How to Get “Free Coins” From Bitcoin Forks – Everything the Average Cryptocurrency User Needs to Know About Bitcoin Forks
To get “free coins” from a Bitcoin fork, you need to have Bitcoin on a platform that supports the fork before the block height at which the fork occurs.
This is because the developers of the new chain will take a “snapshot” of the ledger at a specific block height thereby creating a duplicate copy of the chain (the result being that all holders of Bitcoin on one chain will hold an equal ratio of the new coin on the new new chain). That duplicate will become the new chain after it goes live.
After the forked blockchain goes live down the road (which can take weeks to months), you can them claim your “forked coins.”
How to claim coins can differ depending on which platform you have your Bitcoin on. If it is third party platform, they will credit your account if they support the fork at a date determined by the platform. If you control your private keys (for example via a Bitcoin Core wallet), you’ll need to obtain and configure the wallet of the new coin yourself using your public wallet address and private keys from your Bitcoin wallet (thus you must retain access to any wallets where you stored Bitcoin when the snapshot of a given fork occurred).
That is the gist of how to be in Bitcoin for the fork and get “forked coins,” we explain the process in step-by-step detail below and offer some extra notes.
TIP: See a list of upcoming Bitcoin forks that you might want to be holding Bitcoin for.
How do hard forks work (simple)? When a coin forks (here implying a “hard fork”) a new copy of the existing blockchain is made. This creates two identical ledgers (thus anyone holding coins on one chain now holds equal parts of the coin on the new chain by default). The developers of the new coin can now tweak Bitcoin’s code to create a unique asset. When the new chain goes live, everyone who held Bitcoin will have access to the new forked coin (assuming they held their private keys or were on a platform that supports the fork). That is the gist, let’s not focus on the nuts and bolts of forks here.
STEP 1 – Being in Bitcoin on an Platform that Supports the Fork Before the Snapshot is Taken
To get “free coins” / “forked coins” (AKA to qualify for the fork) you must be in Bitcoin on a platform that supports the fork before the “snapshot” occurs (that includes third party platforms or being in direct control of your private keys, as discussed above; see more notes below for details).
The developers of a given fork will take a “snapshot” of the ledger/blockchain (a public record of all wallet balances) at a given block height. The developers of a given platform will generally do the same (so for example Coinbase/GDAX will record balances in the wallets they host on their platform… for forks they support).
Anyone in Bitcoin before that block height will end up owning equal parts of the forked coin by default if they are in control of the private keys. Meanwhile, if one has their Bitcoin on a platform that supports the fork, they should by all means be credited for that as well (although its at the discretion of the platform).
In other words:
- You must have your balance recorded on the ledger before the block (the transaction must be recorded to the blockchain before the snapshot block occurs).
- Then after the block has been recorded, you can safely move your Bitcoin (but you must retain access to your wallet’s private keys and public address, as you’ll need them to access the forked coins).
With all that said, being in for the snapshot block is only step 1. You can’t claim your coins right away, the new chain needs to go live first (and this is at the discretion of the developers of the fork).
TIP: As noted above, but to be clear, once you are “in Bitcoin for the snapshot,” then from that point forward you can sell your Bitcoin. Bitcoin and the forked coin no longer have any relation after the snapshot block. After that block, the blockchain essentially bifurcates (forks) into two compeltely different chains (like if you do a “save as” of a document; changes to the old document don’t affect the new one).
EXAMPLE OF BEING IN BITCOIN FOR THE SNAPSHOT BLOCK: To get Bitcoin Gold you had to have had Bitcoin in a wallet or exchange that supported the Bitcoin Gold fork before block 491407. With forks the block height (AKA block number) matters, the date is just an approximation. It isn’t good enough to do a transaction right before the block, as your transaction must be recorded on the blockchain before the block!
WHICH PLATFORMS SUPPORT BITCOIN FORKS: Platforms that support Bitcoin forks include third party Bitcoin wallets (it differs by fork, Coinomi has been good about supporting forks), exchanges like Binance or hitbtc with a good record of supporting forks (again, it can differ by fork), and wallets that gives you direct control of your private keys (for example in a wallet like Bitcoin Core)! Other entities like Coinbase, Bittrex, TREZOR, etc (that is third party wallets and exchanges) may or may not support a given fork. Annoyingly, many wallets/exchanges have a habit of not telling their users whether or not they will support a fork until after the fact.
NOTE ON GETTING BITCOIN FUTURES FROM THE FORK: Some exchanges offer Bitcoin fork futures at the snapshot block. For example Binance and hitbtc have done this in the past. Futures can be great, they allow you to trade a coin before it even goes live! If the fork doesn’t occur, then you really scored. However, if the fork occurs and is stable, you could end up trading away a coin with a hefty future price tag for pennies on the dollar by trying to unload it right out of the gate. Thus, taking advantage of early access to a coin via this type of future product is a mixed bag. Once you trade away your futures, you no longer get the coin. Likewise, if you buy more futures, you’ll get more of the forked coin if it ends up being legit (but will get only the futures if it doesn’t). These futures aren’t the same sort of futures product as the Bitcoin futures traded on the traditional stock markets.
STEP 2 – Wait For the Chain to Go Live
Step 2 is waiting. You have to wait for the chain to go live. This can take weeks or months depending on the fork.
The only way around this is if you were on exchange that offered futures of the forked coin (described above).
Remember, if you get futures and you trade them, realize that you are trading away your forked coins. Sometimes, like with Segwit2x, this is great. The Segwit2x fork never occurred, so only users who traded futures benefited (holders of Bitcoin did not).
However, this can be pretty rough if the fork ends up doing well. Imagine selling your Bitcoin Cash futures for $200 in August. That isn’t ideal, today the coins trades around $3,000.
Anyways, if you don’t have futures (and maybe even if you do), step 2 is “wait.” Yes, waiting was important enough that it got its own step.
WARNING: If you try to skip step 2, you could fall victim to malware or cons. For every fork, there is a fake wallet and a fake set of instructions attempting to trick you. In every case, the goal of the malicious software/instructions is to get you to transfer your Bitcoin into the void. If you send your Bitcoin into the void (AKA to some internet thief) then you have lost your Bitcoin. Don’t do this, wait for official instructions!
STEP 3 – Once the Chain is Live You Can Claim Your Coins… If You Are In Control of Your Private Keys; Otherwise, More Waiting…
If you are in control of your private keys: Once the devs announce that the new forked chain is live, you are ready to claim your coins. To do this you’ll need to configure the wallet of the forked coin and import a copy of your Bitcoin keys. This means you’ll need to make a copy of the same public and private keys that you used for the wallet(s) in which you stored Bitcoin during the snapshot (you don’t have to have coins in them anymore, but you do need the public and private keys). For this reason it is important to retain access to all wallets in which you held Bitcoin during the snapshot. It is also important to wait until you know the new chain is stable. If the coin doesn’t have replay protection, it could result in you losing any Bitcoin still in that wallet. Thus, you may want to “wait” even if you control your private keys. Let someone else play crash test dummy, and then once everyone is sure “replay protection” is there and the wallet is stable, at that point its safe to configure your new wallet and claim your coins.
If you are in a wallet that supports the forked coin: You need to follow the directions of the wallet and configure the wallet for the new forked coin.
If you are on an exchange or managed wallet (like Coinbase) that supports the forked coin: Wait until they credit your account. Using a third party is the simplest solution for coins in many ways, but it can be the most stressful as all your friends are already configuring their wallets and trading futures you are just like “I wonder if Coinbase is going to blog about this?” Anyways….
See detailed examples of each method: How To Claim Your Free Bitcoin Gold [BTG] From Any Wallet and How To Safely and Easily Claim Bitcoin Gold + Almost Any Other Forks.
STEP 4 – HODL (AKA WAITING)
Now that you have your new coins, you should likely “Hold on for Dear Life” (AKA HODL) and wait for them to go up in value. If you don’t think your forked coins have the potential to see a nice increase or two over the next year, you don’t know crypto.
I strongly suggest not trading away your coins out of the gate, but it really depends on your personal goals and the confidence you have in the fork. Anyways, it is your call. Just saying, historically, holding a forked coin has been better than trying to sell it out of the gate for a low price (if you see a giant spike in price out of the gate, by all means, take that into account, I’m only saying don’t be the one who sells your Bitcoin Cash for $200).
That is really all there is to it. The gist is as simple as “be in Bitcoin for the fork, in a wallet where you control your private keys or a platform that supports the fork.”
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