What happens to your coins after the Bitcoin blockchain splits?

Over the past two weeks, the Bitcoin community has been discussing the possibility of a hard fork in the future. In addition, many exchanges and Bitcoin companies in the industry have begun to prepare for this event. The question that Bitcoin holders have is whether their Bitcoins are safe after the blockchain splits and how they should deal with this situation.

Your deposits are safe

First, all Bitcoin holders should understand that although a hard fork could split the blockchain, the Bitcoins you own are absolutely safe.

In the past year, hard forks have become notorious for political reasons. In fact, most forks are just protocol updates. A blockchain split only occurs after a hard fork, possibly into two chains. Once a hard fork is finalized, there is nothing Bitcoin users can do except wait.

A user in r/btc published a full post that explains the most common questions users ask about the protocol update and how users will be affected. This post details the hard fork process and further developments.

Once the blockchain splits in two, two digital assets will appear immediately after the hard fork. Bitcoin users who control their own private keys can access assets on both chains at the same time. Therefore, if your funds are stored in a local wallet on your computer or mobile phone, you can do nothing and wait for the fork to happen.

If you have funds stored on a Bitcoin exchange, it is up to the exchange to decide how the two token assets will be distributed. Most major exchanges have announced that they will support both assets after the split.

Deposit coins on exchanges

Users should keep in mind that storing cryptocurrency on an exchange is not a good option, even in "calm" situations. As mentioned above, after a blockchain split, users who store their coins on an exchange will have to follow the rules of the specific exchange. For example, the exchange is likely to suspend withdrawal services within 24 to 48 hours after the fork. Most reputable exchanges should eventually distribute assets between the two chains reasonably, but users will definitely have to wait a long time before the company makes a good assessment.

Coinbase mentioned in a blog post:

Ensuring the safety of user funds is our primary goal. After the Bitcoin protocol hard fork, Coinbase will likely suspend Bitcoin withdrawal and deposit services. During this period, we will evaluate the technical risks caused by the fork, such as the possibility of replay attacks and network instability. Users must understand that they cannot withdraw Bitcoin from the platform or deposit it for 24 hours (or longer) after the fork. After the Bitcoin protocol hard fork, Coinbase may suspend platform buying and selling activities.

In addition, about 20 well-known Bitcoin exchanges have announced emergency plans for hard forks last week, and they will list both digital assets at the same time (creating other accounts for the "new" forked coins). However, these exchanges are likely to stop withdrawal and top-up services during the fork period. At that time, users will have to abide by the rules of each exchange, and the regulations of each company are different.

The individual holding the private key

Users who hold private keys will be able to access funds on both chains after the hard fork. The way they can access both digital assets is to wait for wallet support or transfer their funds to another wallet platform that supports both chains, depending on their coin storage platform. For example, hardware wallet manufacturer Ledger has guided users who hold private keys on how to use cold storage devices.

First of all, it is important to understand that hardware wallet users control their own private keys. Therefore, no matter what happens, you can export your private keys and use your Bitcoin in any chain or forked software. No matter what happens, you do not need to move your funds before the fork, and you do not risk losing your coins in both chains.

This statement applies to any user who independently controls the private key of Bitcoin. They do not have to bear the risk of losing coins in the event of a hard fork, and can access both chains at the same time after the blockchain splits.

Keep your private key safe and stay informed

Forks are a sign of maturity for most open source software protocols, and many people believe that Bitcoin will experience a large number of forks in the future. Users should first consider mastering their private keys so that they do not have to be manipulated by exchanges and can use their funds freely.

Users can also go online to find resources about forks, and many Bitcoin companies have already announced the details of hard fork plans. Bitcoin developer Gavin Andresen wrote a popular post analyzing the fate of the two chains. Andresen speculated on the market reaction from the price point of view, but he assured that the assets of Bitcoin holders are absolutely safe during the blockchain split.