What Should You Do Right Now That All Cryptos Are Crashing Hard
All the major altcoins are dropping right now, even my beloved DogeCoins.
Below is a screenshot taken from cryptocompare.com showing the price changes of altcoins as of July 11, 2017:
What is causing this price drop?
This is most probably due to the impending Aug 1 crossroad in BTC's future. For those that don't know, on Aug 1 Bitcoin will undergo a user activated soft fork(UASF). This soft fork plans to activate Segwit as a solution to Bitcoin's scaling issues. Some are speculating that miners are opposed to this activation and that this disagreement will lead to a hard fork ending in 3 possible scenarios for investors:
a) Your Bitcoin balance will stay the same and you will be able to use that Bitcoin token as usual
b) Your Bitcoin balance will be zero since your wallet chose the wrong chain
c) Your wallet provider will offer you a chance to keep your token balance on both chains or to choose one of them
But wait..... What is the difference between a Soft fork and a Hard fork?
The texture of course. ba dum tss Much jokes, such wow.
A soft fork is a change to the bitcoin protocol where some previously valid blocks/transactions are made invalid, and the rest of the previously valid blocks/transactions are kept valid.
A hard fork is a permanent divergence in the blockchain, that occurs when non-upgraded nodes can't validate blocks created by upgraded nodes that follow newer block validation rules.
In simple terms, a company requiring all employees to wear flip flops is a soft fork. On the other hand, a company telling their employees they can now choose to wear either rubber shoes or flip flops is a hard fork.
What You Should Have Done
Before we discuss what you should do, let us first discuss what you should've done before investing a single cent in cryptos.
a) Have a savings account
b) Set-up an emergency fund that covers a minimum of 6 months of your monthly expenses
c) Pay all your debts
These 3 do not only apply to cryptos but to investing in general. And most of all, only invest the amount you can afford to lose. This means that you won't go robbing a 7-11 when you lose all the money you invested.
What You Should Do Now
I am not an expert by any means and I certainly don't have an all seeing eye that will foresee the eventual outcome. The following are suggestions to help you mitigate risk in case the worst does happen.
a) Put your coins on wallets where you own the private keys. Take them out of exchanges and online wallets and transfer them to cold storage wallets, hardware wallets, or paper wallets.
b) Don't make any large transactions before Aug 1 and at least 1 week after it.
c) Don't panic sell, unless you have irrefutable data at hand telling you that the end is coming.
I hope this post will help you regarding the upcoming Aug 1 crossroad. Remember to make your own research and to not give in to hype and fud posts. Don't panic, stay calm and trust your gut.
