Recently there has been a lot of chatter about different proposals and Bitcoin scaling initiatives, some of which can be confusing. The average user should feel confident that they can store their coins in breadwallet to protect themselves from potential forks in the network.
A bitcoin user has a choice between two basic options: to hold their coins themselves, or to rely on a third-party to keep their coins safe. Each has pros and cons. Holding your own coins is the best way to retain complete control over them, but it comes with some additional security burden to the user. Specifically, the user must keep a copy of their private keys in a place that is resistant to both theft and loss. On the other hand, allowing a third party, such as an exchange, to hold your coins means giving up some control, but enjoying the convenience of leaving private key security to somebody else.
Breadwallet falls into the first category. It provides a simple and secure way to hold your coins yourself. In breadwallet we’ve made it easy to store your private keys by giving you a random 12-word recovery phrase, from which your private keys are derived in a predictable way. As long as you write down the recovery phrase and keep it in a safe place, almost nothing can go wrong.
For bitcoin users who are concerned about network forks, both imminent and future, breadwallet should be the standard option for controlling your own coins and providing the greatest optionality in the event of a contentious split.
Here is how it works: If your coins are on an exchange and there is a persistent hard fork, it is up to the exchange to decide whether to give you access to your coins on one or both chains. Some exchanges have made public announcements that they will not be supporting two chains, which may concern customers.
If your coins are in your breadwallet, after a fork you will have the same number of coins on both chains. Immediately after the fork occurs, it is recommended that users do not make any bitcoin transactions, regardless of what wallet they are using. This is because until something called “replay protection” is implemented, a bitcoin transaction may settle on both chains, or only one, depending on how the transaction is propagated. However, if two chains persist, replay protection will permit users to access their coins on either chain, after a short period of time.
The best course of action to retain control over your coins with the most options available to you is to store the majority of your coins in breadwallet as a default safety measure. During a contentious hard fork, users should sit tight and wait for announcements that it is safe to make transactions again.
Because our code is open sourced, even if breadwallet disappeared tomorrow, others could build tools that properly segregate the coins that you would own on both chains. This is why you can depend on us, without having to trust us.
In addition, advanced users can make use of our node tethering feature, which permits you to follow a chain of your choosing. However, this is not recommended for the casual customer.
Good luck, and always write down your 12-word recovery phrase.
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