We will use this as the basis for our prices. We reserve the right to determine which cryptocurrency unit has the majority consensus behind it. If the fork results in a viable second cryptocurrency, we may open an equivalent trade in the new cryptocurrency on client accounts to reflect this or, instead of creating an equivalent trade, we may make a cash adjustment on client accounts.

This would be at our absolute discretion and we will have no obligation to do so. We will notify clients of any actions we will take or have taken. Clients should pay close attention to their trade s during this period and consider any implications the new trade may have on their account, such as increased margin requirements.

Where clients do not have sufficient funds in their account to meet margin requirements, clients may be subject to an account close-out. When a hard fork occurs, there may be substantial price volatility around the event, and we may suspend trading throughout if we do not have reliable prices from the underlying market. We will notify clients when we have taken this action. We will endeavour to notify clients of potential blockchain forks.

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No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. What are the risks? What is ethereum? Cryptocurrency trading examples What are cryptocurrencies? The advance of cryptos. How do I fund my account? How do I place a trade?

Do you offer a demo account? How can I switch accounts? Search for something. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. What are blockchain forks? Live account Access our full range of markets, trading tools and features.

Open a live account. Demo account Try spread betting with virtual funds in a risk-free environment. Open a demo account. Discover cryptocurrencies Read the next articles in our series. What are cryptocurrencies? Whichever method is used, the result is the same. A majority of the community needs to agree before any fundamental changes can be implemented, or else you risk a hard break.

The result of a successful upgrade is that a new coin will fork off from the blockchain, from the block where the upgrade took place. Two separate coins with two separate ledgers, all originating from the same blockchain. In the case of updates like SegWit, everyone ideally updates to the new protocol, so only one coin exists. In cases of hard forks, like Bitcoin Cash , two different coins and blockchains will run simultaneously after the fork.

The first outcome is the most common, as happened with Ethereum and Ethereum Classic, with Ethereum vastly outperforming Ethereum Classic. The second is rarer, but it does happen. Bitcoin Cash and Bitcoin ended up broadly coexisting once the SegWit 2.

Forks can be disruptive experiences for a community. There are often competing visions for the future of a cryptocurrency and this can lead to a point where traders and miners feel that they have no choice but to go their separate ways. For example, the lead up to the Bitcoin and Bitcoin Cash split happened after a series of increasingly venomous debates within the community.

On the other hand, sometimes, this level of disruption can be enough to prevent a fork from taking place. The controversial SegWit 2. The plan was put on hold due to fears that the upgrade might lead to another hard fork and would further destabilize Bitcoin. Hard forks can have a profound impact on the cryptocurrency and not just because of the uncertainty caused. The Bitcoin Cash hard fork is a good example of a quirk that can occur.

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For example, if you had held 10 Bitcoin at the time of the Bitcoin Cash fork, you would have 10 Bitcoin Cash. This can lead to some really interesting waves within the market. Large traders, or whales , can make big waves on the market.

Whales are generally large organizations that own hundreds of thousands of Bitcoins. This is enough that their decisions will strongly influence the direction of the market. Some large private traders, or dolphins , also have enough stake to influence the market to a certain degree. This gives them a strong incentive to increase their stake in the parent token.

Thus, they begin to buy every token they can find. Their huge size means that they can artificially drive the price of the parent currency higher in the lead up to the fork as the whales and dolphins buy up everything they can find. The whales are rewarded with new tokens on a one-to-one ratio.

Because whales know that the price of the parent company has been inflated by their actions they proceed to dump both the new token and the parent token on every exchange they can. This can cause the value of both the forked and parent token to crash in value. Over time, their values will begin to stabilize as the traders use their profits to purchase more cryptocurrency coins.

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The above example also applies to splits where the entire blockchain is cloned. Many forks only copy the underlying code, so while a new coin is corrected it does not create duplicates. In these cases, traders act a little differently. It is also possible to see traders largely abandon the original cryptocurrency in favor of the new fork, as happened with Ethereum and Ethereum Classic with the former strongly outcompeting the latter. A hard fork marks an unstable time for a cryptocurrency.

The community will often be divided over the issue and the market is generally very volatile, even by cryptocurrency standards. How you will react will largely depend on the stake you have in the currency and the type of fork you are looking at. Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity.