What is bitcoin fork? Can you profit from the fork?

I feel that Bitcoin will come to a fork every three. But what is the fork? Can we profit from it? Is there a risk of forking? Did you get the free currency through the fork? Let's talk together.

Time back in August 2017, the first digital currency generated by Bitcoin forks was born: Bitcoin cash. However, since then, there have been many bitcoin forks, such as bitcoin gold and bitcoin diamonds. Most people still don't know what these forks mean, how forks happen, and whether they can profit from them.

So, what is a fork?

The fork is basically a change to the current Bitcoin code (or protocol), in other words, someone has changed the rules of Bitcoin. Imagine that you are playing games with thousands of people from all over the world. At this time someone said, "Or we have to change the rules." Generally speaking, in order to keep the game intact, everyone needs to be regular. Change the consensus. After the rules are changed, it does not affect the normal operation of the game. But if you don't agree on this change, you will have two different versions of the game, one running the original rules and the other running the new rules. In other words, the game produces a fork, similar to the fork of the road, which also happens in the bitcoin code.

Usually, when a fork occurs, you will have a "raw bitcoin" and a "new bitcoin". For example, Bitcoin cash changed the block size from 1 MB to 8 MB, so each block can handle more transactions.

So some people support this change, they moved from the Bitcoin network to the Bitcoin cash network.

Others want to maintain the original rules and continue to use "original bitcoin" (so there is a fork).

Of course, the explanation about bitcoin forks is simple, because each fork is different.

With a soft fork, the new version is well compatible with the old version;

There are also hard forks that produce a completely different new currency.

All bitcoin forks that everyone is currently hearing are hard forks.

Why do we care about forks? There are several reasons:

First of all, you may feel that the new rules and the new currency are better than the original;

Second, the fork may have an impact on the Bitcoin community, the use of Bitcoin, and even the price of Bitcoin, and we will discuss this impact later.

Finally, you want to profit from the sale of the forked new coins, because each bitcoin holder can get these new forks.

Wait.

Can I get the coins in white?

Yes, you didn't get it wrong.

Go back to the game just said. Imagine that your game has been running for a long time and you have already scored a lot of points. Now someone wants to change the rules, but does not want players to lose their existing points, so when the new game starts running, everyone will get the same number of new points. For example, you have 150 points in the original game, and you will get 150 points for the new game with the new game. If you like, you can play two games at the same time. In both games, you have 150 points.

Let's take a look at how this situation applies to Bitcoin. When the fork occurs, people who support the fork say, "We don't like the original rules, so we're creating a new one now." Those who hold bitcoin when they fork will have two kinds of "bits." Currency": "Original Bitcoin" and "New Bitcoin". You decide which one to use, or both. This means that if you hold a bitcoin when the fork occurs, the original bitcoin is still in your hands, and you can also get a "new bitcoin" running on the new rules.

Is it not easy to understand? Just remember one sentence:

When Bitcoin forks occur, any Bitcoin holder can get the same amount of SGD.

The new currency will not be automatically sent to your address, you need to collect it yourself. Therefore, each new fork has a different collection mechanism, we will not elaborate on this video.

You can pick up or sell the new coins that you have successfully received. In other words, you can earn money by splitting, because you can get the free currency and you can sell it on the exchange. Is it easy to earn money?

With the emergence of a series of forked coins such as Bitcoin cash, the fork seems to be a legitimate way to change the original route of Bitcoin. However, the forks after bitcoin cash are similar, and more are marketing gimmicks than actual ideological changes. In other words, if someone thinks Bitcoin is not good enough, he can create a brand new altcoin, and there is no need to clone Bitcoin. The reason why they choose to fork bitcoin is mainly due to the following three reasons:

Marketing gimmick

Bitcoin fork is the new ICO, everyone wants to get a free fork, so everyone spares no effort to fork Bitcoin. How to better attract investors' attention when issuing new coins? Just say that you are forking bitcoin, it will be.

2. Developers can make a fortune.

Some forks don't really copy the rules before Bitcoin. The way the rules change is that the developers get a lot of new issued new coins, and when the new coins can start trading, they are sold in the market.

3. Fraud in the name of a fork

The scammer can split the bitcoin to pick up the disc, and even steal the user's bitcoin while the user is picking up the new fork. Therefore, there is a great risk in receiving the forks.

So how do we safely collect new forks?

First of all, I suggest you take a good look at this forked coin, understand the developer team, understand their past background, understand how they are planning, and read articles about this project. If there is no problem, this forked coin should be fine. However, even if this fork is justified, it does not mean that it is worth receiving the new currency.

The process of receiving a new currency is usually complicated, and the risk of losing money is unskilled. For example, if you have 0.5 bitcoin, then you are eligible to have 0.5 bitcoin gold. I don't know if the 0.5 bitcoin gold value is worth your risk. Of course, this is up to you to decide.

There is one very important thing: forked coins must implement replay protection. Basically, the network can separate the old currency from the new currency, and the original currency will not be sent to the new currency address when the new fork currency is received.

When you decide to receive a forked coin, I suggest that you follow some guidelines for regular wallets or materials. Remember, this is your own money, only you are responsible for it. Be sure to follow a rule:

Before you receive the new currency, you can transfer the bitcoin to a new wallet that generates new mnemonics so that you can reduce the chance of Bitcoin loss to almost zero.

I hope that everyone has a certain understanding of the definition, operation, advantages and potential problems of the fork.

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Original material link: https://www.youtube.com/watch?v=pLNr786xEkg

Chinese translation: Cobo wallet