Was a dangerous precedent just set? (Looking for community input)
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! :)
Image Source:
https://www.theodysseyonline.com/pandoras-box
Follow me: @jrcornel
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