More Bitcoin ‘Forking’ Coming
The Big Q: What is a Bitcoin ‘fork?
The Big A: Fork is a type of spinoff in which developers clone Bitcoin’s software, release it with a new name, a new coin and possibly a few new features. Often, the idea is to capitalize on the public’s familiarity with Bitcoin to make some serious virtual money.
Last year 19 Bitcoin forks came out, but up to 50 more could occur this year.
And in reality, the number could run even higher now that Forkgen, a site enabling anyone with rudimentary programming skills to launch a clone, is in operation.
The reasons behind the actions vary.
Some backers try to improve on Bitcoin, others a quick profit. The Forks will lead to greater demand and may cause losses for those shorting the cryptocurrency market.
We should see incresead forks in Ethereum, Ripple and G-BiT as well as many others.
Developers typically score a cache of newly minted coins in a process called post-mining, but the prices do not always hold up, as many of them are a ‘money grab.’
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Experts in the new, hot asset field predicts forking may soon sideline a more popular alternative, ICOs (initial coin offerings), in which startups raise money by selling entirely new tokens.
The ICO market has gotten crowded after raising about $3.7-B last year, and smaller offerings often struggle.
A fork’s Key advantage lies in sprouting from Bitcoin, the world’s largest and most famous cryptocurrency.
Currently, Bitcoin is trading at: 10,522.1846, +205.189, or +1.99%, as of 4:33a GMT, the market is open.
In a typical fork, all existing Bitcoin owners are eligible for the forked-off coin, thus giving the new asset a potentially huge number of users.
Most coins arrive with at least some name recognition, because they bake “Bitcoin” into their moniker. Take for example, Bitcoin Diamond, with a price that started off strong, and faded.
Bitcoin forks are kind of the new alt-coin.
Forks can also help startups raise funds in countries such as China, where ICOs have been banned.
Bitcoin Cash, launched in August 2017, is now the 4th most valuable coin, worth a total of about $28-B, according to CoinMarketCap.com.
A fork can often make millions for its developers as well as the server farms running and supporting the new software.
Bitcoin Gold distributed 100,000 coins, currently worth about $190 apiece, to an endowment funding its ecosystem and development. About 5,000 of those coins went to the core team that created the fork. If the coins appreciate, that’s a boon for the developers too.
Bitcoin Miners, those whose computers and servers process cryptocurrency transactions, have been helping create new coins, hoping for big rewards.
Bitbank and some Chinese miners were instrumental when Bitcoin core developer Jeff Garzik created UnitedBitcoin, which forked in December. Like many other forks, it can be mined using older gear that cannot compete with state-of-the-art machines on the Bitcoin network. So if UnitedBitcoin takes off, miners with older machines that support it will be minting money.
Many of the new forks are looking to lure mom-and-pop miners, who have been pushed aside by industrial server farms. Some forks allow GPU mining, which means anyone with a graphics card can potentially participate.
Imagine “rigs set up in a garage,” a core developer of Bitcoin Interest, said in an interview. “Everybody has a graphic card, and most people can afford to purchase 1 that can mine a certain amount of coins.”
Support from miners isn’t always enough to maintain a price. SegWit2x (B2X), a fork from late December, drew more than 10,000 miners, according to an e-Mail from one its creators. But B2X has been falling, losing more than 90% of its value since 22 December, according to exchange data.
Be very astute and cautious if you choose to play in the asset class.