I have never experienced a fork .. Could you explain (like I'm 5, please) what happens to my bitcoin if such a thing were to happen again, or point me towards the literature that could explain it?
Thanks
🤙🏼
Discussion
There are two types of forks: soft fork and hard fork. Soft forks are backwards-compatible and occur when new features are added, such as taproot when it was added recently. Nodes, wallets
, miners, etc need to update if they want to utilize the new features, but are still compatible with the network if they don’t upgrade. Hard forks, on the other hand, are not backwards compatible and result in a chain split and an entirely new token/network. Nodes, miners, etc, have to decide whether to stick with the existing network and consensus rules, and/or switch to supporting the new one.
As I understand it then, soft forks are nothing really to worry about as my bitcoin will still be compatible with earlier versions of the protocol, as well as the newly forked version.
However, hard forks force me to decide whether to stick with my original bitcoin OR choose to go with, say, SatoCoin. And once I make my decision, it's final .. 🤔 .. does that decision apply to a random pleb with a few thousand satoshis in, say, Breez wallet?
I’d be cautious about dismissing a soft fork as simply nothing to worry about. Soft forks can have unintended consequences, even though your coins are still spendable.
As for a hard fork, when that occurs there is a chain split, and now anyone hold coins before the chain split have the same number of coins on both networks. Which network/chain you decide has the most value proposition is up to you to decide. That’s how Bitcoin Cash and BSV came into existence, for instance.
Soft Forks: Unintended consequences or not, as long as my bitcoin remains just that (my bitcoin) I'm willing to proceed cautiously.
Hard Forks: What does that look like in my wallet? Does Breez wallet allow me to see my Bitcoin AND my SatoCoin in the same wallet? Are the exchanges actually willing to buy SatoCoin, or exchange for more Bitcoin? .. 🤔 .. without having experienced these things I'm curious about how it translates into what I would see happening within my wallets