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Our policy on a possible Bitcoin hard fork

20 Mar 2017 21:37
Adrian Przelozny, CEO

As many of you are no doubt aware, there has been heated debate in the Bitcoin community in recent months about the best way of scaling the Bitcoin protocol to support greater transaction throughput.

This debate has led to a situation where it is possible that a hard fork may occur at some time in the future, with the Bitcoin blockchain splitting into two. This may result in two different versions of Bitcoin going forward.

I would like to provide some clarity to our customers as to how Independent Reserve plans to handle the possible future hard fork between Bitcoin Unlimited and Bitcoin Core versions of the Bitcoin protocol. The hard fork, if it were to occur presents a major challenge for Bitcoin exchanges worldwide. At present there is no suitable solution proposed to the ‘Replay Attack’ problem, meaning that there is no reliable way to send Bitcoin on a single fork of the chain, immediately after a hard fork occurs.

Another source of concern is that there is no reliable timeline at present as to when the potential hard fork may occur. It is possible that the network could fork at an unexpected moment in the near future.

To address these concerns, we have decided on the following policy:

1. Starting today, we will be implementing stricter restrictions on automated Bitcoin withdrawals. Most withdrawals will still be processed automatically, but if you find that your withdrawal is delayed due to requiring manual approval, please understand that this is being done to protect all of our customers and is put in place to avoid a transaction being sent immediately after an unexpected hard fork had occured.

2. If a hard fork was to occur, we plan on suspending Bitcoin deposits and withdrawals for a period of time. We will restore this functionality only when we are confident that Bitcoin transactions can be processed safely. Although we cannot guarantee exact timings, we expect this to not take longer than three to four days.

3. We will wait for consensus to emerge in the Bitcoin community about which fork of the chain is to be considered the successor of the current Bitcoin. If appropriate, we will make existing balances available to our customers on both forked chains, at some point in the future. The exact timing will depend on the stability of the Bitcoin network and whether both forks of the chain continue to be active.

Customers who wish to access their Bitcoin on both chains at the time of the hard fork should withdraw their Bitcoin from Independent Reserve since we cannot guarantee what will happen during the hard fork or when this access will be made available.

Thank you for your support and understanding.

Adrian Przelozny CEO, Independent Reserve