Today, I'd like to do things a little differently with this blog post.
Normally I like to bring the latest cryptocurrency and Bitcoin news to the wonderful world of Steemit coupled with my own slight flair.
However, today I'd like to open it up a little more to hear exactly what the community here on Steemit thinks.
The Subject that I am curious about and would like to hear the community's thoughts on has to do with the latest fork of Bitcoin and Bitcoin Cash being created.
What else would I talk about right?
The Specifics.
Specifically, something very interesting happened on August 1st that was not all that expected, at least by me.
Bitcoin cash was created and it's market cap at the time was around $7 Billion USD (currently it's at just over $5 Billion USD). That isn't interesting by itself, it was interesting because Bitcoin didn't drop by a corresponding amount.
Normally when you have a split (of anything), any value that the newly created asset has is mostly subtracted from the original asset it split from.
This wasn't the case with Bitcoin and Bitcoin Cash. Instead roughly $7 Billion dollars were created out of thin air, with no drop in price in the underlying Bitcoin.
Poof!
Magic Money!
What's the problem?
That sounds great and all, especially if you are a holder of Bitcoin and got that free money, but what does that mean going forward?
Human nature would dictate that if someone just got a nice benefit without any real consequences, wouldn't they try to do it again?
Of course they would!
Specifically, there is now nothing stopping a group of miners getting together and splitting Bitcoin any number of times in the future to collect this seemingly free money.
At least the money would be free at first.
Eventually it would likely stop working like this after it was attempted several times, but my point in all of this is that what just happened with the creation of Bitcoin Cash and the free money that was created along with it potentially just opened a pandora's box of things to come...
Likely many more splits/forks like this are on the way...
If a group colludes to split the chain, they all can benefit, and after all, who wouldn't like a few more coins in their pocket?
What's to stop them?
What do you all think, did we just set a dangerous precedent for Bitcoin going forward?
Let me know in the comment section below.
I look forward to a nice debate! :)
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https://www.theodysseyonline.com/pandoras-box
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Bitcoin introducing Segwit and lightning networks, it will make super fast micro transaction, much faster than Bitcoin Cash causing it to be worth pennies on the dollar. Right now people are mining it because it is cheap and easy to do so but they are not holding it long term.
I don't think its free money, as they derive value from each other.
I think of it more like Bitcoin had a kid-
Now its in it's terrible twos! (Two weeks :P)
All original artwork by me- HotsauceIsLethal :)
Really what you say and all takes effort.
In normal circumstances the value of a spin off should be subtracted from the Bitcoin value. The reason why it did not happen could be that the Bitcoin market is not efficient or that Bitcoin cash really creates value. Both are reasonable explanations.
I think Bitcoin Cash is to stay since all Bitcoin owners did receive a free lunch and are held hostage by Greed and thus will try to maximise the profit.
I am only afraid that a new hardfork might be coming and that we will face three Bitcoins at the end of the year.
In case all hardforks will create and not destroy market value it might be a good thing although I would be suprised if the world really needs three types of Bitcoins
Although bitcoin cash has a shared history with BTC, it didn't remove anything during the fork. Normally in any split, the remaining entity is lessened (as in a share split), which is why the value decreases. In this case, bitcoin cash is more of a clone than a split bitcoin. So it did not remove any value from bitcoin when it split.
Additionally I think there was a lot of money waiting to flood into bitcoin but the fork put them off, so they waited on the sideline until the fork was completed, then piled in.
I think the hype built up over the months and years of debate was set on fire by the news mass media networks reporting on the split. Everyone and their grandmother got interested in Bitcoin and wanted to have one, but not before the split happened. Also, when the split happened, a lot of Bitcoin maximalists sold all the BCC they got for free to get more BTC and drive up the price even higher.
I hate to be the one to say it, but we need some damn oversight in cryptocurrency. At least some form of governance by the people to put some rules in place to prevent people from abusing the system. Otherwise we are going to see more and more attempts at this sort of thing.
Good points here. I agree with a lot of it, even the last part. I would like to see some regulation over ICOs and I would like to see some regulation in regards to the exchanges... their are pros and cons to both, I just think the pros outweigh the cons.
To be honest I am just tired of finding so many scams and absurd money grabs in ICO's and I feel bad for the FOMO investors jumping in on every ICO that hits the market. Something has to change!
i consider ico investment like angel investment . U spread out in the hope few hits make up for majority of the misses
I disagree with over site. I understand how you feel but it will lead to manipulation just like you see in the banks, stocks, and government itself. The people you would trust to over see those item would be in the perfect position to manipulate or be manipulated through blackmaill. It happens more than you might think, but I don't want to go down that rabbit hole right now..lol.
I am calling no one here lazy but you have to read your white papers, and educate yourself in what you invest in no matter what it is. If you don't then its just a roll of the dice or playing the lottery.
Not sure about a dangerous precedent , but the whole point is BTC/BCC and crypto is valued based on future expectation. if we try to value it based on % of forex transaction and store of value ,BTC might be valued at 100 of thousand dollars or more , thats just based on financial value.But we know that block chain can potentially change organizational structures,chain of commands, and currency system as we know it today.I donot know a precedent for valuing such a thing exist. If it makes a big social and financial change , which is very well possible,then crypto is way too undervalued!!! if not this could all come crashing down
Btw,I used your guide to setup witness and everything turned out well . Thank you. I wanted to use something that go in detail than the docker system which is easy but doesnt tell u whats its doing
The point of the split was not to create "free money", and it didn't even do that.
The market cap of Bitcoin is ever-expanding, remember that as I elaborate on this point. When I got into Ƀ, the market cap was less than 10Bil. It's over 50Bil today. It will continually go up as more people get involved.
BitcoinCash had initial mining strength over 30+% and it has been slowly falling, but that's beside the point.
The point is, that when the mining power shifts, and a new coin is created -- the money does not come out of "no where". It comes from the other coin.
The reason you don't notice is because there has been a huge wave and surge of newcomers lately, which make up for the fall in price. If you will notice, Bitcoin did actually drop a few hundred down into the 26-2700 range for a bit, before skyrocketing to 3400+.
The BitcoinCash caused a minor price decrease which was nullified by the newcomers and new bitcoin services that literally buy Ƀ at market value all day, indiscriminate of price.
All of these factors will cause the price of the original Ƀ not to fall, and to slowly climb.
BitcoinCash was created to be the sound money that Bitcoin was envisioned to be, designed the way it was meant to be. It was not meant to be a money-making scheme, but a better way forward.
I do not think it would be dangerous for Bitcoin if even 1000 alts are made from it, as we have now seen that the efforts of nearly 30%+ of the bitcoin and mining community have fallen upon deaf ears and are losing support. I think that coins with less noble causes would not succeed in the market, unless they sufficiently brainwashed the users into thinking theirs would somehow be superior.
Yes there is that possibility as well... One where the money did come out of Bitcoin, but since there was so much demand we just didn't notice it.
For example, say there was no split and we got passed the uncertainty surrounding Bitcoin and August 1st, Bitcoin would have increased by the same amount it has currently, PLUS whatever amount Bitcoin Cash is currently worth.
However, that scenario is much harder to actually measure but one I have considered as well. :)
While I agree with you that new investors coming into the space helped prop up Bitcoin and prevent losses, I would argue that a lot of Bitcoin's new found value is coming directly from Bitcoin Cash and the hype around it.
You can argue all day long, but in the end Bitcoin Cash created money out of thin air. The lost mining power in Bitcoin has already been replaced on day 1 (for the most part) by mass mining operations that have been preparing for this day for months and anticipated the split.
I know many of my friends sold all the BCC they got for a huge profit at over $600 and just bought more BTC and ETH with their profits. In most of these cases IT IS free money because the other coins are not effected by it and the entire cryptocurrence market cap grew by over $30 billion in a matter of days because of all this hype and the air drop of BCC!
The point of the BTC/BCH split was an engineering upgrade to make the BTC technology more efficient. So from a technology standpoint, the market cap grows when the new technology is applied. Just like windows or apple system/software upgrades that create better technology, upgrades grow the market cap of those companies. If you are looking at BTC/BCH as purely a stock split then it does not make sense. If you look at it as an upgrade in technology then it should grow because of new interest and a higher valuation from the new technology added.
Good point. It will be interesting to see if it really is an upgrade or not, the market will tell us over the coming years...
True. Expectations are currently positive. Another split down the road trying to game the market and not tied to an advance in technology could be detrimental and market expectations would likely reflect that.
meep
meh
meep
I find myself wondering if you all have seen this video?
https://steemit.com/cryptocurrency/@teamsteem/dan-larimer-said-one-of-the-most-inspiring-thing-ive-ever-heard
Start about 3 minutes in, and see what Dan thinks about oversight, and centralized authority.
Good point about how often will BTC fork.. It occurred to most I think; what's to stop this from happening constantly?
It's one of the things people most hate about ETH for example; but POW tokens will be prone to it I guess; their communities are not so orderly and organized.
But BCH may have a real purpose, as it creates new opportunities. Probably mostly for miners, but also people that need trades to go very quickly. I can imagine BCH trades VERY FAST compared to BTC, for example.
Probably less than 30 seconds, and it will be cheaper transactions too.
Listening to it now, thanks for the link!
Yes it will be interesting to see which coin the market ultimately decides to go with. They will likely both exist at least for a while. I didn't sell my BCH right away like some, just in case.
I think this kind of thing is dangerous. As you say it just leads to temptation for other to get in and do the same
For a long time stock splits have happened in the stock market. There were arguments that splitting a $100 stock with a 2:1 split would result in two shares worth $51. The reasoning with stock market stock splits was to keep stocks "available" to mom and pop investors. The current situation is interesting, and to a large extent is I think is the result of a lack of liquidity. To the extent it may help crypto currencies catch on it could be good. In my opinion, I think the lack of liquidity and stability, is a problem for widespread adaptation; however, it is noted that the other more centralized currencies that may have been structured as such have failed due to government regulations. With significant Wall Street Money now interested; it will be interesting to see what is happening. This could well be the Tulip Mania of today.
Interesting perspective- one I hadn't considered. I've been watching BCC since its inception. It started at around $300 (that's the first I saw) and within a day had soared to around $1700. Then it plummeted to around 1/10 of that ($175) It looks like somebody made a huge profit and then tanked BCC afterward. I know I'm probably not saying this right... but it looks like a bunch of speculators created it, made a bundle then abandoned it! If this becomes a pattern, it doesn't bode well for HF's in the crypto market.
BCH not BCC ;)
Most investors and traders I know did not believe in BCC and sold all they got immediately.
I made the mistake of buying some!
Bitcoin was trending up till the craziness of the split was brought up. So I believe the raise would have been sooner other wise. I guess you could say the value was from that and the pull back in July around the 17th. I know all of the chrypto market took a hit the same time. Due to the ICO run throu ETH, but I do believe that included the split of BTC.
Most people just sold off their BCC to by altcoins or more BTC. I have a feeling BCC will be around for a while. All comes down to whether people find value in Bitcoin Cash. I do not think Bitcoin its self will fall because it has a set limit that gives BTC it's store of value.
Everyone does want to push another split. Can't blame them.
Not sure if that is any help or not.
Don't forget that even complete crap scam coins can live on for years and retain value long after they are exposed. I'm not calling BCC a scam or anything like that, but even if it does not take off like they plan it could be around a really long time.
All very true. I just think it will be around for the mining community until there is a split with a better or more suited use for the time. There will be plenty of scams and hacks, but any split Bitcoin does will be trusted. It will be interesting, hopefully for our sake bitcoin is never compromised.
You know what @jrcornel you are right. I didn't actually look at it from that perspective but now that you have brought it up. I think that we have opened Pandora's box on Bitcoin and for that matter any other coin that has a great big value. That changes the game some...huh...thanks for the thoughtful post!
There is and will only be one Bitcoin. Bitcoin cash/segwit/xyz coin are all alts.
They need to rename Bitcoin Cash to Bcash or something so new people dont get confused
I feel like all this rise we are seeing might have a massive crash , everyone is caught up in the highs and forgetting the lows . It's like they are trying to make us avoid the possibility is something going wrong and BAMM it's gonna happen @jrcornel
yeah it is a weird concept because it seems Federal Reserve like to just make money appear like that.
It will probably happen a couple more times and like you said it won't work again.
Clams did it before by saying if you had BTC or LTC between certain years then you would get Clams.
I think what would be interesting if someone had a good project and they did that but said a certain portion of the coins was going to holders of like 10 different cryptos. Then other portions would go to others.....etc. To get wide distribution and have people looking at the project.
lets hope that there will be no scam splits in future :) and only strong cryptos will split and make us money, and little will not do anything like that and dont lose our money
that is a good point. if everyone cashed out where would the money come from?
The price would quickly drop to zero if everyone tried to sell. No buyer's no bids. It's Supply & Demand.
You are so right in everything you said..There is no free lunch in the world,everything has its price,so does this Bitcoin fork...I am afraid just like you,because-the more successful Bitcoin becomes,it will have more enemies,trying to destroy it in any way
people always say there's no such thing as a free lunch, but it's just not true... go for a walk in a forest, pick some apples and berries, maybe a few mushrooms and some wild garlic and herbs... stew it all up with a rabbit that the cat brought home... how much did that cost?
True..but the majority of people don't know how to accept abundance.
Yea, it was overall like money from the air. I hope there won't be more forks because that will be unprofessional and real value of crypto will drop down.
new to this cyptocurrency thing so cant really debate, however im here for this topic and comments :-) good article .
I had not thought of this perspective until reading your post.
Hopefully, the enticement of greed and quick money does not overtake the miners or others who have the ability to collude and split the chain. On a positive note, it brings more credence to the value of a system like Steem has.
A president will not be dangerous if his policy is always in the guard by government observers. But if left then it would be very dangerous for a country. Thank you for sharing
There needs to be a reason to split. If not the community will not accept it.
Sadly I was not holding my BTC in an account on Bittrex because I had to pay some bill at the time of the split so I didn't get any free money. I wish I had. I don't think BTC Cash is going to go anywhere though.
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Wow ,, a very beautiful post @jrcornel
I like it
I was Thinking about this just today and was pondering the question as posed in a video i saw. here is my question. If Bitcoin is suppose to be a limited to 21 billion coins to create store of value like gold then how do you split a "gold coin" and not create an inflationary scenario?
I don't know much about cryptocurrencies or economics or Bitcoin politics, but I don't think it's magic money. I believe they created value by providing a possible solution to an existing issue - that is, the scalability problem. Meanwhile, Bitcoin Core created value by reasserting its stability.
I also don't see the duplicated money as a gift, but rather as a statement. They are claiming the existing blockchain just like they're claiming the name Bitcoin. I see this as a battle of sorts over the future of Bitcoin.
Nonetheless, I'm glad to see this issue being addressed, and I'm really curious and eager to see how this evolves, whether we just kickstarted a descent into inflation, or whether Bitcoin just proved itself able to survive this kind of things.
Regards!
It's certainly no more magic than fiat currencies. Thanks to central banking activities, those are essentially split just like BCH every few years (think inflation).
Yes. And also, unlike with fiat money, we've got the choice to ignore and not accept Bitcoin Cash - as many did, if I'm not mistaken.