Are you ready for Bitcoin Cash hard fork coming up soon? Here are some tips to get ready.
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What is a hard fork?
During mining, a hard fork is when nodes no longer agree on rules of protocol. However, they continue to share a permanent ledger or blockchain of transactions previously created on the shared network.
A hard fork exists after a block of the new, protestant chain has been successfully mined. I’m reality, the hard fork chain has to survive longer than that for the world and the community to consider it tangible.
A hard fork should not become confused with a software fork where a code is used to develop a distinct product with major or minor modifications. All digital currencies from Litecoin Cash to Dash are a software fork of Bitcoin.
To understand what a hard fork is, consider the Bitcoin fork aay from Bitcoin Core during the previous year.
The Bitcoin Cash blockchain was identical to Bitcoin blockchain until blocks mined in August 2017. From this time, it became an entity and developed its own services, community and divisions.
What is a replay attack?
This occurs when the transaction details for a single blockchain is used on another. To illustrate, if you make a transaction on a blockchain and the receiver uses details from the transaction to receive coins coins without your permission on the other chains from you.
In the upcoming Bitcoin Cash fork which aims to result in two different versions of Bitcoin Cash would not offer native replay protection. During previous hard forks, replay protection was integrated by development teams. You should take this seriously because there are no pull requests, only push transactions.
Fortify yourself against replay attacks
When the fork starts, you should not rush to make transactions. Decide which Bitcoin Cash version you want to use and store your existing wallet on that chain.
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Then, the user should install the other version, access their coins on that chain, and once they have accessed their coins on the chain they do not intend to use, they should sweep them all to a new address of their own on that chain. In this way, they will not be at risk of replay attacks because the coins are now held in different “accounts” or addresses between the chains. Failure to do this puts the user at risk of having their transactions replayed.
Unfortunately, with a lack of replay protection built into the new clients, you will have to do something if you want to secure the coins on the new chain. There is another option wherein you don’t care about the funds on either chain, and under this scenario you are free to simply leave things as they are — if someone replays a transaction you sent them on your preferred chain, you wouldn’t care anyway.
The Alternative Option: a Managed Exchange Wallet
Users who are overly concerned and not technically sure they’ll be able to successfully migrate their coins themselves could simply send all their Bitcoin Cash to a cryptocurrency exchange that has explicitly stated that it will support the fork, where they will automatically be credited with the new versions. Then, if you want either coin or both, you can withdraw them once the fork has settled. Potentially, there could even be three versions of Bitcoin Cash, provided miner support is there for all of them.
Many other exchanges will do this, but Poloniex has committed to doing so and has also begun pre-fork trading of both new versions of the coin.