  We present a model for the different X-ray spectral states displayed by
Galactic Black Hole Candidates (GBHC). We discuss the physical and spectral
implications for a magnetically structured corona in which magnetic flares
result from reconnection of flux tubes rising from the accretion disk by the
magnetic buoyancy instability. Using observations of one of the best studied
examples, GX339-4, we identify the geometry and the physical conditions
characterizing each of these states. We find that, in the Soft state, flaring
occurs at small scale heights above the accretion disk. The soft thermal-like
spectrum is the result of heating and consequent re-radiation of the hard
X-rays produced by such flares. The hard tail is produced by Comptonization of
the soft field radiation. Conversely, the hard state is the result of flares
triggered high above the underlying accretion disk which produce X-rays via
Comptonization of either internal synchrotron radiation or soft disk photons.
The spectral characteristics of the different states are naturally accounted
for by the choice of geometry: when flares are triggered high above the disk
the system is photon-starved, hence the hard Comptonized spectrum of the hard
state. Intense flaring close to the disk greatly enhances the soft-photon field
with the result that the spectrum softens. We interpret the two states as being
related to two different phases of magnetic energy dissipation. In the Soft
state, Parker instability in the disk favours the emergence of large numbers of
relatively low magnetic field flux tubes. In the hard state, only intense
magnetic fields become buoyant. The model can also qualitatively account for
the observed short timescale variability and the characteristics of the X-ray
reflected component of the hard state.
