The August 1 change could be a blessing or a curse for you. Read on!
The debate over which plan to adopt to increase Bitcoin’s transaction speed, SegWit or Bitcoin Unlimited, carries three possible dangers for people currently holding Bitcoin or buying it before the change occurs.
First, people dislike uncertainty. In the stock market, prices typically decline in times of uncertainty, like before the last US presidential election. This leads me to believe that the price of Bitcoin and other cryptocurrencies will remain level or decline until the debate is resolved or August 1, whichever comes sooner.
Second, If Bitcoin Unlimited is adopted, the split into two coins may drop the price of both in the short term. This is because supply and demand control prices. If the demand is split, the price will drop. What is unknown is whether such a split will reduce demand.
When Litecoin did a hard fork and broke off from Bitcoin on Oct. 7, 2011, Bitcoin’s price declined about 50% in the month before Litecoin and then another 50% in the two months after it was launched. However, after 9 months Bitcoin’s price doubled and continued to increase in value.
Another cryptocurrency, Ethereum, underwent a hard in July 2016 splitting it into a new coin, ETH (Ethereum Hard Fork), and leaving the old coin, ETC (Ether Classic). However, both prices remained relatively stable at the time of the split. After a year, both prices rose dramatically. So, Bitcoin may or may not decline after the split, but if it does decline, it will continue to rise after several months.
Third, when a coin does a hard fork and splits, holders of the old coin are given the same number of new coins. For example, an owner of 100 Ethereum Classic (ETC) coins after the split held 100 ETC and 100 of the new Ethereum Hard Fork (ETH) coins provided the wallet or exchange holding their coins was using software that permitted that to occur.
Currently, the majority of wallets and exchanges will support both coins, but not one of the most popular exchanges, coinbase. For this reason, you should not hold your Bitcoins on coinbase.com. The exchange has already announced it will not hold both Bitcoins if there is a split. So, if you have Bitcoins on coinbase, I strongly recommend you move them to another exchange. Exchanges below have reported they will support both coins. (Note: This list may not be complete and others will, I suspect, support it as the days go on.)
If you use a wallet rather than an exchange to hold your Bitcoin, the following have reported they will support both coins if there is a split. (Note: This list may not be complete and others will, I suspect, support it as the days go on.)
- Green Address
- Ledger (hardware wallet)
- Trezor (hardware wallet)
3 Replies to “What does the August 1 change mean to you?”
So Luno has not confirmed if they are coming on board
That’s correct. Neither the Luno exchange and wallet have stated they will or will not support the possible change. If you have their wallet or money in their exchange, which used to be called BitX, I suggest you contact their help department and ask if they will support both Bitcoins if there is a split.
Great content Peter. I like the website too. Very well done my friend. Thank you!