11 ms·

Bitcoin May Split Many Times in 2018

82 points by SirLJ 9y ago

bsbechtel 9y ago
Stocks do the same thing, and after the split, the stock's price is determined by the market based on how much the new shares diluted the market. Seems like something very similar will happen here, with the difference being each fork will have a differing value determined by the market's exchange rate between forks? Edit: I think many are missing the point that a fork and the original BTC blockchain are not of equal value. Maybe a more apt analogy would have been countries in the EU leaving and issuing their own currency.
- sct202 9y ago
  I think the big difference is that companies can choose to split their stock or spin out new companies, but bitcoin forks can be done by basically anyone.
  - deleted 9y ago
    [deleted]
- dmm 9y ago
  Some argue thinking of forks as a stock split is incorrect. """ Should it be treated as a split of BTC? That seems incorrect and complicated. If you half the value of your BTC holdings and sell them, you will incur more gains. However, could you determine how much were short-term and long-term? The BCH would also be classed as income at this point, since it now has a value, and so will incur income taxes. Unlike stocks that split, BCH and BTC are separate digital assets that have no common markets, and will have different values going forward. """ https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/ https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/
- ThirdFoundation 9y ago
  It's funny, that's how things should work, but the crypto space has been so irrational it is not how things have effectively been priced in other splits. For example, Bitcoin Cash's split ended up being free money for consumers, which doesn't make sense in a rational market. Bitcoin Cash split from Bitcoin, but Bitcoin actually maintained value (and went up soon after). I'll wager most of these will have little affect on the price of Bitcoin. Often, the bigger issue is that no exchanges offer pairs for the new Bitcoin forks, so they're basically useless.
  - qsucvatz 9y ago
    Bitcoin Cash added new utility that SegWit lacked: 8 MB blocks, higher capacity, lower on-chain fees. That new utility is new value for Bitcoin holders. Another fork will add ZKP privacy, new utility and new value.
- smaili 9y ago
  To be fair, stock splitting does not result in another entity being spawned (e.g., Apple didn't split into say, Apple and Apple "Cash" like Bitcoin and Bitcoin Cash). So in that sense, it is a bit different.
  - planteen 9y ago
    Companies spin-off like you are describing too. Except the market there is rational, as in, the market cap of the two split companies is equal to the previous market cap of the unsplit company. Look, for example, at Hewlett-Packard over the last 20 years: they spun off Agilent, which itself later spun off Verigy and Keysight, and the HP computer business is split into many parts now: HP, HPE, and DXC. https://en.wikipedia.org/wiki/Corporate_spin-off https://en.wikipedia.org/wiki/Corporate_spin-off
- wz1000 9y ago
  Bitcoins are not stocks. Stocks represent claims on actual stuff. Bitcoins represent... nothing.
  - 0xFFFF0000 9y ago
    Besides all the hype, etc. it at a minimum represents the amount of work/energy required to create a valid block to securely store data inside.
  - 45h34jh53k4j 9y ago
    Except the energy that has been burned in the last 9 years used to create them. The security comes from the need to spend as much energy to 'undo' them. Where do alts (esp non POW alts) get their value? Because people want to trade them to get more bitcoin, which has value as per above. You can keep repeating this circa 2014 argument 'not backed blah blah', but as yet it has not gone to 0, and likely never will.
  - aussie1233 9y ago
    Minimum value would be the work/energy needwd to create blocks that enable safe storage and avoid double spending. So there is that.
chaseha 9y ago
Most of these forks add nothing of value. I don't see forks replacing ICOs at all, as the article suggests - they serve different purposes (besides the fact that both may serve as a pure money grab by unscrupulous parties)
- ojr 9y ago
  I saw one exchange charge 0.5 btc to list and support new forks but charge 0.1 btc, if it was an ERC-20 Ethereum token
  - tlrobinson 9y ago
    Presumably because it’s less work to support ERC-20 tokens. I don’t think you’d need to run a separate full node for each token.
    - ojr 9y ago
      not only that ERC-20 is a standard, so apis and bots are easy to write on top of them, ever more reason why forks won't replace ICOs
alex_duf 9y ago
Is there a list somewhere of all the bitcoin forks? The wikipedia one doesn't seem to be up to date...
- akerro 9y ago
  I use this list https://btcdiv.com/ https://btcdiv.com/
dmm 9y ago
The tax situation is interesting. Many believe that you owe taxes as soon as the funds for a bitcon fork are available to you. For someone with bitcoin in a private wallet that's instantly. For someone with bitcoin in an exchange that's whenever the exchange implements the coin or you withdraw to a private wallet. For example bitcoin cash was forked August 1, 2017 but coinbase didn't implement it until December 19, 2017. https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/ https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/
- pjc50 9y ago
  Isn't it treated as an unrealised capital gain?
  - twohlix_ 9y ago
    And if you realize it I imagine your strike price was $0, so its full profit. IANAL tho.
    - jsty 9y ago
      (This thought experiment may be completely wrong, I'm unfamiliar with US tax law) If people were attempting to propose improvements via forking and this were true, would that not create rather dire tax liabilities? Say you bought into bitcoin 'original', and then it forks into bitcoin 'improved' as well. Loads of people agree that the improved version is much better and switch to it, leaving the original near worthless. But then if this interpretation of tax rules were true you'd be left paying cap gains on the full value of the improved version, rather than the difference between original and improved at sale time. Ouch.
      - my_username_is_ 9y ago
        I think there's an implication in your thought process that the 'bitcoin original' value, which you bought into, goes to $0. This would constitute a capital loss, and you would have gains up from $0 on the secondary blockchain ('bitcoin improved'). This would seem reasonable to me, as it's essentially a wash. The only thing that would muddy the whole thing up is the holding period for short term and long term capital gains.
cs702 9y ago
Anyone possessing the private keys to a Bitcoin balance in the blockchain before each fork automatically owns an equal balance in each forked blockchain.
- invalidusernam3 9y ago
  Which in most cases doesn't really matter since the forked value is pretty much zero (except for the occasional rare ones like BCH)
  - kakarot 9y ago
    BCH retained value because it represented a large portion of the community, and the goal was a soft fork rather than a hard fork so quite a few people participated in the switch. That kind of thing will happen less and less each time a large, informed group of people leave BTC, till all you are left with is a fool's market.
    - makomk 9y ago
      It also helped that the portion of the community BCH represented included the owner of bitcoin.com and a few of the other major sites and services. (Also one of the major mining hardware providers, though I'm not sure how well that worked out - they forced miners to use it for hardware purchases at a time when it was borderline-unusable, which can't have left a good impression.)
Nursie 9y ago
This seems bad. I understand the idealogical reasons for, say, Bitcoin Cash arising as an attempt to bring transaction times and fees crashing down while increasing network capacity to the existing 'currency'. But when it cpmes to creating new currencoes on general, forking the existing blockchain just seems let yet more reward for existing holders, and further disincentive for the new coin to actually be used for anything. I mean hell, here's another way for your rapidly inflating asset to maybe gain another 10% overnight! Why on earth would you ever spend any of it?
thisisit 9y ago
How many of the 19 forks have value now? Other than the famous ones - BCH and Bitcoin Gold - other 17 are not even in the top 100 of coinmarketcap. So the article and the expert are just inflating their claims. Additionally, there is no need for forks to create value in coins. Coin developers also have tried something called "airdrops" where they assign some coins on a particular criteria. And using bitcoin's blockchain has been one of the favorite criteria.
- aaron-lebo 9y ago
  While forking as you stated isn't really an issue (if my dog forks Bitcoin, does it really matter?), but it does suggest that people are willing to do it. If we drag out further and further into the year and some of the problems with core Bitcoin aren't resolved, we'll probably see more attempts at forking, and you only need one to cause some chaos. Each sizable fork adds confusion, though. It might be obvious to you that Bitcoin Cash is not Bitcoin, but new adopters not so much. IN some sense the Bitcoin brand is becoming very diluted.
  - thisisit 9y ago
    Again the issue is whether the fork actually gains any credence at all. If your dog can create a fork which has the same amount of influence behind it as Bitcoin Cash, then it will gain credence. Otherwise it doesn't matter if there is a fork. That said, surely we will see more forks. The Segwit2x was called off but it will be back with additional force. We might see additional 1-2 more forks with credence and re-using the name "Bitcoin" but 50? is just making up numbers.
philipodonnell 9y ago
I think this article is making a serious mistake in confusing different kinds of forks. We use the word fork to describe the act of commandeering the head of the existing BTC blockchain and using your own miners to continue it in a way that diverges from the original chain. This can have a negative effect on the value of both chains due to inverse network effects. We also use the word fork to describe the act of cloning a branch of code and than adding new commits on top of it to create new software. This is good since more coins increase experimentation and drive innovation and does not in any way effect the existing BTC network or its value (unless you believe we are already in a zero-sum game with cryptos where every new coin reduces BTC). This article leads with "Some 19 Bitcoin forks came out last year -- but up to 50 more could happen this year" and then completely conflates the two by talking about Litecoin et. al. and Bitcoin Cash interchangeably. To my knowledge, Bitcoin Cash is the only 'true' fork that survived beyond the splitting of the BTC chain, but please correct me if I'm wrong on that. It would be scaremongering if I thought it was intentional.
- thisisit 9y ago
  Well, the correct word is "hard" fork. Bitcoin gold is another hard fork of Bitcoin which survived. Though there are several software forks based on bitcoin client implementation like Bitcoin XT and Bitcoin Unlimited.
  - philipodonnell 9y ago
    Are you aware of anywhere that keeps data like that as a reference? CoinMarketCap groups into coins and tokens, but not into soft/hard forks of which codebases. Although I suppose at a certain point you'd get into the argument about how many changes are required to make it a new codebase even though it originally forked... but a question for another time perhaps.
    - thisisit 9y ago
      There is a limited list on wikipedia: https://en.wikipedia.org/wiki/List_of_Bitcoin_forks https://en.wikipedia.org/wiki/List_of_Bitcoin_forks Most forks which have no value are quickly forgotten so this might be a reliable list.
magnat 9y ago
Take care when claiming coins from those forks - even if only for transferring them to an exchange. Wallet software for those altcoins usually come as an unsigned, unverifiable binary and ask you to import your existing mainchain private keys (explicitly or as wallet.dat). Doing so is a best way to lose your BTC should authors get hold of those keys. Much safer solution is to craft transaction offline on a separate VM (using BCCSplitter [1] or altcoin wallet) and then posting raw transaction using altcoin's blockexplorer or yet another instance of altcoin wallet software (not containing any private keys). [1] https://github.com/NicolasDorier/BCCSpliter https://github.com/NicolasDorier/BCCSpliter
- gondo 9y ago
  or transfer BTC to different wallet before claiming forked coins
  - magnat 9y ago
    It depends. If you import whole wallet.dat into altcoin wallet, you share both present and future (next 100 or so) private keys with the software. If you transfer your bitcoins to new address provided by existing bitcoin wallet, chances are the altcoin wallet also has a private key to those addresses. To be safe, you'd have to transfer existing bitcoin funds to completely new wallet. Also, for privacy reasons you would need to make as many transactions as UTXO you have, which means paying a hefty fee tens or hundreds of time depending how much you use your wallet.
    - tlrobinson 9y ago
      Also note that transactions that consume multiple UTXOs on one chain lead to privacy leaks on other chains.
45h34jh53k4j 9y ago
Its cool -- the only coins that will survive 2018 will be the ones with segwit, and thus, lightning network support. Instant, near zero cost bitcoin lightning transactions on the bitcoin network makes all other coins look lame. This is not science fiction, it is here today. $2 segwit tx to fund the channel, as many tx's for 1 satoshi after that until I exhaust the channel.
aminorex 9y ago
That being the case, then the present value of Bitcoin is much higher than it would be with no expectation of future forks. It is like holding shares in a company which spins-off a division to increase shareholder value.

82 points by SirLJ 9y ago

Stocks do the same thing, and after the split, the stock's price is determined by the market based on how much the new shares diluted the market. Seems like something very similar will happen here, with the difference being each fork will have a differing value determined by the market's exchange rate between forks? Edit: I think many are missing the point that a fork and the original BTC blockchain are not of equal value. Maybe a more apt analogy would have been countries in the EU leaving and issuing their own currency.

sct202 9y ago
I think the big difference is that companies can choose to split their stock or spin out new companies, but bitcoin forks can be done by basically anyone.
- deleted 9y ago
  [deleted]
dmm 9y ago
Some argue thinking of forks as a stock split is incorrect. """ Should it be treated as a split of BTC? That seems incorrect and complicated. If you half the value of your BTC holdings and sell them, you will incur more gains. However, could you determine how much were short-term and long-term? The BCH would also be classed as income at this point, since it now has a value, and so will incur income taxes. Unlike stocks that split, BCH and BTC are separate digital assets that have no common markets, and will have different values going forward. """ https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/ https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/
ThirdFoundation 9y ago
It's funny, that's how things should work, but the crypto space has been so irrational it is not how things have effectively been priced in other splits. For example, Bitcoin Cash's split ended up being free money for consumers, which doesn't make sense in a rational market. Bitcoin Cash split from Bitcoin, but Bitcoin actually maintained value (and went up soon after). I'll wager most of these will have little affect on the price of Bitcoin. Often, the bigger issue is that no exchanges offer pairs for the new Bitcoin forks, so they're basically useless.
- qsucvatz 9y ago
  Bitcoin Cash added new utility that SegWit lacked: 8 MB blocks, higher capacity, lower on-chain fees. That new utility is new value for Bitcoin holders. Another fork will add ZKP privacy, new utility and new value.
smaili 9y ago
To be fair, stock splitting does not result in another entity being spawned (e.g., Apple didn't split into say, Apple and Apple "Cash" like Bitcoin and Bitcoin Cash). So in that sense, it is a bit different.
- planteen 9y ago
  Companies spin-off like you are describing too. Except the market there is rational, as in, the market cap of the two split companies is equal to the previous market cap of the unsplit company. Look, for example, at Hewlett-Packard over the last 20 years: they spun off Agilent, which itself later spun off Verigy and Keysight, and the HP computer business is split into many parts now: HP, HPE, and DXC. https://en.wikipedia.org/wiki/Corporate_spin-off https://en.wikipedia.org/wiki/Corporate_spin-off
wz1000 9y ago
Bitcoins are not stocks. Stocks represent claims on actual stuff. Bitcoins represent... nothing.
- 0xFFFF0000 9y ago
  Besides all the hype, etc. it at a minimum represents the amount of work/energy required to create a valid block to securely store data inside.
- 45h34jh53k4j 9y ago
  Except the energy that has been burned in the last 9 years used to create them. The security comes from the need to spend as much energy to 'undo' them. Where do alts (esp non POW alts) get their value? Because people want to trade them to get more bitcoin, which has value as per above. You can keep repeating this circa 2014 argument 'not backed blah blah', but as yet it has not gone to 0, and likely never will.
- aussie1233 9y ago
  Minimum value would be the work/energy needwd to create blocks that enable safe storage and avoid double spending. So there is that.

chaseha 9y ago

Most of these forks add nothing of value. I don't see forks replacing ICOs at all, as the article suggests - they serve different purposes (besides the fact that both may serve as a pure money grab by unscrupulous parties)

ojr 9y ago
I saw one exchange charge 0.5 btc to list and support new forks but charge 0.1 btc, if it was an ERC-20 Ethereum token
- tlrobinson 9y ago
  Presumably because it’s less work to support ERC-20 tokens. I don’t think you’d need to run a separate full node for each token.
  - ojr 9y ago
    not only that ERC-20 is a standard, so apis and bots are easy to write on top of them, ever more reason why forks won't replace ICOs

alex_duf 9y ago

Is there a list somewhere of all the bitcoin forks? The wikipedia one doesn't seem to be up to date...

akerro 9y ago
I use this list https://btcdiv.com/ https://btcdiv.com/

dmm 9y ago

The tax situation is interesting. Many believe that you owe taxes as soon as the funds for a bitcon fork are available to you. For someone with bitcoin in a private wallet that's instantly. For someone with bitcoin in an exchange that's whenever the exchange implements the coin or you withdraw to a private wallet. For example bitcoin cash was forked August 1, 2017 but coinbase didn't implement it until December 19, 2017. https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/ https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/

pjc50 9y ago
Isn't it treated as an unrealised capital gain?
- twohlix_ 9y ago
  And if you realize it I imagine your strike price was $0, so its full profit. IANAL tho.
  - jsty 9y ago
    (This thought experiment may be completely wrong, I'm unfamiliar with US tax law) If people were attempting to propose improvements via forking and this were true, would that not create rather dire tax liabilities? Say you bought into bitcoin 'original', and then it forks into bitcoin 'improved' as well. Loads of people agree that the improved version is much better and switch to it, leaving the original near worthless. But then if this interpretation of tax rules were true you'd be left paying cap gains on the full value of the improved version, rather than the difference between original and improved at sale time. Ouch.
    - my_username_is_ 9y ago
      I think there's an implication in your thought process that the 'bitcoin original' value, which you bought into, goes to $0. This would constitute a capital loss, and you would have gains up from $0 on the secondary blockchain ('bitcoin improved'). This would seem reasonable to me, as it's essentially a wash. The only thing that would muddy the whole thing up is the holding period for short term and long term capital gains.

cs702 9y ago

Anyone possessing the private keys to a Bitcoin balance in the blockchain before each fork automatically owns an equal balance in each forked blockchain.

invalidusernam3 9y ago
Which in most cases doesn't really matter since the forked value is pretty much zero (except for the occasional rare ones like BCH)
- kakarot 9y ago
  BCH retained value because it represented a large portion of the community, and the goal was a soft fork rather than a hard fork so quite a few people participated in the switch. That kind of thing will happen less and less each time a large, informed group of people leave BTC, till all you are left with is a fool's market.
  - makomk 9y ago
    It also helped that the portion of the community BCH represented included the owner of bitcoin.com and a few of the other major sites and services. (Also one of the major mining hardware providers, though I'm not sure how well that worked out - they forced miners to use it for hardware purchases at a time when it was borderline-unusable, which can't have left a good impression.)

Nursie 9y ago

This seems bad. I understand the idealogical reasons for, say, Bitcoin Cash arising as an attempt to bring transaction times and fees crashing down while increasing network capacity to the existing 'currency'. But when it cpmes to creating new currencoes on general, forking the existing blockchain just seems let yet more reward for existing holders, and further disincentive for the new coin to actually be used for anything. I mean hell, here's another way for your rapidly inflating asset to maybe gain another 10% overnight! Why on earth would you ever spend any of it?

thisisit 9y ago

How many of the 19 forks have value now? Other than the famous ones - BCH and Bitcoin Gold - other 17 are not even in the top 100 of coinmarketcap. So the article and the expert are just inflating their claims. Additionally, there is no need for forks to create value in coins. Coin developers also have tried something called "airdrops" where they assign some coins on a particular criteria. And using bitcoin's blockchain has been one of the favorite criteria.

aaron-lebo 9y ago
While forking as you stated isn't really an issue (if my dog forks Bitcoin, does it really matter?), but it does suggest that people are willing to do it. If we drag out further and further into the year and some of the problems with core Bitcoin aren't resolved, we'll probably see more attempts at forking, and you only need one to cause some chaos. Each sizable fork adds confusion, though. It might be obvious to you that Bitcoin Cash is not Bitcoin, but new adopters not so much. IN some sense the Bitcoin brand is becoming very diluted.
- thisisit 9y ago
  Again the issue is whether the fork actually gains any credence at all. If your dog can create a fork which has the same amount of influence behind it as Bitcoin Cash, then it will gain credence. Otherwise it doesn't matter if there is a fork. That said, surely we will see more forks. The Segwit2x was called off but it will be back with additional force. We might see additional 1-2 more forks with credence and re-using the name "Bitcoin" but 50? is just making up numbers.

philipodonnell 9y ago

I think this article is making a serious mistake in confusing different kinds of forks. We use the word fork to describe the act of commandeering the head of the existing BTC blockchain and using your own miners to continue it in a way that diverges from the original chain. This can have a negative effect on the value of both chains due to inverse network effects. We also use the word fork to describe the act of cloning a branch of code and than adding new commits on top of it to create new software. This is good since more coins increase experimentation and drive innovation and does not in any way effect the existing BTC network or its value (unless you believe we are already in a zero-sum game with cryptos where every new coin reduces BTC). This article leads with "Some 19 Bitcoin forks came out last year -- but up to 50 more could happen this year" and then completely conflates the two by talking about Litecoin et. al. and Bitcoin Cash interchangeably. To my knowledge, Bitcoin Cash is the only 'true' fork that survived beyond the splitting of the BTC chain, but please correct me if I'm wrong on that. It would be scaremongering if I thought it was intentional.

thisisit 9y ago
Well, the correct word is "hard" fork. Bitcoin gold is another hard fork of Bitcoin which survived. Though there are several software forks based on bitcoin client implementation like Bitcoin XT and Bitcoin Unlimited.
- philipodonnell 9y ago
  Are you aware of anywhere that keeps data like that as a reference? CoinMarketCap groups into coins and tokens, but not into soft/hard forks of which codebases. Although I suppose at a certain point you'd get into the argument about how many changes are required to make it a new codebase even though it originally forked... but a question for another time perhaps.
  - thisisit 9y ago
    There is a limited list on wikipedia: https://en.wikipedia.org/wiki/List_of_Bitcoin_forks https://en.wikipedia.org/wiki/List_of_Bitcoin_forks Most forks which have no value are quickly forgotten so this might be a reliable list.

magnat 9y ago

Take care when claiming coins from those forks - even if only for transferring them to an exchange. Wallet software for those altcoins usually come as an unsigned, unverifiable binary and ask you to import your existing mainchain private keys (explicitly or as wallet.dat). Doing so is a best way to lose your BTC should authors get hold of those keys. Much safer solution is to craft transaction offline on a separate VM (using BCCSplitter [1] or altcoin wallet) and then posting raw transaction using altcoin's blockexplorer or yet another instance of altcoin wallet software (not containing any private keys). [1] https://github.com/NicolasDorier/BCCSpliter https://github.com/NicolasDorier/BCCSpliter

gondo 9y ago
or transfer BTC to different wallet before claiming forked coins
- magnat 9y ago
  It depends. If you import whole wallet.dat into altcoin wallet, you share both present and future (next 100 or so) private keys with the software. If you transfer your bitcoins to new address provided by existing bitcoin wallet, chances are the altcoin wallet also has a private key to those addresses. To be safe, you'd have to transfer existing bitcoin funds to completely new wallet. Also, for privacy reasons you would need to make as many transactions as UTXO you have, which means paying a hefty fee tens or hundreds of time depending how much you use your wallet.
  - tlrobinson 9y ago
    Also note that transactions that consume multiple UTXOs on one chain lead to privacy leaks on other chains.

45h34jh53k4j 9y ago

Its cool -- the only coins that will survive 2018 will be the ones with segwit, and thus, lightning network support. Instant, near zero cost bitcoin lightning transactions on the bitcoin network makes all other coins look lame. This is not science fiction, it is here today. $2 segwit tx to fund the channel, as many tx's for 1 satoshi after that until I exhaust the channel.

aminorex 9y ago

That being the case, then the present value of Bitcoin is much higher than it would be with no expectation of future forks. It is like holding shares in a company which spins-off a division to increase shareholder value.