Warning Bitcoin Getting Messy
Let me start by saying I am obviously a fan of Bitcoin and started this website to introduce people to Bitcoin and other cryptocurrencies and also taught me how to trade crypto, in an easy to understand fashion. However, the politics behind Bitcoin is making things very complicated for new users to Bitcoin, which in its self, is going to make mainstream adoption difficult if not impossible at least in the short term.
I will now try to explain keeping it as simple as possible what is going to happen on the Bitcoin Network in the near future. I made a short post in July warning of a potential disruption to the Bitcoin network because of an upgrade on the network which is called a Hard Fork. One of the consequences of this was another Bitcoin currency being created called Bitcoin Cash, now if you held Bitcoin at the time of the Hard fork there was a good chance that you would have automatically received Bitcoin cash.
The problem now is there are going to be more Network upgrades, or Forks, starting on the 25th of October 2017 with the introduction of another Bitcoin offshoot called Bitcoin Gold. So once again if you hold Bitcoin you should receive the equivalent in Bitcoin Cash. In theory, this should not cause any issues apart from confusing people about another form of Bitcoin.
The next Hard Fork is going to be on the 15th of November 2017 and this one is going to be called Segwit2x this is the one that concerns me because there is the potential for people to lose their Bitcoins if they are not careful. I will try to explain why I’m so concerned and it is because of something called Replay Attacks. With Bitcoin Cash, this was not an issue because the developers built in a safety system to prevent Replay Attacks and I believe Bitcoin Gold has done the same.
So what is a Replay Attack? Like before if you held Bitcoin before the Hard fork you should receive Segwit2x, but now because there are 2 Blockchains or Networks if you spend some Bitcoin on one Blockchain without Replay protection potentially someone could Replay the transaction on the other Blockchain and spend your Bitcoin.
My advice on how to protect yourself from Replay Attacks is to not buy or sell Bitcoin immediately after the Segwit2x Hard Fork, just sit tight and see how things turn out.
Another concern I have about Bitcoin, believe it or not, is the price. At the time of writing this, the price is at $6154 per Bitcoin and the price is going through the roof. I would much rather see a slow steady increase in the price. I presume the price is increasing due to all the various free Bitcoin coins, but if these Hard Fork don’t go to plan the Bitcoin price could crash hard and a lot of people will lose a lot of money.
Finally, I will leave you with this….. Be Fearful When Others are Greedy. Warren Buffett.