Be Careful with the Hardfork - How to prepare

I've been struggling for a while about how to safely store my bitcoins before the bitcoin hardfork. In fact, one of the first posts I've made on steemit, back when I thought steemit was a forum, as opposed to a blog platform, was about it.

Unfortunately I couldn't find any helpful resources, and couldn't feel safe about whatever I read. Fortunately a lot of articles came through. Specially the one on bitcoin magazine.

One thing I'm not gonna do here, is explain what is the bitcoin hardfork discussion, because all articles spent more than half of themselves explaining it, and it took me long to find what I wanted. Anyway, if you really wanna know you can check my Bitcoin Hardfork for Dummies article.
I'm trying answer, in plain english, the following question : Should I be worried about the hard fork ? how can I be safe ?

When is the hardfork ?

First of all. There is no The Hardfork. A hardfork isn't gonna happen for sure. Of course though, it is a possibility. Likely, I'd dare to say. But is not a sure thing.

A hardfork is gonna take place if the vast majority of miners do not agree on which proposal they'll accept to make bitcoin faster (scalable). If consensus doesn't happen, there will probably be 2 "new" bitcoins, one following each proposal.

Well, when?

The thing is, different proposals have different implementation dates.

BIP91, will be implemented, in the earliest case, on the 25th of july. Before that it has to be signaled by miners, so that we will have a good idea of what's going on, on the previous days. On the 29th the BIP91 will either be a success or the bitcoin chain will be split.

In the following days, on the 31st of july, the BIP141 deadline takes place. If by then the BIP91 isn't active the BIP141 might be.

Long story short, you'll hardly have to worry about anything before the 25th of july. So do not loose your hair over it.

What are the risks ?

All right, now that you know you have some time to get ready, you must know why to do so.

Most of what we know from hardforks comes from the lessons we had when the Ethereum Network splitted. It is more a fact than a risk. It all comes down to how bitcoin works:

Well, there's the blockchain, and there are the addresses. The one way to spend the bitcoins that were once sent to a given address is by holding the private key that unlocks it. When a hardfork takes place the entire blockchain is duplicated. So whatever private key unlocks bitcoins sent to a given address on one blockchain, will do so on the other. Regardless of the scaling method implemented.

All the fuzz about being careful about the hardfork is actually targeted at people who do not control their private keys. That seems to be the case for most of us actually. Specially because we all use exchanges to trade, and exchanges have their own wallet.

Usually exchanges and web wallets will let you create your login info. But that hardly concerns the blockchain, that has only to do with the exchange/web wallet platform. Your actual keys are held by them. More often than not, you do not even have your own wallet within the platform, they just use the company's wallet to store your bitcoins.

The risks of holding your bitcoins on an exchange of web wallet are:

• After the fork, the exchange might decide to deposit you bitcoins in only one of the other chains. Since you do not owe the private keys, there's nothing you can do about it. Honestly, I don't think exchanges will do so. If they do, they'll likely loose their businesses;

• A web wallet does not give you access to your private keys might do the same;

• A web wallet that gives you your private keys might be faster than you to withdraw the coins on one of the chains.

Honestly, I don't think anyone will do so. If they do, they'll likely loose their businesses. But anyways, you better prevent it than regret it.

How to prepare ?

Good, now you know when and why, but how ?

Controlling your private keys should be simple. In the old days that's all you could do. Controlling your keys used to be the default case.

Nowadays though, there are a few ways to accomplish that:

• You can use a desktop wallet. That means that you'll run the wallet that interacts with the blockchain on your own computer, and if you let it turned off the risks of getting hacked are quite low. If you do not own a ton of money in bitcoins, and do not watch a lot of virus infected porn, that's the resolution method I'd recommend. It should be simple and low maintenance to do so. You can use, for instance, the "actual" bitcoin client, called Bitcoin Core;

• You can use a hardware wallet. That is keeping your wallet on a separate piece of hardware like a usb flashdrive. One know example is Trezor;

• Otherwise, specially if you have a ton of money or is keeping it for the long run, you can use a paper wallet.

Further information on storing your bitcoins can be found on this coindesk article and further review on the different wallets can be found on this WeUseCoins article

Rumors that a Hardfork can come early

Ok, so the prevailing proposal nowadays is the BTC1/ SegWit2x / New York Agreement proposal. First things first, it can't be implemented early since the code hasn't been published yet. It is due 21st of July, until there, no worries.

Many people claim the signaling in favor of SegWit2x is reaching almost unanimity and that it can trigger an early fork. That is inaccurate.

One type of signaling is to signal intentions. Bluntly, that's just some words that miners insert in their newly mined blocks. That doesn't change anything, and that is the only signaling there is to be about the SegWit2x.

The other kind of signaling is the one the actually triggers new code. That's what would happen with SegWit. But, remember that the SegWit implementation wouldn't trigger a hardfork, since it is meant to cope with old Bitcoin nodes.

As said in this article:

The first type is signaling support. This requires that actual Bitcoin software has been written to monitor the signals and, once these signals reach some kind of threshold, something actually activates in all of these Bitcoin clients. For example, code for the Segregated Witness soft fork as included in Bitcoin Core clients, will enforce the Segregated Witness rules once 95 percent of newly mined blocks include a specific piece of data in the coinbase strings. If that happens, all these nodes will actually reject transactions and blocks that break the SegWit rules. (Edit: It should be noted that SegWit signaling doesn't use the coinbase transaction for signaling, but the block header.)

The second type is signaling intent. As opposed to signaling support, signaling intent doesn’t actually do anything on a technical level. Rather, it's literally miners sending a message to the world, which has in the past, for example, been used to state a preference for a potential scaling solution. (While miners can also do this through letters or blog posts, coinbase signaling cannot possibly be faked, so it’s a bit more reliable.)

The recent “NYA” signaling is of the second type. It doesn’t actually trigger any code, but it instead lets the world know that the miners intend to support the New York Agreement. Specifically, they seem to indicate that they will be signaling support for the New York Agreement once the BTC1 client is officially released: presumably by July 21st, or at least in time for August 1st. (Though earlier is possible, too.)

Done !

Hope that helps tranquilizing all of you. I, for one, was quite disturbed with the possible outcomes of the hardfork, and was specially concerned of whether it could come early or something like that. Please let me know whether I forgot something important !

Cheers