What should I do if there is a Bitcoin hard fork?

By The Lightning Pay Team

Updated December 17th, 2024

 

A hard fork in Bitcoin is a backward-incompatible change to the bitcoin protocol. There have been a number of them in the history of Bitcoin, but today, the community endeavours to make most major upgrades via soft-fork.

When a hard fork occurs in Bitcoin, it's essential to take steps to protect your funds and ensure you're prepared for any changes.

TLDR: If you are in self custody of your own Bitcoin do not stress. For you, the important thing to note is you do not have to do anything in the event of a fork. After the fork is over you will have coins on both sides of the split, and can decide in your own time what to do.

Here's a guide to help you navigate the situation:

1. Secure Your Funds

  • Before the fork - move funds to a self-custody wallet under your control:
    • If your Bitcoin is on an exchange, transfer it to a wallet where you control the private keys. This ensures you're entitled to the coins on both chains post-fork.
    • Hardware wallets (like Coldcard, Jade, Bitkey) or trusted software wallets are recommended.
    • This will ensure you have the most amount of options available to you after the fork.
    • If you leave your funds on an exchange or other custodial service you will have to accept how they deal with the fork.
  • Backup Your Wallet:
    • Ensure you have a secure backup of your wallet's seed phrase or private keys.

2. Understand the Fork

  • Research the details of the fork:
    • What is the purpose of the fork?
    • Is it supported by the broader community and major exchanges?
  • Do some research on previous forks (e.g., Bitcoin Cash).

3. Avoid Transactions During the Fork

  • Stop making transactions a few hours before and after the fork to avoid issues like replay attacks or accidental loss of funds.

4. Claim Forked Coins

  • After the fork has happened, assess the two chains:
    • You should be extremely careful about splitting your coins with a new wallet as this would be an attack vector for someone trying to take your coins. If in doubt, do nothing.
    • Determine whether the forked chain is viable and supported by exchanges and wallet providers.
    • If the forked chain is legitimate and valuable, you could claim the coins on both sides of the fork by:
      • Using a wallet that supports both chains.
      • Importing your private keys into a wallet that supports the forked chain (only after ensuring it’s safe and reputable).

5. Beware of Replay Attacks

  • Some forks may not implement replay protection, meaning transactions on one chain can be duplicated on the other.
  • Use wallets or exchanges that implement replay protection if you're transacting after a fork.

6. Monitor Business and Community Announcements

  • Businesses often announce whether they will support the fork.
  • Community updates can help you determine the legitimacy and potential value of the fork.

7. Stay Alert for Scams

  • Forks attract scammers trying to exploit confusion.
  • Never:
    • Share your private keys with unknown services.
    • Click on phishing links claiming to help claim your forked coins.

8. Decide What to Do with the Forked Coins

  • Hodl or Sell
    • Evaluate the value and prospects of both sides of the fork.
    • If you are certain about which side of the fork you support, you can find an exchange that supports the other side of the fork and transfer your coins there to sell them and buy more of the coins on the side you prefer.

9. Consult Experts if Uncertain

  • If you're unsure about handling the fork, consult a trusted Bitcoin expert or service provider. We're happy to help if you contact us.

By following these steps, you can ensure your Bitcoin and any potential forked coins remain secure during a hard fork.