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Monday, July 31, 2017

Bitcoin Cash Is Not Free Money

Bitcoin Cash Is Not Free Money

Ever since the Bitcoin Cash hard fork was announced, many people have viewed its token as “free money.” While it is true these new tokens will be issued to users at no additional cost, they are most certainly not free money. In fact, many people feel Bitcoin Cash will take away some of Bitcoin’s value, just as Ethereum Classic did to Ethereum. Although the value of BCH has yet to be officially determined, it is not free money in the way most envision it.


The fact that every holder of Bitcoin is entitled to his or her share of Bitcoin Cash tokens does not make it free money. BCH tokens will be issued at a 1:1 rate to Bitcoin. If you own 100 Bitcoin, you will receive 100 Bitcoin Cash. Those new tokens can then be sold on supporting exchanges, either against Bitcoin or fiat currencies. However, the value of these tokens may be effectively subtracted from the Bitcoin price at that time.


Let’s put this into numbers for a minute. One Bitcoin Cash is currently valued at around US$400. These tokens do not exist currently, and IOU values always betray actual prices until the tokens are available in an official capacity. However, assuming they retain their US$400 value when the tokens are live, that means that value may be deducted from the Bitcoin price at that moment.


If one Bitcoin is worth US$2,800 by the time the split happens, and BCH is worth US$400, it is not unlikely Bitcoin would drop to US$2,400 on that day. The value for BCC has to come from somewhere, and deducting it from the regular Bitcoin price would seem the most logical course of action. With two competing forks, the value of the Bitcoin network — the market cap, in this case — will be distributed over the two blockchains. The actual values of both currencies will fluctuate heavily over the first few days following August 1st.


Full story at http://bit.ly/2hfZYWG


Source: https://themerkle.com


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