W.T.F. - What Are Bitcoin Forks/Airdrops?
This is not financial or investment advice. Please do your own research and make your own decisions. This W.T.F. is intended only to educate on the very basics of the topic.
What are Bitcoin forks?
A fork is where a new project starts and decides on different set of blockchain consensus rules, but decides to continue on from the Bitcoin blockchain. It decides on a block to serve as the fork point and begins generating a different block sequence that is incompatible with the Bitcoin chain. It has common ancestry with the Bitcoin blockchain, so private keys that held balances of coins before the fork block have the ability to spend those coins on the new chain and separately on the Bitcoin blockchain.
What are Bitcoin airdrops?
The Bitcoin software provides a ready-made cryptographic addressing system and the blockchain associates it with the owner's relative economic participation via the balance of BTC. For new, non-Bitcoin projects the software can follow the same cryptographic rules to allow you to receive the new coin at a Bitcoin public address. Some projects give airdrops to all bitcoin holders. Some give airdrops to a subset meeting a certain criteria. Others give airdrops to users that specifically opt-in to demonstrate interest in the project by cryptographically singing a message with a bitcoin private key that also holds a BTC balance.
How many Bitcoin forks are there?
There is some variation between the construction of these blockchain projects, so the true answer really depends on how you categorize them. Also, many projects are still in development. The best source for the current status is the table on our main page. We also have some more straightforward breakdowns from our data set:
Is this free money?
Yes, it is! A number of these coins have achieved some level of price support and these coins may be bought or sold on some cryptocurrency exchanges.
Why would anyone give me free money?
There are many reasons and each project is different. In general terms, it works to the benefit of the project by bringing attention from owners of coins on the original chain and incentivise them to participate in the new project by giving them a financial stake.
Are these projects legit?
Well, that depends on what your definition of 'legit' is. At this point, a subset of projects have an established a track record and have gotten their tokens traded on exchanges with high thresholds of acceptance. This set is likely to grow over time.
How do these projects sustain themselves?
Many projects have claimed a subset of the tokens on the new chain for themselves to pay for development, marketing, and other things. This is commonly referred to as a 'premine' or a 'founders reward'. Other projects have not done this specifically but may have a different strategy for sustaining.
Are these tokens any good?
It is not our place to say. Please evaluate each project on its own software delivery, communication, track record and other criteria and come to your own conclusions.
How do I locate my balance?
There are some block explorers and other tools. However not all of it is guaranteed to work and may also be a conduit of malware and/or may be broadcasting and recording information for malicious purposes - be careful! For this reason, we cannot specifically recommend any without knowledge of your particular risk profile.
How do I redeem my balance?
With the right software, you can use your private key to redeem those coins by sending them to an exchange. It is up to you whether you wish to entrust your private key to particular software. WARNING - there exists an amount of not-particularly-trustworthy-looking software out there asking for your private keys that might have side effect you don't want - please be very careful. For this reason, we cannot specifically recommend any without knowledge of your particular risk profile.
What is 'replay protection'?
This is a specific piece of code that ideally each forked project's software should implement that makes transactions for its chain invalid on all other chains. Not every project does this correctly, so the reality exists that spending coins on one chain may inadvertently have the side effect of spending coins on another chain.
What can I do about coins that haven't launched their network yet?
Some projects may never launch, even though they have announced a fork block or other details. If you hold out hope that they eventually will, it makes sense to keep possession of your private keys and hope they eventually follow-through on their announced plans.