Electrum Bitcoin Wallet Simulates Chain Split on Bitcoin Testnet

Posted in: Markets
June 23, 2017 7:30 PM UTC

Computer science in action, some might say. In the Bitcoin space, we hear a lot of talk about the “danger” of a chain split, and the unending mantra “more hash power = more security.” Some analysts believe that a significant reduction in hash power could be experienced by the Bitcoin blockchain, however, without the chain becoming significantly more insecure.

The development teams in both theoeretical forks, if intending to maintain their chains, would be best to actually switch the algorithms away from those used by more powerful chains in order to avoid potential for periodic inter-chain warfare. A major chainsplit would ultimately, of course, require a secondary Electrum wallet to be created, with the original maintaining for the dominant fork of the Bitcoin blockchain.

The “Segwit2X” agreement is supposed to head-off an actual User Activated Soft-Fork on August 1st, but there are no guarantees this plan will work out. There are those who believe that regardless of how miners signal come August 1st, no actual blocksize increase will be implemented later on, which is part and parcel of the agreement – that larger blocks would follow the network activation of Segregated Witness.

The prospect of a chain-split is still daunting, but most Bitcoin users should be safe so long as they keep their coins somewhere safe. Electrum wallets are probably not the best idea for this metric, regardless of how prepared for such a split they are. A better option for anyone would be to store their coins in a paper wallet or a normal Bitcoin Core wallet, and simply not transact with those coins until things have settled.

Electrum is a lightweight wallet implementation which works by allowing you to use someone else’s full node for sending and receiving transactions. You don’t actually maintain the entire blockchain, which you don’t have to, but you by keeping your coins stored in this manner you do run the risk of suffering by decisions made at the server level. As such, the safer way to maintain your coin stash is to keep it somewhere within arm’s reach – your own full node, or a paper wallet. It’s probably important to add that the risk to those who hold their coins in Electrum is infinitely safer than those with no plan, who intend to keep their coins on exchanges. These coins will be most at risk for a multitude of reasons, not the least of which is the temptation by exchange operators to execute exit scams and blame any potential network confusion, which has happened in the past regarding malleability attacks.

Featured image from Shutterstock.

Last modified: July 3, 2020 7:54 AM UTC

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P. H. Madore @bitillionaire

P. H. Madore has written for CCN since 2014. Please send breaking news tips or requests for investigation to bitillionaire+phm@gmail.com. He lives in Maine, USA. A single father of four young children, he does not discourage financial donations, provided they do not come with strings attached.