Don't waste your time with Bitcoin Cash, do this instead!steemCreated with Sketch.

in bitcoin •  last year

Just a quick note in between my regular series posts. There's a lot of information going on with Bitcoin Cash right now. If you aren't familiar with Bitcoin Cash, it's basically an altcoin that will be created from the hard fork with Bitcoin on August 1.

Currently, Bitcoin Cash is trading as a future (meaning its a speculative trade on the coin being available in the future) in a small Chinese exchange. The price as of this article is around $400 or .151 BTC. So basically, someone is willing to pay .151 BTC for an unknown new altcoin that basically does the same thing as BTC. (Yes, I know there are some variances in regard to block size, etc., but it's basically the same coin).

So the question is, where is this value of $400 coming from?

How can $400 of value be created out of thin air?

It can't. At least not in the eyes of the market.

One minute, you will have just Bitcoin. The next, you will have Bitcoin and this new coin. Has any new money flowed in the crypto market in that blink of an eye? No, it hasn't.

Therefore, you can infer that Bitcoin's pre-fork value in the moment before the fork is equal to the post-fork value plus the value of Bitcoin Cash.

So one of two scenarios will play out:

  1. The community with embrace the new coin. Bitcoin Cash is valued at a non-zero amount. Bitcoin will drop in price as people exchange them for the new currency. You will now have a second currency created with part of the value of the original Bitcoin.

  2. The community disregards the new coin. Bitcoin Cash's value approaches zero and Bitcoin stabilizes around it's pre-fork price. It's business as usual and everyone forgets this whole fork and looks towards Segwit being locked in.

Either scenario could happen, it's entirely possible.

So where should we be as a trader/investor? The answer is not in Bitcoin.

As I type this, most of the altcoins are down drastically in price since 2 days ago. That is because of the flood of people who are selling out of their altcoins to hold Bitcoin. They see free money and run to it without thinking entirely about the consequences.

It's basically like they are the people that flocked to the rooftops in Independence Day to welcome the aliens.

When things didn't turn out quite like they planned, they got what was coming to them.

And what do you think will happen to those altcoins when the "coast is clear"? Everyone's going to see that the prices are low now and rush back to them.

Exactly.

Don't be like the hippies on the roof in LA when the aliens come.


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Great article. Totally agree. Buy Alts now.

Loving the independence day references, keep it up!

Awesome summary

Laughed out loud about the Independence Day comparison! It's true that the average crypto collector will run to buy his 4 BTC to get 4 BCC... and at 50 cents per BCC, that's 2 bucks he will make when he sells them! (Less than the amount spent exchanging the alts into the 4 BTC). Then as the BTC plummets in price, he buys the rising Alts. All that wonderful wealth just tossed to the traders who bought ALTS today and tmrw.... you and me!

Yep...altcoins. Buy now. Great article.

well said...very well said!

Great point! as the herd is trying to buy up as much bitcoin as they can to get a free unproven coin... the deals are to be had are in the ALT coin market. We all know this divergence happens often... and it always results in returning back to normal and business as usual. I believe that the whales are doing the exact the opposite too... while everyone is flowing money to bitcoin, they are buying up cheap alts... We may some see FOMO going on in the month of August. Definitely an interesting time.

Very well said! Love the alien reference! Are there any Alts in specific you recommend?

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Ones with either a solid platform or good leadership. I'm high on STEEM, STRAT, ANS/NEO, PIVX, LSK among others.

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Thanks for the reply. Totally agree with the first 3, just researched PIVX and LSK, they definitely seem interesting. Thanks.

Don't be a hippie! Buy alts now!

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Hope you bought them yesterday, they are moving up!

May be BTC will trade at 10x of BCC... just like ETH and ETC

I think you are right except for one problem: If you hold your assets out of Bitcoin in any other altcoin (not dollars) you'll lose value like you said (altcoins are losing value). I'm just going to keep my dry powder in Bitcoin because the dollar transactions on the exchanges are sooo slow. That way all my bases are covered. I'll capture any Bitcoin upside but I'll be able to move fast into altcoins after the fork.

I agree this is a good strategy but I disagree that the value of BCC cannot be created out of thin air. Many coins have been airdropped in the past and the people receiving them get them for free. Those who do not receive them then want them creating demand and creating value. A market cap is not a total of all the money everyone has spent on a coin in the past but the potential value of all of the coins based on the current price. Price is just what someone would pay for something. If a celebrity signs a piece of paper... the value of it goes up tremendously but where is the value coming from? Was it created out of thin air? Just some food for thought.

Do you still have the same opinion?