You may have heard by now that "Bitcoin is splitting" or "there is going to be a fork of Bitcoin". While these statements are true, they require much clarification. What I am about to tell you is important for every user of bitcoin, young and old, new and experienced, saver or spender. Because the audience of this post is so broad I am going to stick with a fairly high-level overview of what's happening on August 1st:
- Your bitcoin is safe. Pretty much wherever you store your bitcoin, you're not at risk of losing them on August 1st or later. Just make sure you write down and test your username and password or 12 word seed for your wallet. Not making verified backups is the #1 cause of lost money with Bitcoin.
- Bitcoin is upgrading in August with a new protocol called Segwit. What's important is that it should enable a greater transaction capacity. This means that transactions shouldn't take as long to confirm and the mining fees per transaction should be lower. The effects may not be felt for many months, however.
- A minority group is looking to split away from Bitcoin and create a new network called "Bitcoin Cash". This is the main subject of this blog. Bitcoin Cash may or may not survive as an alternative cryptocurrency. If it does survive then it will have a price and economy of its own separate from and competing with main Bitcoin. You do not need to do anything about Bitcoin Cash if you don't want to.
- ...but you many want to. If Bitcoin Cash survives and gains an independent value, you will probably end up with "free money". When Bitcoin Cash splits off on August 1st, every holder of bitcoin (technically, every public address/private key controlling some positive amount of bitcoin) will be given an equal amount of Bitcoin Cash. So, if you own 0.25 BTC on August 1st you will also own 0.25 BCC on the Bitcoin Cash network. Likewise, if you own 4 BTC on August 1st you will also own 4 BCC on the Bitcoin Cash network.
The most important takeaway from all of this is that Bitcoin Cash may or may not survive it's attempt to split from Bitcoin. If it does sustain itself and grow to some positive value, then you will own Bitcoin Cash coins that could be sent to anyone willing to accept them or sold for another currency. You would also be able to buy Bitcoin Cash if it persists.
⚠ A cautionary note for Coinbase and other custodial account users: Coinbase has declared that they will not be providing their customers with Bitcoin Cash, at least in the short-term. Xapo, CoinJar, Paxful, and others have made similar statements. We advise that you remove your bitcoin from these online accounts and store them in a non-custodial wallet, such as the Athena Bitcoin app, prior to August 1st if you wish to protect your future access to Bitcoin Cash.
What's going to happen to the price of Bitcoin?
There is no way to know ahead of time how the markets will respond to these developments. It's possible that Bitcoin could increase in price as people become more confident that it has found a scaling solution. On the other hand, the existence of a competing and possibly major alternative "Bitcoin" could lead to a price decline. Expect a lot of price movement as the markets figure all this out.
How soon can I sell/spend/transfer my new Bitcoin Cash coins?
Technically, you can begin to use your new Bitcoin Cash coins right after the network forks on August 1st at 12:20 p.m. UTC. Unfortunately, that will require using special software that supports the Bitcoin Cash network. It also requires that you import your private keys or master private seed into a Bitcoin Cash-compatible wallet. This is potentially very risky if you don't know what you are doing! You may end up giving a scammer access to all your regular bitcoin as well as your Bitcoin Cash coins.
We recommend that you wait until we or another news source you trust can offer greater guidance on how to use your Bitcoin Cash. Your existing wallet software may also end up supporting Bitcoin Cash if it becomes popular enough.
Will the Athena Bitcoin / Airbitz wallet support Bitcoin Cash?
Not immediately. The Athena Bitcoin wallet (based on Airbitz technology) will give you everything you need to manually access your Bitcoin Cash as of August 1st, but the process is technical and intended for only those who are familiar with handling and importing private keys. Our wallet app may end up supporting Bitcoin Cash directly if there is enough demand. Please see Airbitz CEO Paul Puey's recent guidance for users of Airbitz-based wallets, including a step you can take now to make claiming Bitcoin Cash easier after the fork.
Can we still use regular Bitcoin on August 1st?
Yes and no. Yes in the sense that there is no obvious reason why the regular Bitcoin network won't function properly on August 1st, however several major exchanges and services are shutting down Bitcoin transactions on August 1st as a precautionary measure. Likewise, for maximum safety, we would recommend that you do not send OR receive bitcoin on August 1st until major news sources you trust indicate (or fail to indicate) that any disruption has occurred with the main Bitcoin network.
Athena Bitcoin ATMs will also be affected. See below....