a good product.

To conclude this part – both side aren’t playing nice. In my opinion you need to separate the chaff form the wheat, and all of the slander and accusation are just chaff.

Conclusion – What can you do?

Nothing. We’re just going to have to see how this plays out.

However, if you would like to influence the outcome – Get involved. Use the information you’ve learned here and from other resources online to educate others and form an opinion. Make sure to voice that opinion on social channels like Reddit, Facebook, Google +, local meetups and any place you think is relevant.

That’s the best any of us can do for now.

If you’ve found any mistakes or want to ask any more questions about this subject feel free to leave them in the comment section below. In the meantime here are some good videos for you to learn more about the subject.

And don’t forgot to move your coins to a local wallet!!




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Ofir Beigel

Owner at 99 Coins ltd.
Blogger and owner of 99Bitcoins. I've been dealing with Bitcoin since the beginning of 2013 and it taught me a lesson in finance that I couldn't get anywhere else on the planet. I'm not a techie, I don't understand "Hashes" and "Protocols", I designed this website with people like myself in mind. My expertise is online marketing and I've dedicated a large portion of 99Bitcoins to Bitcoin marketing.

70 Comments

    • Ofir Beigel on

      Hey Mario, you can use Bitcoin Core, Electrum or any hardware wallet to store your Bitcoins. I personally use a hardware wallet.

  1. It is still unclear to me when these forks are going to happen. I have both wallets, Bitcoin Core and Bitcoin Unlimited on my computer, so I am prepared for the split to happen. Any money coming in shows up on both wallets.
    I expect the $ value of Bitcoin to be at its lowest shortly before the split, so I plan to move some money from altcoins into bitcoin when its value is at its lowest. Question is: when is this going to happen if indeed it does. Bitcoin value has recovered at the moment and s again above $1100.

    • Zsofia - 99Bitcoins support on

      Hi Marc, thanks for the feedback. No one knows when will exactly the fork happen, but you are on the best track having coins in both wallets, so you are well prepared for the event.

  2. Ofir,

    Great post – thanks for taking the time to write it up!

    One nit / correction – a fork in software development isn’t simply a new version number. It comes when there’s an impasse in the future direction of a piece of open software. A fork is when developers take a copy of the open software and start modifying it independently, usually without a consensus of the community or the original creator, in order to “improve” the product or to take it in a new direction. In this case, “fork” can be used interchangeably with “split” or “schism”. It implies a difference of opinion from the original creator(s).

    Here’s the wiki definition: https://en.wikipedia.org/wiki/Fork_(software_development)

    • Ofir Beigel on

      Thanks for clearing that up. I was actually looking for some sort of an analogy that non technical people can relate to as well. I think that’s the best example I’ve found.

    • Ofir Beigel on

      Xapo is a 3rd party wallet where you do not control the private keys. I don’t recommend using it.

  3. Valentin Filchev on

    I think you mistake.Miners just mining blocks and broadcast and validate for first time transactions but nodes validate second and many time this transactions.

    • Ofir Beigel on

      Hey Valentin, I’m sure not I understand what you’re saying. You are right, miners only validate blocks once and nodes continuously verify transactions, but what is this different than what is written?

      • Valentin Filchev on

        Problem is the node of pool or single miner ho catch the block verify transactions so not not miners verify transactions and nodes verify transactions.If miner ho catch the block have BU node he broadcast BU transactions – if this transactions is not compatible with rest of network they will be rejected.

  4. OFIR – Thanks for sharing information about bitcoin fork. What I want that my coins should be safe and I should get both BTC and BTU in case of hard fork.

    I am worried about my coins stored at blockchain.info. I have asked blockchain support that will I get both BTC & BTU after hard fork. I got reply “At this time Blockchain.info has no official stance on this debate. With that said you always have 100% control over your funds and private keys. Your wallet recovery phrase is compatible with any other BIP39/BIP44 wallet. So in essence no matter what happens you have control of these funds and can import them into any other wallet that our mnemonic/seed is compatible with.”
    Now I am confused. Where should I keep my coins so that it should be secure and I can get both BTC & BTU in case of hard fork. Can I use blockchain.info’s wallet recovery phrase/backup to get both coins. If yes then how ?
    Is Electrum wallet is safe and good alternative ? Or Core Bitcoin wallet is safe ?

    Poloniex will provide equal BTU only if new fork must include built-in replay protection : https://poloniex.com/press-releases/2017.03.17-Hard-Fork/
    I am not sure it safe to keep funds at Poloniex, what is your view ?

    • Ofir Beigel on

      Hey Vijay, thanks for sharing this it’s very interesting. If Blockchain.info is correct then you shouldn’t have an issue if you leave the coins there. Personally I prefer moving the coins to a different wallet. Both Electrum and Bitcoin Core are good enough but Bitcoin Core will take a lot of space of your machine (it downloads all of the blockchain).
      However, after reading what you wrote I believe that you can also leave the coins on Blockchain.info.

  5. Thank you very much Ofir for your super great article that answered most of my questions (I have ) of hard fork. Now I can see the clearer imange of what and how if the hard fork would have accured. I have stored some of my BTC in blockchain info. So now I have the idea of what to do next. Thanks alot. Phanida

  6. Okay, so right now i know what to do.
    First , is to convert my BTC to Ethereum , wait for the exchange to skyrocket , then convert again to BTC or BTU.

    Thanks Ofir for the infos.

  7. Do You have a post on personal hardware wallet where I control my keys (w/e that means), I want to learn more.
    Also that this kind of wallet freezes my bitcoins and not allowing them to rise as price go up?
    Thanks, great article, it’s a lot more clear for me now. I’m just not sure If I should just leave my coins in blockchain.info or move them somewhere else.

    Thank you again !

    • Ofir Beigel on

      Hi, thanks so much for the great feedback :)
      you can read the TREZOR review here and the Ledger Review here. Both of them are good wallets for this scenario.
      Also, this wallet doesn’t “freeze” your Bitcoins – their value continuer to rise even as they are inside the wallet. Personally I am not leaving a lot of my coins on Blockchain.info.

    • Ofir Beigel on

      That’s correct but it will take time to make the difficulty adjustment, and depending on how many miners leave it can take longer.

  8. Exchanging my Bitcoin to other encurrency like payza and pm money will it not be a good idea to preserve by money or Bitcoin?. Thanks for the information

    • Ofir Beigel on

      You can exchange your Bitcoins to whatever you want but then you won’t have Bitcoins so I don’t understand the question. Can you please clarify?

  9. Great article for us newbies and novices. I’m a lot more clear on this.

    I hold my bitcoin in a software wallet where I control the private keys. If the hardfork occurs and it’s a one for one event, how and where does my BTU wallet ‘magically’ show up with the BTU coins?

    • Ofir Beigel on

      That depends on your wallet. It may be available on your wallet or you may need to transfer your Bitcoins into another wallet that has BTU. However you will be able to claim them if you own the keys.

  10. thanks ofir beigel, for that wonderful information,but i want ask a question is luno a local wallet and is it good to keep btc with ?, because they have there office in my country or should i convert my btc to my currency which i think it more safer,what did you think?.

    • Ofir Beigel on

      Hi,
      local means that it’s on your computer and not on someone else’s computer – it doesn’t have anything to do with a physical location. I haven’t used Luno but from a quick look it doesn’t seem to be a local wallet. Seems like they keep your Bitcoins for you, which is something you don’t want to do in case of a fork.
      Regarding what to do with your Bitcoins – it’s your call, I can only give you what I think are the possible scenarios.

    • Hello Iyanda. I am assuming that you are in Nigeria. I also use Luno and its not a local wallet. What you might consider which is the option I also intend to choose is to invest in a hardware wallet as an offline option to store Bitcoin. Only put the Bitcoin you need to trade with online. Converting to local currency may reduce the value and also cost you via exchanges. Thank you Ofir. Very informative article.

  11. Great article Ofir,

    I have a question though. In the event that the chain forks and I get 2 BTU in addition to the 2 BTC I currently own, wouldn´t I then just have doubled my money, and be able to spend them independently? Or basically exchange both 2 BTC and 2 BTU for dollars on an exchange that sees them as two coins?
    Or is it so that once I “touch” either coin the other is gone, and I have to stick to the one i chose?

    Hope you can elaborate a little on this point.

    Thanks
    John

    • Ofir Beigel on

      You doubled your money and so did everyone else – that’s why the price will probably go down by at least half.
      So 1 Bitcoin today = 1 BTC + 1 BTU after the fork (of course this is just a theory and the price may be different).

  12. HI, First of all i have to say thank’s for the article and great jobs ^_^.
    I have two question and i would very happy if you are going to answer to me :
    1 – about Fork : why Segwit didn’t start activate or they wait also to get 50% of vote
    2 – about wallet : I personally use coinbase wallet, it’s safe from replay attack? and about “several hardware wallets” i would to learn more if it’s possible.
    #supportSegwit

    • Ofir Beigel on

      Hey, great questions.
      Segwit is also waiting for a majority of the miners to signal they are willing to accept it (i.e. 95%).
      Coinbase at the moment says they will not support BTU at all – only BTC. So you’re safe from an attack but you won’t have any BTUs, only BTCs.
      I don’t recommend leaving your coins at Coinbase.

  13. Thanks for the article Ofir. It has made things a lot clearer.
    However, can you just confirm one thing… :
    If I have my coins in a self-hosted wallet and a fork happens, will I get an equal amount of BTC and BTU still, or does that only happen if they are in an exchange wallet?

    • Ofir Beigel on

      It depends on the wallet. But as long as it’s self hosted you will be able to redeem both coins at any exchange even if you don’t see it on the wallet itself.

      • Hi Ofir, your blog is very helpful.

        I have a question about when you mention “If you don’t hold the private keys to your wallet and allow some other wallet to hold your keys for you – you are basically letting them choose what will happen with your coins.” Private keys as in the wallet file? I use Bitcoin Core wallet and don’t know about private keys but I do know where the wallet file is stored. Is the wallet file the important element? I’m assuming that if there becomes a BTU wallet program then I’d simply replace the automatically generated BTU wallet file with a copy of my BTC wallet file.

        • Ofir Beigel on

          Yes- the wallet.dat file is the important element. Bitcoin core is a good wallet to keep your Bitcoins on in case of a fork.
          I don’t think replacing the file would work, I don’t really know technically how Bitcoin Unlimited will do it but probably they will explain once a fork happens (if it happens) how to claim your BTU.

  14. Hi Ofir,

    Thank you for this great article,
    I am wondering about the impact on price, you said erlier that the price will drop as the supply will be doubled.
    What do you think about the following readings ?
    If a fork occurs it will result in two cryptocurrencies (regardless their names) operating in two separated blokchains, which means a reduction of the amount in circulation, thus increase in price ?

    Regards

    • Ofir Beigel on

      I think it’s wrong – how is this a reduction of the amount in circulation ?
      Let’s say before the fork we have 16m Bitcoins.
      After the fork we have 16m BTC and 16m BTU – I don’t see any reduction.

  15. I have mostly ethereum with Coinbase, and practically all my bitcoins are with Havelock Investments and Bitconnect. I would prefer to leave them there, but I would like to at least be reasonably sure that doing that would be wise. I have high security on my accounts with both Havelock and Bitcoin.

    • Ofir Beigel on

      Hey Andrea,
      I’m not familiar with Havelock investments and Bitconnet. I would still advise moving your coins to a self hosted wallet and not letting someone else hold them for you.

  16. robert manni on

    oh shit,,,you are right, this is a lenghty bit of information , which i did understant up to a point. now i am lost but i do enjoy the information. i am just retarted here. however i did take into account on a purchase of a hard wallet and bought two nanoS es…. thank.
    robrert..

  17. It’s a little misleading to call a fork an update. A fork is something that happens all the time in free (as in speech), open source software. It’s more like a different team takes the existing source code and alters it in a way that radically changes it from its previous iteration. Sometimes this happens when a project is seemingly abandoned by the original team, in which case it is an update for all intents and purposes, but this is not one of those cases. When you say its an update, that implies that the original team is implementing it.
    That being said, you do a good job explaining this in the body of the article, but the way you worded it in the introduction might be a little confusing to some people.
    On the other hand, I completely agree with you 100% to ride it out, and that BTC is the way to go. I have a feeling that most companies currently accepting Bitcoin will take a long time to migrate to BTU, though they might have to eventually.
    If everyone panics and sells their Bitcoin, the price drop will be far worse than just the fork itself. Unfortunately, history shows that this is how people behave when markets are uncertain, but that is why I don’t bet more than I can afford to lose :-)
    Also, I’m not technically knowledgeable enough to know this, but perhaps another commenter is: would it be possible to increase the speed of confirming transactions by means other than increasing the block size, like more efficient threading?

    • Ofir Beigel on

      Thanks for this added explanation Nick, I appreciate it.
      I think the Lightning Network will allow near instant transactions by conducting a lot of transactions off the blockchain and then only transmitting them when needed. But I also am not well versed in all the details.

  18. Thanks for the explanations.

    The pro and cons are subjective and up for debate.

    But one thing is wrong:
    A hard fork with bigger blocks could be changed at a later point back to 1MB without any problems.
    In contrast a SegWit soft fork could not be reversed so easily.

  19. Hi Ofir, I too have been trying to read more into this Seg Wit vs. Increased blocksize/ BU vs Core debate and this is probably one of if not the best apolitical take on the debate I have seen. Good job on the breakdown.

    Did have a question, you mentioned checking on making sure your wallet is safe, how can we do that exactly? I use Mycelium, is that vulnerable to a replay attack?

  20. Thanks for this clear article.
    What happens if current bitcoins are lent on an exchange?
    Theoretically the borrower will own a BTC and BTU after the fork, so he should pay back rightfully both coins to the lender as it happens for lent stocks where dividens are detached.
    However I read, during the ETH fork last year, that some exchanges just considered that the borrower had to pay back the forked ether and not classic ether which created, to my consideration, an asymmetry in the loan.
    What is your opinion on this topic?
    Thanks

  21. Hi Ofir,

    I programmed your article to share on Twitter for tomorrow. So many articles on this topic lately.

    BU vs Segwit Fight!

    I prefer Segwit personnaly, at least with BU we should be able to buy a coffee at Starbuck ;)

    Boker Tov

    • Ofir Beigel on

      Roger Ver is one of the investors of Blockchain.info so I’m not sure which route they will take. Personally I would move the coins to a different wallet.

  22. Wondering why you did not include DASH in your list of coins to move BTC to until the dust settles. Thanks!

  23. Lew Kontnik on

    Ofir–thanks for your thorough (and I think unbiased) summary of the issues. I am a newbee with minor BTC holdings. I am also organizing a local (FL) seminar with a few collaborators on BitCoin/Blockchain for real novices. I will definitely refer attendees to your article.

  24. What about if I simply leave my money converted in USD at Coinbase or any other exchanger?
    I will exchange again in BTC/BTU/ETH or whatever when all this will play out.

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