How Another Fork Affects the Bitcoin Price

One of the more hilarious myths about bitcoin is that it is a money supply that is fixed. Like most myths, there is an element of truth here. There are only 21 million solutions to the bitcoin encryption puzzle. Each solution represents a coin or token that impacts the bitcoin price. When all the solutions are found there will be no more new bitcoins.

But this is not strictly true, thanks to the open source miracle known as a fork.

Having covered open source for five years in the past decade, I know about forks. A fork happens when developers can’t agree on how to improve an open source program. A divorce is arranged, and the two codebases go their own ways, letting developers sort the wheat from the chaff.

What the Fork Means for Bitcoin’s Price

Bitcoin has already gone through such a fork, resulting in Bitcoin Cash. On Sept. 28 a bitcoin was worth $4,171, and a Bitcoin Cash token was worth $441.72.

I covered the issue for InvestorPlace at the time of the fork and, while some bitcoin trading houses were reluctant at first to hand over Bitcoin Cash to their customers, things are slowly sorting themselves out.

They’re doing so just in time for two more forks.

One, called Bitcoin Gold, claims technical motivation — a new algorithm, the claim of a truly “decentralized” market. But this is basically Chinese miners and a programmer operating under a pseudonym building a new sandbox.

The other fork, based on Segwit2X, aims to increase the transaction capability of bitcoin. It could happen in November.

The result would be four tokens, all claiming the title bitcoin, in the market.

Ethereum Is Bubblelicious

Want more cryptocurrency? You’re in luck, because Vitaly Buterin, the Russian programmer behind Ethereum, is planning a fork there, too.

A new network dubbed Metropolis is being rolled out, aimed like the bitcoin forks on scaling issues, allowing more trading and a new Proof of Stake algorithm to identify new coins.

There is a lot of hype around all of this. Buterin says his network will be able to handle as much transaction volume as Visa, the credit and debit card network, in just a few years.