Bitcoin Beginners Guide to Surviving the BIP 148 UASF
Addressing issues connected with the approaching of BIP 148 UASF.
Bitcoin might undergo a chain-split on August 1st as few of Bitcoin users plan to activate a user activated soft fork (UASF) as described in Bitcoin Improvement Proposal 148 (BIP 148). Particularly, their nodes will reject any Bitcoin blocks that does signal support for Segregated Witness (SegWit), the key factor of Bitcoin Core’s scaling roadmap. If the best part of miners does not signal support for SegWit through BIP148 on August 1st, Bitcoin’s blockchain will divide in two. If that happens there would be two types of Bitcoin tokens. Let’s call it “148 BTC” for coins on the soft forked chain, and “Legacy BTC” for coins on the chain that did not start the soft fork.
There is, however, some alternative strategies to keep the chain as one, through substitute activation methods. To make it easier, this article will believe that these methods has failed. More information on these alternative strategies can be found here.
That means that each bitcoin would completely be copied to both chains. So after the split, you will have both 148 BTC and Legacy BTC.
But this coin-split can be sloppy and dicey. If you are not cautious, you could lose money.
This guide will give you the basics to keep your funds safe during the UASF and will assist you to make sure you will make it to the end with all your coins safely intact.
Quick note: If you are going to play the 148 BTC/Legacy BTC markets and you are happy with taking the risks, and you know what you are doing, this article might not be for you: this is a beginner’s guide.
Before August 1
Please be aware that a chain-split can create high-risk circumstances. There is, however, a chance that some sort of cyber-battle might break out between the two camps, perhaps even increasing so much that bitcoin’s exchange rate(s) drops quickly, possibly to zero. Do make 100% sure you are not holding too much value in bitcoin than what you will be willing to lose.
If you choose to hold onto your bitcoins, it is of utmost importance that you control your own private keys.
If you’re storing your bitcoins on an exchange, or on any other service that holds your private keys for you, you might or might not receive coins on both ends of the chain. But, if these kinds of services are not vigilant you might not get any coins at all. Thus far, not many exchanges have given any kind of assurance.
If you are going to use any of these services to store your bitcoins, you have to create your own wallet. Then you send your bitcoins to one or a few different Bitcoin addresses in this new wallet. This wallet will then hold your private keys.
What specific kind of wallet you use is entirely up to you. With that said, here are some solutions:
Full node wallets are the only wallets that are entirely trustless, like Bitcoin Core or Bitcoin Knots. These verify all custom rules but can be a bit time consuming to use. Another option is if you want to keep both as long-term investments is to print your private keys on the paper wallet. But this option will only be secure enough if you follow very strict security discretion, which you can find here. Or you could get yourself a hardware wallet. You can keep your hardware keys secure at bitcoin.org.
The usual desktop or mobile wallets on bitcoin.org are as secure as your computer or phone would be. This would not be ideal as almost all computers and phones are not secure enough for large amounts. Bearing that in mind, bitcoin.org will store your private keys for you on mobile and desktop wallets.
So make sure you make back-ups on your keys as almost all wallets require you to do this when installing in the first place.
On and maybe after, August 1st
If the best part of hash power signals supports for Segregated Witness through BIP148 on or before August 1st (or BIP141 or BIP91 before August 1st), the protocol upgrade should start freely. Which in that case, you should be fine, even if you did not prepare at all.
Although there might be a smooth upgrade there is a chance that a few new types of “Bitcoin” can appear, such as “Bitcoin ABC”. This was not known at the time of writing of this article, and is not covered herein. Almost all of the same security protection apply but if you follow this guide, all your coins (including “Bitcoin ABC coins”) should be safe. For more info, see this article.
There is also a possibility that a larger amount of hash power will not go along with the BIP 148 UASF on August 1st, which in that case the chain could possibly split. You will then have both 148 BTC and Legacy BTC if you held your private keys. In that instance, a chain-split could unravel in many ways.
If on or after August 1st, the 148 BTC chain becomes the chain with most collected proof of work, both BIP 148 nodes and Legacy nodes would switch to the 148 BTC chain. Then the Legacy BTC chain ought to be rejected, solving the situation. Then it would have been a short-lived split, and you would be fine if you held onto your private keys. So then you can continue to using bitcoin as you normally did.
If and when this happens (or other precautions were taken), there is always at bit of a hypothetical risk that the Legacy BTC chain can be taken over and be thrown away like this. Chances are that it would lessen as time passes, but will hypothetically go on for days, or longer — even if no blocks are found on the 148 BTC chain.
In Light of this, purchasing or accepting Legacy BTC after the split — and specifically just after the split — will be very risky. These bitcoins might actually disappear if the 148 BTC chain overtakes the Legacy BTC chain. For this specific reason it would not be recommended to buy or accept any Legacy BTC. But if you decide to do that then be aware that your money could disappear.
BIP 148 nodes will never accept the Legacy chain, so these would not switch even if the other chain has more hash power. Nevertheless, it is still a risk to buy, accept or hold 148 BTC, too. Primarily, there is no assurance that 148 BTC will carry on. Although that is true for any crypto-currency, but because of slow mining difficulty changes, a possibly unfriendly environment, and the continuing chance for SegWit to start on the Legacy chain after all, it might be truer for 148 BTC. Furthermore, block confirmations may be very slow for a while, which could make using 148 BTC for transacting unrealistc.
If you still want to accept 148 BTC you need to run a BIP 148 full node as a wallet. For more info about that go here, and you can find software downloads here.
Along with the Legacy BTC chain being abandoned or the 148 BTC chain fading away, there is another big risk: replay attacks.
In case of a chain-split, transactions on both sides of the fork will look the same. If a transaction is picked up by both 148 BTC and Legacy BTC nodes — for instance, because the receiver of a transaction retransmits that transaction — the transaction might be valid on both chains. This is called a “replay attack.”
Consequently, spending coins on one end of the chain could make you spend the same coin on the other side of the chain. So instead of paying someone only in 148 BTC, you may accidently send Legacy BTC as well, or vice versa. 148 BTC and Legacy BTC are initially “interfused.”
Prevention is better than cure so to prevent a replay attack: Do not send any transactions until it is clearer to everyone what the post-fork situation will be. It would be in your best interest not to send any transactions the last day or at least two before August 1st, just in case they don’t confirm in time.
After the Chain-Split
In case of the BIP 148 UASF, it is difficult to say what “after the chain-split” really means.
If the 148 BTC chain gets more gathered proof of work, it should be the only chain to survive, and the split would be over. All 148 BTC would then simply be bitcoins (BTC) again.
However, if that doesn’t happen fast, and even if the 148 BTC chain appears nonmoving, a chain-split could in fact remain for a while. Miners could start mining on that chain at any time. For this reason, the Legacy BTC chain can in theory always wipe out the148 BTC chain.
And there are also possibilities where the two chains can synchronize. What’s more, even a strategy where more than two chains appear can’t be taken out of the equation. In these possibilities, you’ll have coins on both (or all) sides of the fork.
As mentioned before, spending coins on one end of the chain could make you spend the same coin on the other side of the chain. The bad news is that splitting these coins can be a bit complicated. (It would require freshly mined or double-spent coins.)
As for the good news, some exchanges will most likely set up coin-splitting services and take care of the complications behind the scenes. You’d send your bitcoins to an exchange, and the exchange will then credit your account with 148 BTC and Legacy BTC. (They should even replay the transaction for you to make sure they did receive both your coins.) Then, if you would want to, you will be able to sell or trade your coins.
If the split continues, there should be wallets for or all the coins at any possible moment afterwards. Then you would need to upgrade your current wallet or download a new wallet if and when this happens. But we will have to wait and see. Do not accept any transactions on your wallet before this is clear. Please Note that the situation could remain hesitant for weeks!
More detail on what to do after a coin-split of if it happens will be published on Bitcoin Magazine and probably on bitcoin.org.
So, to Recap…
1. Make sure your private keys are in your control before the 1st of August.
2. Avoid any transactions two days before, on, and soon after August 1st. (How “soon after” depends on what happens; it could take a while.)
3. Split your coins into two or more wallets after the dust settles.