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As more hard forks are appearing on the scene, their creators are finding more ways to make a profit.
Rachel McIntosh | News (CryptoCurrency) | Tuesday, 12.12.2017 | 11:56 GMT
The Messiah Cometh: ‘Bitcoin God’ is Among the 7+ Upcoming BTC Forks
Photo: A giant fork sculpture, Lake Leman in Vevey, Switzerland (REUTERS)
Finance Magnates recently reported three forks that had been scheduled for the month of December, as well as others that are coming up within the next several months: Super Bitcoin (Dec. 15), Bitcoin Platinum (Dec. 23), Bitcoin Uranium (Dec. 31), Bitcoin Cash Plus (Jan. 2nd), and Bitcoin Silver (TBD).
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Since then, even more have appeared: Bitcoin Hot (Dec. 12), Lightning Bitcoin (Dec. 23), and Bitcoin God (Dec. 25); News.Bitcoin.com reported that another coin called ‘Bcash’ may also soon emerge. According to a tweet from @cnLedger, there are also two Ethereum hard forks on the way.
The sudden swarm of forks has marked the crypto landscape with a few more dicey dimensions. New kinds of scams and methods of price manipulation are emerging; many in the crypto community are concerned that an overabundance of BTC-forked coins could both fragment the market and damage the reputation of the crypto ecosystem as a whole.
It’s not a wildly speculative thought by any means. While Bitcoin has gained quite a bit of pop-cultural clout as well as a more legitimate status in the worlds of fintech and investing, there are still plenty of individuals and officials who see the whole cryptocurrency movement as a giant bubble or a fraud. In some ways, though, the forks are just making the BTC ecosystem a little bit weirder.
“Shorting [Bitcoin] is the Best”
According to a report from CoinTelegraph, one of the newly-forked coins, Bitcoin Platinum, has already been exposed as a scam intended to “short Bitcoin”. The coin, which was allegedly created by a South Korean teenager, had all the trappings of a typical ‘sh*tcoin’: a website full of crypto jargon with no technical substance, and absolutely no information regarding the identities of any of the coin’s creators, advisors, or developers.
The controversy really began when the Twitter account associated with Bitcoin Platinum sent out a message in Korean saying “[Bitcoin] shorting very good”, and “so who told you to buy Bitcoin, shorting [Bitcoin] is the best.”
Soon after the tweets, the creator of the coin was outed as being a high school student who simply wanted to make the equivalent of about USD 5000 by taking advantage of the price fluctuation in BTC that would result from the fork. “Please forgive me,” the teenager tweeted.
And on the 7th Day, God Created Blockchain
Although it wasn’t created by a high school student (as far as we can tell), one of the most intriguing of the new coins that are scheduled to come onto the scene is Bitcoin God. Perhaps it’s not a coincidence that the coin, which has the ticker symbol ‘GOD’, will be born on the solstice day that Christians have used to symbolically mark the birth of their own lord and savior, Jesus Christ.
According to its website, Bitcoin God, created by BTC investor Chandler Guo, will “end the current chaos of the Bitcoin world.” The coin will allegedly “give complete control back to the users as it does not allow for any pre-digging or issuing of additional tokens to anyone.” GOD will supposedly support smart contracts, has a “large block size”, and uses a Proof-of-Stake algorithm and zero-knowledge proofs.
The thing about Bitcoin GOD, and about most (if not all) of this wave of BTC-forked coins, is that there is absolutely no technical explanation of how exactly the coin’s software will work. This is an issue because it’s really impossible to know whether or not a coin will be able to execute what it claims to be capable of with the necessary programming and technical support.
While there seems to be slightly more information about this coin than what has been provided by many of the others, the website bears a striking resemblance to what have traditionally been known as ‘scam coins’ in the past. While we know that Chandler Guo is the coin’s alleged creator, there is a lack of other names and faces involved in the project.
Like Bitcoin Platinum’s website, the Bitcoin GOD site is splattered with the terms ‘decentralized’ and ‘blockchain’, but the lack of technical information is at least somewhat evident that the project is nothing but a vacuous collection of buzzwords that will ultimately result in a pump-and-dump scheme.
Given the fact that Bitcoin God’s ticker symbol is ‘GOD’, some in the crypto community have wondered aloud on Twitter if the coin is some sort of a joke. According to News.Bitcoin.com, Guo replied that the coin was indeed “real”, and has since followed up with quite a few gifs of people saying “oh my God.”
What is a Fork, Anyway?
A fork is essentially just a software upgrade. There are two kinds of forks: hard and soft. If a software upgrade is implemented on a network without making an entirely new coin, it is called a soft fork.
A hard fork happens when a new version of a blockchain is generated that is not ‘backwards compatible’; this means that computers (also known as ‘nodes’) who are running the protocol for the new chain will not have access to the old chain, and vice versa. For example, nodes on the Bitcoin Cash network are not necessarily nodes on the Bitcoin network.
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Hard forks often happen as a rather crude form of governance about the way that a network’s protocol should operate. Traditionally, the coins that are created as a result of hard forks have some qualities that are supposed to improve certain aspects of the original network. For example, Bitcoin Cash was designed to improve upon Bitcoin’s scalability problems. Because of its 8mb block size (as compared to Bitcoin’s 1mb block size), it can process eight times more transactions per second than Bitcoin can.
If a hard fork is truly successful, people will start using the newly-forked coin instead of the old one. While there has been some controversy over whether Bitcoin or Bitcoin Cash is the real slim shady, BTC still outguns BCH to the tune of about $260 billion (in terms of market cap size).
Perhaps the most famous example of a successful hard fork when the coin that we know as Ethereum split off from its original chain. The original chain continues to exist as Ethereum Classic, but ETH’s market cap is roughly twenty-five times the size of ETC’s.
The Age of Forking
Bitcoin forks have become something of a fad. It all started with Bitcoin Cash this August; despite some major fluctuations in price (and rumours of centralization), the coin has been very successful. It has firmly held onto its position as the the cryptocurrency with the third-largest market cap in the world, even briefly surpassing Ethereum for second place during November.
The cryptofinance research firm Smith + Crown recently reported data that is evidence of an overripe ICO market, one that has become saturated while being met with a more discerning customer base. Of the 169 ICOs that Smith + Crown tracked during the month of October, 100 of them were not able to meet their goals.
For a long time, ICOs were the premiere way to make fast funds in the crypto space. Most of the funds raised by most ICOs went toward some sort of legitimate purpose, but their unregulated nature left a lot of room for some rather shady behavior.
Now that governments all over the world have begun to regulate – or even ban – the practice of holding ICOs, people looking to pull in some quick cash have turned to the creation of hard forks. How does it work? Well…
How to Make a Quick Buck Using Nothing But a Fork
Creating a forked-coin for the purpose of shorting Bitcoin (as the creator of Bitcoin Platinum allegedly did) is not the only way to potentially profit off of a hard fork.
Because everyone who holds Bitcoin is automatically entitled to an equivalent amount of whichever BTC-forked coin is created, the prices of the forked coins are pumped artificially high when the coins are born. This is because they are already in circulation without anyone actually having to buy them. In order for non-forked cryptocurrencies to be put into circulation, people actually have to choose to buy and sell them.
Following their initial pumps, forked coins are usually ‘dumped’ onto exchanges as soon as the option becomes available. For example, when Bitcoin Cash was born on August 1st, 2017, it briefly peaked at nearly $700 on August 2nd before dropping to nearly $200 on August 5th (it has since recovered quite nicely).
There has also been speculation that someone could create a BTC-forked coin for the expressed purpose of stealing BTC private keys, which are necessary to retrieve forked coins. Just a few weeks ago, myBTGwallet.com, a scam site that claimed to distribute Bitcoin Gold (yet another forked coin), stole millions of dollars’ worth of both BTC and BTG.
Despite the efforts of governments all over the world, the very nature of cryptocurrency is that it cannot be regulated. While there are plenty of people who see this as a blessing, there are drawbacks – including the appearance of a bunch of scam coins and sh*tcoins. The simple fact of the matter is that although it’s possible that some malicious actors in the crypto space will face some consequences for their actions, many of them won’t.
As the crypto landscape continues to expand, there will undoubtedly be even more kinds of scams and schemes that haven’t even been thought of yet. The best way to stay safe? Stay informed. The best resources that we have in the very new world of cryptocurrency come directly from our community. For as many people hoping to make a quick buck at the expense of other people, there are at least as many who want to share their knowledge to empower others.
There will be more scandals, bubbles, and hoaxes; there will also be more opportunities. In the words of Rudyard Kipling: “If you can keep your wits about you while all others are losing theirs, and blaming you. The world will be yours and everything in it…”
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