What Does Bitcoin Gold Fork Mean for Bitcoin (BTC) Prices?
It’s looking like Bitcoin (BTC) is headed towards what appears to be another split, where a new and rival cryptocurrency will be created, much like what happened earlier in July when Bitcoin Cash (BCH) came on the scene. But here’s the important thing to remember: Bitcoin splits are not the same as stock splits. While the Bitcoin news is predicting the creation of a new digital currency—Bitcoin Gold—that doesn’t necessarily mean that things will fare all that badly for BTC prices. If Bitcoin Gold is anything like Bitcoin Cash, it won’t be much more than a blip on the radar for the cryptocurrency giant.
The takeaway here is that Bitcoin prices will survive another split, just like they weathered the Bitcoin Cash hard fork in the past, not to mention the far more calamitous Bitcoin news like the recent China initial coin offering (ICO) restriction. (Source: “First Cash, Now Gold? Another Bitcoin Hard Fork Is on the Way,” CoinDesk, September 27, 2017.)
So why is Bitcoin going to split in the first place? For that answer, you need to understand the type of supporters that Bitcoin counts among its most ardent devotees.
What Is Bitcoin Gold?
Bitcoin, remember, is more than a speculative buy and more than a commodity to many of its owners. To some people—the true believers, we’ll term them—Bitcoin represents a future of decentralized currency where governments can no longer affect our wealth through monetary policy and other mechanisms like they do now.
To true believers, making sure that Bitcoin remains as decentralized and free as possible is of the utmost importance. These people take issue with several high-profile Bitcoin mining firms who stand accused of gaming the system so that they can reap more BTC coins from mining compared to others.
The Bitcoin Gold fork is a result of a proposal made by several BTC owners who want to open up the currency by making it easier to mine the coin by allowing the use of graphics processing units (GPUs) in mining. At the moment, Bitcoin mining in China is one of the prime culprits in terms of gaming the mining system and is one of the major reasons that we’re seeing Bitcoin news about a hard fork again, with the Chinese Bitcoin mining firm Bitmain being labeled as one of the more egregious offenders.
Of course, there are those who own Bitcoin purely for the speculative value, who also don’t like the direction that BTC is going in when it comes to curtailing bad-faith miners, but one of the major drivers for this split is the desire to keep everything as decentralized as possible.
Ethereum (ETH) had a similar split for a similar reason in its past. Bitcoin Gold would just be another split in a long line of cryptocurrency schisms.
If Bitcoin follows the example set by Bitcoin Cash—which came about after a hard fork over how much data can be processed at a time—then BTC prices have little to worry about.
If you examine the charts from the early days in June when Bitcoin and BCH split, you’ll see that there was a slight downward trend for BTC, only to have prices shoot back up mere days after BCH was released.
The point is that investors will always find something to worry about, but when they realize the sky isn’t falling, they instead see a good price on a climbing commodity and reinvest.
How Will Bitcoin Gold Affect Bitcoin Prices in 2017?
We’ve covered that despite any Bitcoin news to the contrary, BTC will survive, but what does that mean for the short term, following the creation of Bitcoin Gold?
Using the example of Ethereum Classic (ETC) and Bitcoin Cash, two other very well-known hard forks from the two biggest cryptocurrencies on the market, what buyers, owners, and interested parties will see is likely to be a slight drop off when the coin does officially go through a Bitcoin Gold fork. But that drop will likely be corrected very quickly, resulting in a short dive, then a fast turn upwards. This is a good way for savvy, hard-nosed day traders to make a quick buck.
But if you’re more a buy-and-hold type of investor, then you can afford to wait. The coin will not be killed by the hard fork and is looking to have a stellar remainder of 2017.
As for Bitcoin Cash, I imagine that prices of Bitcoin Gold will mirror BTC for a long while, not unlike the way BCH does. Looking at the two cryptocurrencies, both BTC and BCH have shared similar fates on the market since BCH first came on the scene.
You see, while it’s all well and good that owners went ahead and decided to break off from Bitcoin, the new cryptocurrencies have been unable to untether themselves from Bitcoin’s fortunes.
BTC is so ubiquitous right now that it’s hard to find any cryptocurrency that performs consistently well while BTC flounders. As Bitcoin goes, so does the industry. That rule is even more accurate when it comes to digital currencies that split off directly from Bitcoin itself. The connection between the two means that they often mirror each other in terms of gains and losses.
Now, that doesn’t mean that Bitcoin Gold won’t reveal itself to be a highly superior cryptocurrency and therefore instigate a migration to Bitcoin Gold away from BTC, but the chances of that happening are highly unlikely. For now and for the foreseeable future, Bitcoin is king and splits are not going to change that.
For day traders, there are ways to make a quick buck off of cryptocurrency splits. But for most of the rest, you’re better off holding on to what you’ve got.
If history is anything to judge by, what will likely happen during the Bitcoin Gold hard fork is that we’ll see a small burst of irregularity in terms of Bitcoin prices, with fluctuations headed in both directions, before the price rights itself and continues apace.
As far as Bitcoin news goes, this is more hype than substance. BTC prices have been through hard forks before, and the coin will likely feature more splits in the future, but that will have a temporary effect at best on the Bitcoin price forecast.
Of course, that is all contingent on Bitcoin Gold not dramatically outmaneuvering BTC. Which is to say that if Bitcoin Gold can provide an objectively better product and manage to sell itself as the preferred coin on the cryptocurrency market, then that’s a different story. But the chances of that are slim, so for now, stick with Bitcoin.