I'd love to hear the answer..... or the resolution as to how the Bitcoin fork, impacts the value of your holdingsover the next several days.
It's been one of the strangest things I've ever seen in "financial markets". Maybe most Bitcoin holders don't know how markets work? I don't know, but here's what has happened.
On July 31st one Bitcoin was about $2,700, and I think there have been ~16 million out of an eventual 21 million maximum mined. So 16 million Bitcoin have been mined, with probably plenty of them lost back from the early days when one Bitcoin was worth 0.00001 pennies.
So, on Aug 1st, the Bitcoin blockchain forked into Bitcoin (BTC) and Bitcoin Cash (BCC). Bitcoin's (BTC) software is agreeing to do some upgrade that will improve efficiency beginning November 1st. Bitcoin Cash's (BCC) software has refused to implement the modification, so there are now 2 blockchains (BTC and BCC) which are identical up to Aug 1st, and different after August 1st.
Everyone who held BTC on this fork now has BTC and the right to one BCC. So there are 16 million BTC's mined and up to 16 million BCC's available to the holders of BTC coins.
It's like a stock split, sort of, but nobody knows whether both chains will flourish and grow, or one of them will be the dominant one while the other fades away and dies off, or something in between those two outcomes.
So today BTC (the chain agreeing to implement the software change on Nov 1st) remains at about $2,700 per coins. No meaningful change in price. It's as if nothing happened.
Surprisingly, BCC started off around $200 per coin, went up to $800 per coin and is now about $480 per coin.
coinmarketcap.com
So.......there is a new $8 billion of BCC created out of BTC, and BTC did not decline in price. At least it hasn't declined yet.
For a stock investor, seems really really strange. BTC is not a company, I understand that, but it's sort of like a stock split in that if BCC is now worth $8 billion, and BTC pre-fork was worth $40 billion, we would expect BTC post-split to be worth $32 billion. But no, BTC remains worth $40 billion.
It's as if the US increased the money supply such that everyone with a US dollar gets a new US sorta dollar, and the sorta dollar winds up being worth 15 cents, and there's no resulting inflation.
Uhmmmmmm, can you say free money!?!?!?
So some caveats - it's a bit tough for normal non-techies to figure out how to get the BCC that they are due from their BTC ownership. But I'll bet anyone with $500,000 of BTC is reasonably techie enough that they can figure it out. And some exchanges don't allow trading in BCC yet, but others allow it. So.....why didn't the two coins shift to make the total value $40 billion combined? I really don't know.
And I was always under the impression that Aug 1st was a big big deal for Bitcoin. If BTC successfully agreed to upgrade WITHOUT a fork, that was supposed to be good, and BTC would rocket up in price. But....the outcome was a fork, and the other fork is quite successful (it's the third most valuable coin after BTC and Ethereum, it's massive!) which I think is bad for Bitcoin (there are now 2 competing chains each wanting to dominate the crypto world), so I would have expected the combined value to plummet. Since there are now two Bitcoinish chains, and they want to do the same thing, and who will win out becomes uncertain, I would expect the value of BTC + BCC to go a good bit BELOW $40 billion, since all the pre-fork Bitcoin holders who are holding and not selling the big dog of crypto currency can no longer be 90% confident that they have the big dog. Uncertainty = price goes down.
But BTC hasn't budged.
My guess is if BCC gets more easy to access and trade, and stays with a high value, that BTC will plummet, and the combined value of the two will fall well below $40 billion. The crypto world doesn't want two major competing coins, it's bad for the long term story. And......if the miners (who make the upgrade decisions) think they can fork the chains, and actually MAKE rather than lose money, then surely they are going to try to fork it as many times as possible. Lots of forks would be awful (I think) for the crypto system.
Anyway, it's pretty frickin' confusing. Maybe a few weeks from now BCC will collapse, and BTC will rocket (that would make sense), but as long as BCC is doing well, it's completely illogical from a financial perspective. |
