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Simply put, does your current bitcoin (pre-fork) multiply with every fork that bitcoin may experience?

For example if I have one bitcoin stored in a cold wallet for the next century and Bitcoin experiences 5 forks over that period. Will I have the original bitcoin and 4 new coins (differently named)? Assuming every new coin type is still going.

Also, if you have 1 bitcoin in a hot wallet or exchange, does the exchange then issue you with the new coin with every fork? What if your exchange does not support the new coin?

Sorry, lastly... Say your bitcoin is in cold storage. At what point do you see the new coin? Will an exchange automatically recognize it as a pre-fork bitcoin and issue you the new coin?

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Note that the word "fork" can have several meanings. The more common one is a protocol change (either a soft or hard fork) where everyone switches to the new protocol. In this case there will still be only one type of coin.

You are talking specifically about a scenario where both the new and old versions are being used. In this case the network and the currency will split into two separate networks, blockchains and currencies. I will refer to such a scenario as a "split".

In essence, if the split is done properly, then the two networks will be incompatible and not recognize each other. Each will believe it is the one true coin, and will treat any transaction on the other network as invalid garbage.

The two networks do share a common blockchain history up to the point where the split happened. So if you have a bitcoin in address X in cold storage prior to the split, each network will recognize that there is a bitcoin in address X, so you will indeed have a coin of type A and a coin of type B. If there are several splits while the coin remains in the same address, you will have a coin in each of the resulting currencies.

You can "see the new coin" the moment there are block explorers for both networks. You can examine the block explorer for network A and see that you have a bitcoin, and you can examine the block explorer for network B and see that you have a bitcoin. Once you've installed wallet software for both network types, you can import your private key to both and have each display that you have 1 bitcoin.

This means that you are now able to create two transactions - one that sends a bitcoin to an address C of your choosing, which will be recognized as valid by network A; and one that sends a bitcoin to an address D of your choosing, which will be recognized as valid by network B. (This requires that there will actually be software available for both networks A and B, and that it will be careful not to create transactions that might be mistakenly picked up by the wrong network).

What happens next involves interaction with the real world, and the real world is messy. There's no absolute answer to what will happen as it depends on what kind of software and services you are using.

If you "have 1 bitcoin in an exchange", remember that you do not really have a bitcoin, the exchange has a bitcoin and is contractually obligated to give you 1 bitcoin when you demand it. This becomes messy when a split happens and it's not universally agreed what "bitcoin" means.

The exchange will, technically, definitely now have both a bitcoin A and a bitcoin B. What will it do about its contractual obligation is up to it. The exchange could treat both coins as legitimate, support balances of both Bitcoin A and Bitcoin B (the same way it has balances of any other currency), and credit you with 1 bitcoin in both (since your pre-split bitcoin really is equivalent to a bitcoin on both). Then you can either withdraw both, sell both or any other combination.

Or it could decide that only one of the coin types is legitimate. So it will run only nodes of Bitcoin A, recognize only transactions of Bitcoin A, and list a balance only for Bitcoin A (which it will just call "Bitcoin"). When you ask to withdraw your bitcoin, it will send you only a bitcoin A. It is technically capable of sending a bitcoin B as well but it ignores this possibility. The bitcoin B will probably be lost (or at least kept by the exchange).

So, it's in your best interest to keep your coins only in exchanges / hosted wallets that recognize the importance of handling splits properly. (Or, preferably, not keeping your coins in exchanges or hosted wallets at all).

I've analyzed the contingency of a split in more depth at https://fieryspinningsword.com/2015/08/25/how-i-learned-to-stop-worrying-and-love-the-fork/.

  • Thanks for both answers. I have edited the question with another scenario... – Josh Jan 10 '17 at 8:49
  • @Josh: Ok, I've expanded my answer accordingly. – Meni Rosenfeld Jan 10 '17 at 13:03
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    So just to be absolutely clear: if on july 22 you had 1 bitcoin rated at $2810, and on july 23 the BTC/BCH fork happened, then on july 23 you owned both 1 BCT opening at $2808 and 1 BCH opening at $555 , with the possibility to sell the BCH for $555 and buy more BCT with it, giving you instant 20% more BCT?! Is it really that simple to understand!? Or am I missing something?! – nl-x Nov 20 '17 at 17:09
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    @nl-x: One thing you may be missing is that when there is a significant split, many exchanges halt trading until the dust settles. Otherwise they cannot sync balances with blocks. When trading resumes, there is no reason BTC should trade for the same price it did before - prudent traders will update the prices offered, taking into account that the "Bitcoin" they are now paying for does not award BCH as well, and thus less valuable than the pre-split BTC which also awards BCH. So if the market estimate post-split BTC to be worth $2300 and BCH to be $500, it will valuate pre-split BTC at $2800. – Meni Rosenfeld Nov 20 '17 at 21:37
  • @MeniRosenfeld I used actual figures in my example that I got from here coinmarketcap.com/currencies/bitcoin/historical-data/… and here coinmarketcap.com/currencies/bitcoin-cash/historical-data/… . Before was $2810, and after was $2808 +$500. It shows BCH listing starting July 23, so I assume that was the fork date (?) – nl-x Nov 20 '17 at 21:41
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Yes, that's basically how it works. You will still only ever own one bitcoin, since only one branch will ever be considered to be "Bitcoin". However, you will also own 4 other coins on 4 other blockchains. You should also be aware that if any of these 4 coins have significant value, it is likely because Bitcoin has decreased in value. In other words, the value of the forked coins only have value that they took away from the one still called Bitcoin.

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