With bitcoin value now above $5,600 and still going up, a lot of bitcoin holders have made serious gains already, and there are still more gains ahead as bitcoin would soon fork to create a new cryptocurrency (bitcoin cash) for which every bitcoin holder is entitled to an equal amount of Bitcoin Gold (this means that if you have 1 bitcoin before the fork, you’d be having 1 Bitcoin and 1 Bitcoin Gold after the fork).

But to ensure that you receive your Bitcoin Gold and that your Bitcoins are kept safe during the fork, you need to have total control of your Bitcoins and your Bitcoin Wallet, which means being the only one in possession and control of your bitcoin wallet Private Keys.

A private key or secret key is a set of alphanumeric password/number used to send/receive your bitcoins to/from another Bitcoin address. It is a 256-bit long number which is picked randomly as soon as you make a wallet. The degree of randomness and uniqueness is well defined by cryptographic functions for security purposes.

This is how the Bitcoin private key looks (it always starts with 5): 5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF

If your coins are on an exchange and there is a persistent hard fork, exchanges are not obliged to give you anything but what they approve as a valid chain, chains that might start trading on other exchanges could be completely ignored by your exchange. it is up to the exchange to decide whether to give you access to your coins on one or both chains. Some exchanges have made public announcements that they will not be supporting two chains, which may concern customers.

A few other reasons why it’s quite risky to store your Bitcoins on an exchange or third-party online wallet:

  • There have been instances of Exchanges being hacked (find list with hack dates here) and you might lose all your bitcoins if such an event occurs.
  • There have been events of exchanges shutting down (for instance btc-e) and you can also lose all your bitcoins.

With all the uncertainties surrounding the fork, being in control of your Bitcoin Private keys would definitely keep you on top of the game before, during and after the fork, ensuring you don’t lose your hard-earned Bitcoins and Bitcoin Gold.

You can read more about Cryptocurrency Wallets, understand how they work and discover which ones are the best for you here.

Best of Luck

Share this:

Leave a Reply

Your email address will not be published. Required fields are marked *