So Bitcoin forked and hit all time highs, all in the same week. We now have two versions of Bitcoin which in aggregate are valued in excess of $56 billion
, $11 billion more than the day prior to the fork. One could have purchased 1 BTC sub $2,000 in mid July and the same BTC would have yielded more than $3,000 post fork on August 1st. The mainstream media is going nuts
on the free-money story.
The process itself was relatively smooth, in fact surprisingly so. If you had your bitcoins in cold storage, hardware wallets or even in (a small number of) exchanges you'd have seen your accounts airdropped with fresh BCH pretty swiftly. BCH price went artificially through the roof in the short term (to over $1,000 in some places) as most exchanges didn't accept deposits, so BCH holders could not actually sell even if they wanted to. As that backlog started to clear up, BCH price fell all the way down to just north of $200 as of this writing, giving Bitcoin Cash a network value of $3.7 billion. Arbitrageurs has a hell of a ride
A few observations:
1. The market clearly rewarded this distributed governance decision, certainly in the very short term. The narrative seems to be that, in absence of an opposing activist faction, the two competing school of thoughts are now free to implement their own agendas for protocol scaling, which should accelerate speed of innovation in both camps. As Fred Wilson put it, forks are a feature not a bug
in the blockchain sector, and we are likely to see more of them in the future. Vitalik himself expressed
this view, in much geekier terms of course. The whole crypto market is up +$20 billion (+20%) since the fork.
2. The counter-narrative is that network effects are damaged
and brands diluted by the fork, assuming that the competing networks are mutually exclusive. As always the market is a weighting machine in the long run, so it will be down to it to establish which version will be most valuable. If ETH/ETC are a precedent, we know which way it may go.
3. Exchanges have been put under tremendous spotlight, not just for how they handled the process from a comms perspective, but also for their actual holdings
. The fork opened up some greenfield legal debate, such as whose actual property is a forked digital currency if held in an exchange. Some exchanges ended up flipping
their initial stance. Very few came out of this fork stronger than before and there's a chance this will represent an inflection point for decentralised exchanges (and perhaps the end of a few of the centralised ones). "Only when the tide goes out do you discover who's been swimming naked." said Buffet, and it fits nicely here.
As always Naval is able to put the whole thing in the right perspective: