It appears that Bitcoin will fork on August 1. This means that the blockchain on which Bitcoin is encoded will split in two. One chain will remain Bitcoin, and the other will become Bitcoin Cash. To learn more about the details and history, read about it on CoinDesk, Forbes, MIT Technology Review, The Economist and The New York Times. This over-simplified graph illustrates what will basically happen.
HOW COULD THE BITCOIN FORK AFFECT YOU?
The value of your Bitcoin may fall. As we mentioned before, uncertainty about cryptocurrencies makes financial markets anxious, so they react sensitively to news that may worry them. The price of Bitcoin fell by 36% between June 11 and July 16 because a potential fork worried financial markets, and it recovered by 53% between July 16 and 23 because agreement on BIP 91, new rules governing the blockchain, relaxed their concerns. However, some miners remain unsatisfied with this solution, so they have announced that they will fork the blockchain on August 1 and create Bitcoin Cash. This has spooked financial markets again, and the price of Bitcoin has fallen by 10% since July 23.
The Bitcoin market is preparing for the fork. Bitcoin Cash will allow Bitcoin users to buy its new cryptocurrency with Bitcoin. Bitcoin exchanges have released different policies on closing or remaining open on August 1. Bitcoin companies, like Bitrefill, have released statements indicating how they will respond to the fork. Clearly, this is an exciting yet uncertain time.
HOW TO RESPOND TO THE BITCOIN FORK.
We advise to monitor the value of Bitcoin closely over the next few days. Nobody knows for certain what will happen on August 1, so the Bitcoin market may change quickly. It may go up, in which case your Bitcoin would gain value. It may go down, in which case your Bitcoin would lose value.
If you are nervous about your Bitcoin losing value, it may be wise to use it now. You could buy Bitcoin Cash and diversify your cryptocurrency portfolio. You could sell it on an exchange as long as it is still open. You could recharge your prepaid mobile phone at Bitrefill. You could purchase another good or service from another company that accepts Bitcoin. In any case, find a way to generate value from your Bitcoin now if you are risk-averse to fluctuations in the Bitcoin market.
Bitcoin has forked before, and it is bound to fork again — perhaps multiple times. This fork is generating commotion, and it will be interesting to see how the market responds. We wish you the best navigating the action in these next few days — whichever decision(s) you take.
