By Keith Weiner
A Fork in the Cryptographic Road
So bitcoin forked. You did not know this. Well, if you’re saving in gold perhaps not. If you’re betting in the crypto-coin casino, you knew it, bet on it, and now we assume are happily diving into your greater quantity of dollars after the fork.
Bitcoin, daily – adding the current price of BCH (the new type of Bitcoin all holders of BTC can claim at a 1:1 ratio), the gain since the “fork” amounts to roughly $1,000 at the time we write this. So far the chart of BTC in USD terms since 2010 happens to be a spitting image of the chart of gold in USD terms from 1973-1979 (the pattern similarity is eerie). A brief explanation of the “hard fork”. [PT] – click to enlarge.
You don’t have a greater quantity of bitcoins; bitcoin has no yield. Bitcoin simply sells for a greater quantity of dollars now than it did before. But who wants to sell? Bitcoin is going to a million bucks — at least. So bitcoin, whatever it is, forked. Whatever forking is. To understand these two concepts, let’s consider an analogy.
Picture a bank, the old-fashioned kind. Call it Acme (sorry, we watched too much Coyote and Road Runner growing up). A group of disgruntled employees leave. They take a copy of the book of accounts. They set up a new bank across the street, Wile E. Bank. To win customers, they say if you had an account at Acme Bank, you now have an account at Wile, with the same balance!
Is this just the sort of evil thing a greedy bankster would do? Do we need regulation to keep them from doing it (is it even illegal currently)? No, it’s actually impossible. The problem is that Wile E Bank doesn’t have the assets. It does not have the bills and bonds and loans payable to Acme. So it would be suicide to take on the liabilities. It would be nothing more than offering free money to people.
Of course, no one would to do that. It would not be a crime, but an act of altruism. Or perhaps an act of “Wile E. Coyote, Super Genius.”
Yet, this is what happened with bitcoin. Bitcoin Cash set up across the street (so to speak). Anyone who had a bitcoin balance as of the moment of the fork — when the Coyote and his posse set up shop — has the same bitcoin cash balance now.
BCH in USD (green line) & BTC terms (orange line), plus its total market cap (blue line) – BCH is currently the fourth-largest crypto-currency by market cap (which is approx. $5.4 billion, or 10% of the market cap of BTC). [PT] – click to enlarge.
To understand how this could be possible, we have to drill down into what makes a currency, a currency. Most in the gold and bitcoin communities would agree on one thing. The dollar is a fiat currency. …read more
Source:: Acting Man
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