The cryptocurrency world is about to get a little more complicated. So far, the cryptocurrency community has embraced the current wave of bitcoin hard forks with skeptical enthusiasm. Sure, most of the new bitcoin forks have little to know clear value. But who cares? They’re free!
Bitcoin has become enough of a mainstream investment to make it a legitimate option for storing your money. Unlike investing in new coins launched through ICOs, bitcoin hard forks on the Bitcoin blockchain don’t require you to spend any of your own money to get in as an early investor. Instead, new coins created through Bitcoin forks are typically airdropped to people who hold regular-old Bitcoins in a supported wallet or exchange. So, if you had one Bitcoin in your wallet on August 1, 2017, you are entitled to one Bitcoin Cash Coin (“BCH”) free of charge. With the BCH coin currently trading around $1700, it really makes you rethink what people have always been telling you about money not growing on trees.
So far, very few of the bitcoin forks launched through early 2018 have offered much by way of value-based investments. But they’re mostly harmless, so serious investors pretty much just have a laugh at their stupid names and move on with their lives. However, one trend on the horizon may complicate things substantially: forking forks.
Forks on Forks (on Forks on Forks?)
Bitcoin Candy is officially the first fork on the Bitcoin Cash blockchain. Anyone holding Bitcoin Cash (“BCH”) at Block 512666 can claim an airdrop of 1000 Bitcoin Candy Coins (“BCY”) for every BCH they held in a compatible wallet or exchange.
Bitcoin Cash was the first fork on the original Bitcoin blockchain, and it has since become one of the original coin’s biggest competitors. Since Bitcoin Candy forks off of the Bitcoin Cash blockchain, however, only BCH holders are entitled to the airdrop. BTC holders are left out in the cold.
Since we’re talking about Bitcoin Candy – which claims its benefit by solving quantum computing problems that do not actually exist yet – you’re probably raising a legitimate question: who cares? Well, the issue isn’t with Bitcoin Candy itself – the problem arises from the possibility that more and more forked currencies may choose to break off from the Bitcoin Cash blockchain. If this happens at a large enough scale, forked currencies may set off a trade war between Bitcoin loyalists and Bitcoin Cash investors.
The Problem With Forking Forks
It’s pretty clear that many of the proposed Bitcoin forks are not serious investment opportunities. Some of us may find it odd to launch an entirely new tech platform just to get a laugh. Then again, Dogecoin is now worth about $800 million.
Many of the recent and upcoming Bitcoin forks are, quite frankly, silly. Maybe Bitcoin investors may claim a few Bitcoin Uranium (“BUM”) coins or get a slice of Bitcoin Pizza (“BPA”) just for giggles. However, when forks begin to impact market demand for Bitcoin vis-à-vis Bitcoin Cash, they can introduce volatility into markets that are already characterized by wild swings.
Virtual currency markets are becoming an increasingly popular medium for nerd humor, but cryptocurrency investing is serious business. In order to survive in the long term, the top cryptocurrencies must stabilize. The fork phenomenon of 2018 has not impacted the major currencies to any meaningful degree, at least as of yet. However, if the forkers incite competition between Bitcoin and Bitcoin Cash investors by choosing one platform or the other to launch new coins, they may increase volatility in a market that has more peaks and valleys than the Swiss Alps.
Hopefully, this does not come to pass. However, if Bitcoin Candy sets off a trend of forks-on-forks, cryptocurrency investors may need to get ready for a bumpy ride.