Safely Claiming Bitcoin Fork Coins Like Bitcoin Cash

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You can read all about Bitcoin Cash in this Coindesk article: Bitcoin Cash: Why It's Forking the Blockchain And What That Means.

The basic idea is the blockchain will be copied and slightly modified so your private keys will give you access not only to your bitcoin but also to a corresponding amount of a newly created tokens. In this case, Bitcoin Cash.

You do control your private keys, right? If not, check out episode 4 of UBF.

There's a glaring security concern here because, often, you have to import your private keys into the new coin wallet in order to access and control those funds. Let me run through a worst-case scenario to illustrate why this could be a big problem.

Imagine someone comes out with a new scam coin (we'll call it BitcoinAWESOME) including a new QT wallet. Let's say they convince some heavy financial backers it's the real deal to gain lots of publicity and support. The con then involves people importing all their bitcoin private keys in order to get some new BitcoinAWESOME. Then, as planned, each and every one of those bitcoin addresses gets drained because the scammer hid some code in the BitcoinAWESOME wallet to broadcast a transfer to the Bitcoin network using the private key you just gave it.

This isn't a highly plausible situation based on how many people can review open source code, but we do know pretty serious accidents can happen (a recent Parity multisig wallet issue led to a $30M theft).

I'm not suggesting or even hinting this may be the case with Bitcoin Cash, I'm just giving a hypothetical situation which could happen at some point in the future. This is a risk we should be aware of and protect ourselves against.

Seems to me, if you're doing one of these bitcoin split coins, be sure to move your bitcoin off the address in question BEFORE you try to claim your new coin. That way, if it is a scam, they only get access to an empty wallet.

If you own some bitcoin and you want to get some Bitcoin Cash after August 1st, I suggest you follow this process:

1. Get all your bitcoin into addresses where you know and control the private keys. Coinbase and others will not support BCC, so you'll have to move your coins if that's where you have them.

2. After the snapshot is taken (in this case, after 12:20 pm UTC on Tuesday, August 1st), move all your BTC to new bitcoin addresses.

3. Claim your Bitcoin Cash via the Bitcoin Cash wallet using the private keys of the old addresses where the BTC was at the time of the snapshot.

4. If you're not a long-term Bitcoin Cash holder, send it to an exchange and sell for free money.

5. Move on with your life.

Yes, you could also move your bitcoin to an exchange which has publicly announced their support of Bitcoin Cash and promised to give their customers an equivalent amount based on their bitcoin holdings there. But... that's a risk. If you don't own the private key, then you don't own the cryptocurrency. Trusting exchanges has historically been a really bad move.

I have no idea what the price of bitcoin is going to do or if Bitcoin Cash will hold any long-term value. I do know it's our responsibility to learn how to properly use cryptocurrencies safely and effectively if we want to be part of this financial revolution. For more on that, please see episode 3 of UBF: Safety and Security.

Please let me know if you have any questions, but try also to Google for answers first. You'll probably find many well-written articles to explain the answer to your question much better than I can.

Be safe out there, kiddos. Interesting times are coming.

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Luke Stokes is a father, husband, business owner, programmer, and voluntaryist who wants to help create a world we all want to live in. Visit UnderstandingBlockchainFreedom.com

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