What the SegWit2x fork means for Bread users
Nov 8, 2017
Important update: The SegWit2x fork has been cancelled. The standoff has been resolved and Bitcoin will continue without disruption. We look forward to getting back to building great things!
As the date of the SegWit2x fork draws near, many customers ask what this fork means for them, what they should expect, and what options are available to them. We answer these questions below.
Sometime around November 16th, the Bitcoin network will split. This is not the first Bitcoin fork, but it is the most complex, due to the lack of something called “replay protection.” This means that the split will not be be a clean break, such as with Bitcoin Cash. Specifically, any transaction made on one chain will likely result in a mirrored transaction on the other chain. If this sounds confusing, you are not alone, and we will walk you through what this means for you.
What is happening?
The two chains will compete for miners, hoping to outpace one another and become the dominant coin. In the short term, miners may pick the chain they think will win, but in the long term, the coin with the highest market price will attract the most miners. Keep an eye on the market price of each coin.
How long will this take?
If 2x launches with less than 50% of mining power, then it could quickly fail. This would be over in a matter of hours or days. If 2x launches with majority hashing power, then the competition will take place on exchanges, where traders and investors will determine which coin has the most value. In this scenario, the conflict may take a couple weeks to resolve. We do not expect the uncertainty to last beyond two weeks.
What should I do if I am a bitcoin investor?
If you are holding bitcoin as an investment in Bread, then your best course of action is to stay on the sidelines and wait until the fork is resolved before making transactions. Despite the fork, the long-term prospects for bitcoin are strong, and if you take no action then you will be protected in any event. With Bread, you alone have control of the private keys.
For example, imagine you have 1 BTC today: If one chain survives the fork, you will have 1 coin on that chain. If both chains survive, then you will have 1 coin on chain A and 1 coin on chain B.
If two chains survive, Bread will implement a coin splitting function that will segregate your coins so you are protected from transaction replays, and can once again send and receive bitcoin confidently.
What should I do if I am a bitcoin trader?
Our services are designed with security, simplicity, and privacy in mind. Although Bread will split your coins if both chains survive, it will not do so immediately. This means that if you wish to trade the BTC/B2X pair on the day of the fork, you will need to deposit your coins into an exchange that has explicitly mentioned that they will support this function.
If you do decide to use an exchange to split your coins, please be aware that you are taking some additional risks by leaving your assets with a 3rd party.
What is Bread doing to protect customers?
Before the fork, Bread will display an in-app notification clearly warning all users of the split. This notification will recommend that individuals refrain from making transactions unless absolutely necessary. You will be able view your balance in the app, which will not change. When it is safe to make transactions again, we will send a second notification to let customers know.
If you understand the issue of replays, but still wish to send a transaction, you should first tether your Bread to a full node that enforces the chain you wish to use. A good resource for locating these nodes can be found here. Open Bread, click Menu -> Settings -> Advanced -> Bitcoin Nodes -> Switch to Manual Node to enter the IP address. Again, this is for advanced users who fully understand the technical aspects.
We would like to thank all who contacted us via Twitter or support ([email protected]) with questions and comments about the fork. We recognize the serious nature of this event, and will always strive to provide the highest degree of financial security and sovereignty in the face of network threats and disruptions.
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