I had a bunch of people asking me over the past week, if there is a hard fork - what happens if your bitcoin is in a hardware wallet? Do you have access to the original coin and the forked coin? If so, how does that work with ledger/jade/trezor/etc - do they just add it to the suite and you can move it like BTC?
If none of the exchanges list the smaller forked coin, I'm guessing prices can't drop too much on it?
From what i've look at in 2017, it looks like for a while it was uncertain, but BCH sold off significantly compared to BTC. Do you think the same would happen here?
Also wouldn't there be high risk of a 51% attack on the smaller chain, because there isn't alot of hash?
Any further information on this would be cool - I know alot of people asking these questions and I figured to ask the community full of experience here.
A hardfork introduces a protocol rule that is not forward-compatible to existing software. In some cases this might be a protocol that doesn’t affect the transaction format. This could for example be a blockweight limit increase. The upgraded software might accept 8M weight instead of just 4M weight, but unupgraded nodes would continue to limit blocks to 4M and thereby reject blocks created per the new rules, but hardware signers would be able to sign transactions just fine.
If the hard fork changes the format of the transaction, e.g., by changing the way signatures commit to transactions as Bitcoin Cash did when it forked off from Bitcoin, then the hardware signer would require a firmware update to be able to produce the correct signatures, and presumably the companion wallet software for your hardware signer would either get a new function that allows you to copy your Bitcoin wallet to the new forkcoin or create such a copy for you automatically.
From that point on, you would use one wallet to manage your funds for Bitcoin and the copy of the wallet to manage your funds for the forkcoin.
The exchange rate of cryptocurrencies is discovered by trades on exchanges. If no exchange adds the cryptocurrency, it might not have a price or the price would be subjective to the various individual trades sellers and buyers negotiate directly. I would imagine that a Bitcoin forkcoin would be sufficiently interesting that someone lists it. But it might be a tiny or unreputable exchange that you might not want to make an account on.
In my subjective opinion, BIP110 had fairly little support, so the exchange rate of the coming forkcoin should be expected to be pretty low.
Yes, smaller cryptocurrencies are much more susceptible to 51% attacks and other miner attacks.
One important aspect is to watch out whether Luke adds replay protection to his forkcoin. If they do not change the transaction format, any transaction for which all input UTXOs are available on both chains will be eligible for either chain. If you try to send your Luke-coins to an exchange, you might also send your bitcoin there at the same time. If there is no replay protection, you will need to split your coins first, to make sure that you can transfer them independently on the two chains. Hopefully Luke does add replay protection, and the any transaction on either chain will not be replayable.
Wow great response Murch - very well written! We will have to see how this progresses on September 1st - it is my first time watching a fork up close, is in 2017 I was loosely in it.
Thanks!