4

Let's say the year is 2034 (optimistic?) and the New New World has adopted Bitcoin as its currency, and now there's a civil war, and naturally the two sides want to have their own version of Bitcoin ... hence a fork.

A permanent fork as far as anyone can tell.

What happens to my bitcoins in such an event?

If originally I owned BTC 1,000, do I now own BTC 1,000 and BTC2 1,000 separately after the fork, or is it just BTC 1,000, or do I have to choose between the two chains (i.e. I get either BTC 1,000 or BTC2 1,000 but not both), or do I lose all my BTC unless I redeem them for either BTC1 or BTC2 ... or what?

I understand that forking Bitcoin into two or more currencies might reduce its value more than proportionately against real goods and services, which is to say that BTC2 10,000 might not buy you what you could have got for BTC 1,000 before the fork event, and we could get into the economics of that, but that's not my question. My question is specifically about the nominal and not the real, i.e. how many bitcoins I now own as opposed to what my bitcoins can now buy.

8

The question is too speculative to answer. The groups could institute whatever rules they want.

If you assume there's a group that's willing to modify the software to create a permanent fork, presumably they are doing so for some reason. And whatever that reason is, that will affect what changes they make that cause the fork.

They could decide to allow people to transact on both chains. Or they could demand that you send the Bitcoins to a Bitcoin eater in the other chain before they allowed you to move them.

  • Say BTC2 branches off from BTC in a way that neither will accept blocks from the other, resulting in a permanent fork. They remain on the same network, however, so valid transactions are included in both branches of the chain. Now if you're on BTC and I'm on BTC2 (i.e. we're using different clients) and if you make a payment to me, I'll see that payment on my BTC2 branch eventually. The same transaction will be included in two blocks (one on each branch). Is that correct? If so, then for all practical purposes BTC and BTC2 are the same currency, yes? – Manish Mar 30 '13 at 4:56
  • 1
    @Manish: Only for a short period of time. It wouldn't be long before the vast majority of moving Bitcoins were different in the two blocks. For one thing any transaction that used coins from a block reward after the split or had such coins anywhere in its history couldn't work in the other chain. – David Schwartz Mar 30 '13 at 16:37
  • Sure, so coinbase transactions couldn't be spent cross-branch, but other than that every transaction could simply be copied over from BTC to BTC2. i.e. both branches could in theory maintain identical transactions modulo the coinbase transactions. For example, BTC2 block N could simply copy all transactions from BTC block N but with minor changes of its own, such as a higher block creation fee and a lower difficulty level. It would be business as usual if BTC2 decided never to spend its coinbase transactions. – Manish Mar 30 '13 at 19:04
  • What I'm getting at is that a new client (not the default Satoshi client) becomes dominant in the market and then simply decides to mine its own branch. In this situation the new client's coinbase transactions couldn't be spent with users of the old client, but otherwise they could coexist. These coins could be easily marked as "new bitcoins" in the client software, so the user knows they can't send them to old bitcoin users. Eventually everyone or most people will switch over to "new bitcoins," the new client. – Manish Mar 30 '13 at 19:23
  • @Manish: It wouldn't be long before most transactions depended, in some way, on a past transaction that differed between the branches, either through the different coinbases or different resolutions of conflicting transactions. (Consider Satoshi Dice.) – David Schwartz Mar 30 '13 at 19:27
7

You would be able to spend your bitcoins twice - once on each branch.

The independent branches have no way of telling whether pre-fork bitcoins have already been spent on the other branch.

This only applies to bitcoins that you received prior to the fork event. If you receive bitcoins after the fork event you have to choose one or the other.

  • So effectively I would end up with BTC2 1,000 in addition to my BTC 1,000, right? – Manish Mar 28 '13 at 13:37
  • "The independent branches have no way of telling whether pre-fork bitcoins have already been spent on the other branch." I thought it was possible to look up the transaction history for an address just by looking at the blockchain. e.g. blockchain.info/address/1dice8EMZmqKvrGE4Qc9bUFf9PX3xaYDp What am I missing? (Thanks for the help, by the way. Much appreciated.) – Manish Mar 28 '13 at 15:13
  • @Manish if they are branched, there are two blochchains. If they could talk to each other, they wouldn't be split. – o0'. Mar 30 '13 at 10:50
  • @Lohoris OK. But there's the other possibility that they are in fact on the same network, so all transactions are included in both branches, they just happen to disagree on which branch is the main branch. – Manish Mar 30 '13 at 18:53
1

I’m a newbie, so get out your grain of salt, but here’s what I think:

If both sides are on “the” Internet, then either can read the other’s blockchain. And therefore either could reject a spend that has already happened on the other. If BTC1 knows that BTC2 is doing so, it would be foolish for BTC1 to not do the same.

It would also be possible (with software changes) for a spend made in one chain to automatically remove those coins from existence in the other.

HOWEVER, since no government is involved in maintaining the chain, the only way such a fork could happen would be for one of the sides to block any packets related to BTC, right? And with today’s encryption methods, VPNs, and things like TOR, the only practical way of doing that would be to block ALL Internet packets.

So, if you live on side two, the only way to spend on side one would be to travel to there (in this scenario, probably a dangerous thing to do).

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.