So even after the eventual HF, don't panic and just see how it goes for a period of time?
Still very confused how this will all work. Surely no one will use the coin from the chain which is worth less than the other right? As you can see I don't understand all this. I bought up btc and then paper wallets and thought I was fine to leave it all alone.
Wrong.
You are fine with your paper wallet as long as you have no interest in trading either of the two sides during a contentious hard fork.
We have a block chain. All the transactions from the beginning of Bitcoin are in that block chain. Control of private keys (stored on a paper wallet for example) gives you the ability to append the block chain and move bitcoins to another address.
If we have a contentious hard fork, there will be two simultaneously surviving copies of the block chain on "different" networks. Yet, the entire history from the beginning, right up until the fork, is exactly the same. So your private keys will be able to transfer bitcoins on both copies of the surviving block chains.
If nothing else is changed, when you sign a transaction with your private keys, that transaction is valid on both networks. So if you move your coins to a different address, your coins on chain A will go, and your coins on chain B will go. This is called a replay "attack". It's not really an attack, it's just how it works.
In order to disassociate your coins (send coins on one chain to address X and coins on the other chain to address Z) you have to find a way to "taint" coins on one chain so that the transaction is not valid on the other chain.
This can be done by combining coins from block rewards that occurred after the fork, because those block rewards only exist in one chain, with coins under your control. Once a coin is "tainted" it can "taint" other coins by combining them.
One can also leverage BU's larger block size to disassociate their coins.
First you broadcast a very low fee transaction sending your coins to another address you control. This low fee transaction will be included in BU's chain no problem (after all they are all about low fees and bigger blocks to fit every transaction).
It's unlikely this transaction will confirm on Core's chain, due to the smaller blocks and competition (aka spam). Once the transaction confirms on BU's chain, you then use a RBF transaction to send these coins to a different address (not the one used in the previous, low fee BU transaction) under your control, with a large fee.
Once this high fee transaction is confirmed on Core's chain (I would wait an extended amount of confirmations due to possible attacks during the day of the fork), your coins are effectively disassociated (they are on different addresses on different chains) and you can safely send BU coins or Core coins without worrying about a replay attack. You can also use these coins to "taint" other coins if you so desire.
If you aren't worried about disassociating your coins early on (for speculation reasons), you can ignore all of this and sit on your paper wallets and let the smoke clear. Both chains may survive and you may still have to disassociate down the road.
None of this applies if you aren't the sole controller of your private keys. You only have Bitcoin IOUs and are left to the whims of whoever owes you bitcoins. They may, or may not, give you your coins on both chains.
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