IS BITCOIN BLOODBATH IMMINENT?

Updated July, 2017.

There has been confusion regarding whether Bitcoin will undergo a "soft" or "hard" fork. Bitcoin's maintaing staff has not decided which direction to take. A hard fork would result in two tokens, a soft fork would not.

For the purpose of investor education, we decided to explain the difference between the two forks and focus on protective measures for investors if a hard fork takes place. I apologize for any confusion. When a path is decided, I will update this article accordingly. Additional edits were made to this article to ensure updated information. Thank you and happy reading.

Last year, you could've purchased Bitcoin (BTC) for $600.

Today, $600 is laughable. At $2,057, the token is up by over 340%.

But now a real threat is on the horizon: The upcoming Bitcoin fork.

To many investors, the Bitcoin fork is shrouded in mystery. No one can predict the exact impact it will have on Bitcoin's value and long-term potential.

But a few things are certain:

A fork is necessary for Bitcoin to survive as a digital currency.In the short term, it will likely affect anyone in the Bitcoin network, including investors and miners.

Luckily, most investors are being proactive about wealth protection. Many Wealth Daily subscribers have written in to ask about the best way to prepare for the fork.

This article was put together to offer some solutions. Buckle up, because things are about to get a bit technical.

Important note: Even though I can do research and offer solutions, investors need to make this decision by themselves. As with all digital currency investments, volatility is expected and you should decide what protective measures to take based on your own technical skills and investment goals.

What Is the Bitcoin Fork?

In the web development world, a "fork" is when the code is replicated and modified.

A normal investor doesn't have to know the technical details — they just need to know that a fork happens before they get an alert that there has been a software update.

There are two types of forks: a "soft" fork and a "hard" fork.

With a soft fork, a minor adjustment to the code is made, and a user can continue to use the program without complications for a short period of time.

With a hard fork, the program will not run without an update.

In the world of Bitcoin, a fork is needed to ease ongoing scaling issues. As more users join the Bitcoin network, there have been multiple problems caused by slow transaction speeds.

This issue can be resolved through the implementation of bigger "blocks" to the existing blockchain. This requires modifying the code.

Some people are of the opinion that a Bitcoin hard fork won't happen. They favor the soft fork, which will not split the code. 

Either way, nothing can survive our rapidly evolving technology landscape without modifications.

And, even if a hard fork doesn't happen, it's important to be prepared.

Because it doesn't matter if it's a soft fork or a hard fork, Bitcoin will likely lose value.

So, Will It Be a Hard or Soft Fork for Bitcoin?

Currently, Bitcoin is maintained by a staff of 100. Out of that 100, 25 individuals are committed to web development and code maintenance.

Those web developers are split down the middle about whether to do a soft fork or a hard fork.

Many members of the staff favor a soft fork called SegWit. This will not split the code.

The others want a hard fork, which will increase block size dramatically. They refer to this version of Bitcoin's code as Bitcoin Ultimate.

Bitcoin's transaction speed is one of the major issues that stands between the currency and world domination. In fact, if it doesn't overcome the transaction speed issues, it may not survive as a digital currency.

So, a fork — whether soft or hard — is inevitable.

Now, let's move forward to protection.

Protection From the Bitcoin Fork

A similar fork happened to Ethereum in its early years.

Ethereum's core team decided to fork the code in order to restore funds that were lost in a hack to investors. As a result, we now have Ethereum (ETH) and Ethereum classic (ETC).

Many investors who already had money in Ethereum saw it split into two currencies. Their initial investment now existed in codes.

For Bitcoin, things are a bit more complicated. Investors hold Bitcoin in a variety of wallets and exchanges. Those wallets and exchanges will have rules in place regarding the fork.

For instance, digital currency exchange Coinbase has already come forward and said that it will only recognize Bitcoin Core (BTC) in the event of a fork.

Other wallets like Ledger or TREZOR say that they will recognize both codes.

Some investors have chosen to remove the exchanges altogether and transfer their BTC into offline wallets. This way, their money will exist in both codes, and they will be able to sell the version of Bitcoin that they deem the loser.

Bitcoin's Value After the Fork

We will likely see a fairly dramatic dip in Bitcoin's value after the fork.

There will now be two tokens, and one will rise in value in the eyes of investors (just like Ethereum over Ethereum Classic).

Investors will likely respond in one of three ways:

SELL

Some investors may choose to sell before the fork, unwilling to take the risk if a more dangerous hard fork is attempted and Bitcoin's value drops dramatically.

HOLD OFFLINE 

Others will simply move their money into offline wallets so that they can make the decision on whether to buy or sell rather than the exchange.

HOLD IN EXCHANGERS

Others, most with less technical experience, will leave their money in exchanges and hope for the best.

What path you decide to take is an individual choice, but it's important to stay educated before the fork so that you can choose the best path for you and your investments. Remember a fork may not even happen yet. We have to keep our ears to the ground.

What precautionary measures should you take?

Watch out for our next post!

Source credit: Alexandria P.