Bitcoin Q&A: What Happens to our Bitcoins During a Hard Fork?

[AUDIENCE] Andreas, the question
from my side would be: During the hard fork, what do we do with our bitcoins?
Where and how [do we] store it? [ANDREAS] Okay. During the hard fork, what do you do with your bitcoins? Where and how do you store it? How many people here are familiar with what the
concept of a hard fork is, at least on a basic level? Okay, quite a few. There is a process in Bitcoin,
when there is a disagreement or change in the rules, whereby Bitcoin can split into
two systems that operate in parallel. This is unprecedented. It doesn't happen
(on a planned basis, anyway) very often. In fact there's a lot of effort to avoid it, because it can have severe monetary
consequences for those who attempt to do it. But there is always a possibility that it might happen.
If it does happen, the ledger is replicated on both sides, meaning that if you have a key that controls certain [coins], that key will control [those coins] on both sides, because both sides will have the same ancestry.

At first you may think, 'Whoa. Does that
mean I have twice as many coins?' [Laughter] Yes and no. It does mean you have twice as many coins,
but one thing I can almost guarantee you is that they're now worth half as much or less
than what a single coin was before. We've actually seen some of the [coins] that do ponzi
schemes in this space make massive announcements to rooms full of people,
"You now have double the amount of coins!" Remember how I told you that
people don't understand money? What they should do is scream back, "You crooks! Inflation is terrible! Doubling the amount of coins means they're worth less than half because
you've now broken your promises!" Instead they say,
"Yay, I have double the amount of coins!" Because when they were six years old, Mommy couldn't
answer, "Why can't we all have more money?" "Double the amount of coins" is not a good thing.

It will damage the price of Bitcoin temporarily. However, I think in the long run we will see that bitcoin
also survives these kinds of attacks and activities. The reason it will survive is because it's designed to be a resilient, self-healing, anti-fragile system which does not work only when things are going okay. It's a system that's designed to work
when it is being attacked, always being attacked. The assumption is that it is being attacked all the time. The reason Bitcoin survives to this day
is not because it hasn't been attacked, but because it has been attacked every single day for eight years, survived, improved, and grown stronger. It has a reactive immune system.
This is nothing more than a network-based attack. and if it happens, it will be resisted by the
immune system and Bitcoin will survive it. Or some mutated, evolutionary outcome of Bitcoin resistant to that particular attack will evolve out of it. Either way, even if this destroyed
the fundamental technology of Bitcoin, it would give us the most valuable lesson of all, which is
how to build the next version to resist that attack.

And improve on it.
[AUDIENCE] Where and how to store [the bitcoins]? [ANDREAS] Where to store and how to store [them]? What happens to your bitcoin?
If it's your bitcoin, nothing [happens]. The question is, is it your bitcoin?
That is answered best by whether you control the keys. If you control the keys directly, then after [the fork]
you can decide what to do with them. I would expect a cooling-off period where
people don't do too many transactions, because they're waiting to see how this plays out. So sit still, hold tight, and wait until things clarify
themselves. Your coins aren't going anywhere. They're not being invalidated in any way. If you have coins on an exchange, and you are significantly worried about the event of a fork because you have an "investment" and it scares you…
[First of all], you've invested too much.

[Secondly], it would probably be a good idea to remove
your money before the fork to an address you control, so that you can have the ability
to decide what to do with it. Not all exchanges will be able to support
both sides of the fork. [AUDIENCE] Okay..

You May Also Like