back to article For fork's sake! Bitcoin Core braces for another cryptocurrency split

Bitcoin faces the possibility of yet another fork, a divergence anticipated by a code change proposal accepted by the developers of the Bitcoin Core client software. A week ago, Bitcoin split in two: legacy Bitcoin and Bitcoin Cash, an alternative cryptocurrency. Holders of existing Bitcoin saw a windfall, the option to …

  1. Sorry that handle is already taken. Silver badge

    Ahh, Ryan X. Charles...

    The guy who was fired by Reddit after trying to implement Bitcoin in Javascript, on company time.

  2. David Webb

    Where does the money come from?

    Serious question, where does the actual money come from?

    A has a value of £1,000, a fork is made and B comes along with a value of £100. A still has a value of £1,000 and B gives people who hold A, the same amount of coins in B. So customer now holds £1,000A and £100B. Then C comes along with a value of £500. Where does the extra £600 come from? If I split a £10 note, I would still only have £10, not £10+split.

    1. Throatwarbler Mangrove Silver badge

      Re: Where does the money come from?

      Perceived value. Or the Greater Fool Theory. Take your pick.

    2. gerdesj Silver badge
      Childcatcher

      Re: Where does the money come from?

      "Serious question, where does the actual money come from?"

      "A has a value of £1,000"

      To start to answer your question I think you need to really think about what your example really means. Fiat is not just an Italian motor firm. Translated from Latin, "fiat" means "let it be" or similar, if another word is added (plus gender fiddling etc) x, then it becomes similar to "let x be" eg "fiat lux" - "let there be light".

      When you start to use phrases like "has a value" then you have to question what that actually means.

      Does A really have a value of £1,000?

      1. wolfetone Silver badge

        Re: Where does the money come from?

        "Fiat is not just an Italian motor firm. Translated from Latin, "fiat" means "let it be" or similar"

        My understanding was that Fiat was latin for "to become", as a Fiat currency is entirely faith based and effectively a "promise" to pay, not actual currency?

        1. Vic

          Re: Where does the money come from?

          My understanding was that Fiat was latin for "to become",

          Your understanding is wrong. "Fiat" is the jussive subjunctive of the verb "esse", "to be".

          Thus the OP's translation of "let it be" is on the money.

          Vic.

          1. Dave Bell

            Re: Where does the money come from?

            So who has the Mother Mary job in these times of trouble?

        2. DropBear Silver badge

          Re: Where does the money come from?

          What is "actual currency" though (unless you define it as "official money of this state")...? More specifically, what defines what has "intrinsic value" and what does not, if even traditional examples like gold (or cocoa beans) only have "intrinsic value" based on the assumption that many human beings will always want them / find them useful...?

          1. steelpillow Silver badge

            Re: Where does the money come from?

            The bitcoin itself is conjured up by the mining software. Presumably you mean where does the value come from? Answer: user confidence and trust. The value of a dollar bill comes from trust in the US treasury and confidence in its economy. So it is with Bitcoin. The more people trust the Bitcoin system and the more it gets used, the greater everybody's confidence it it and the value they are prepared to exchange for it increases.

            There have been plenty of non-State currencies in the past. Salt was a common one for thousands of years. Bitcoin is just e-salt, really.

    3. inmypjs Silver badge

      Re: Where does the money come from?

      Eventually (if it comes at all) it comes out of the pockets of fools.

    4. Phil Kingston Silver badge

      Re: Where does the money come from?

      You'd not be splitting a tenner though. This would be the Bank of England (or those crazy Scots ones) giving <something additional> to everyone who could show them a tenner. And doing the whole "promise to pay the bearer on demand" thing. Which if I think about it, is as flimsy a foundation for the value of something as an algorithm-derived electronic token.

    5. I ain't Spartacus Gold badge

      Re: Where does the money come from?

      David Webb,

      To answer your serious question seriously, Bitcoin is in a weird state. Some people want it to be money. Which works best by having as stable a value as possible and being useful to buy things. i.e. a "medium of exchange" and a "store of value". Call these people users.

      However some people see Bitcoin as an investment. They want wild swings in value. Well OK, they probably don't want it to go down (unless they want to buy more of it) - but they do want the value going up continually. They're your investors.

      A worry for Bitcoin is that a large chunk of the miners might sabotage the use as money lot in order to keep dollar values high to maximise their investments (in both mining rigs and coin). And by doing so, kill the golden goose.

      Sometimes your user/investor might be the same person. I've seen some Bitcoin defenders trying to make the "it's better than fiat money" argument, but then being unable to stop themselves from smugly saying, "and look how much the value went up last week!"

      So the dollar value of a Bitcoin only matters when you convert one into "real money". And I believe turnover in these exchanges is quite low. So the price is set by the next person in line willing to buy.

      So the answer to your question is that like any investment, it's only worth what someone is willling to pay you for it now. Which is why it once went from being worth over $1,200 to around $50, in about 2 days.

      However, again, if it has the ability to survive long-term then today's worthless asset might go back to having the same value as yesterday if you're willing and able to wait long enough. Half the banks nearly went bust in 2008 because they were holding mortgage backed securities that nobody trusted. So they went from being worth something like 98% of their face value to nothing overnight. Nowadays, those mortgages are mostly still being paid off - and so most of those assets are still probably worth 95-98% of face value - though I don't know what price they sell for.

      So, in the same way (and to undermine my own anti-Bitcoin argument), if the Bitcoin economy still continues - it doesn't mattter so much what they're worth in dollars. If people will accept your Bitcoins for stuff, and can spend those with other people, then the Bitcoin economy could conceivably continue forever. I don't know how big the Bitcoin economy is. Or whether people use them like a currency by pricing in Bitcoins, of if you're always charged the dollar value at the time of transaction. That, and whether there are enough non-criminal uses to keep it going, will determine if Bitcoin lasts.

    6. phuzz Silver badge

      Re: Where does the money come from?

      Well, to take a real world example, say you wanted to buy something from Scan.

      Now, scan will accept Bitcoins by using a company called BitPay as a payment processor (in a similar way to many companies using another company to process credit card payments).

      However, BitPay are currently sticking with the main fork, and don't accept Bitcoin Cash (BCC), only regular old Bitcoin (BTC). So, your £10 worth of complicated maths is still worth £10 worth of stuff from Scan, and the BCC is worth bugger all.

      Of course, if you can find someone to accept your BCC then it might be worth something after all.

      1. David Webb

        Re: Where does the money come from?

        I don't mean where does the value of the bitcoin come from, I mean where does the cash come from.

        We have the original bitcoin which is (probably) backed up with real world cash. Along comes the split and a new bitcoin is formed at about 10% of the value of the original. The original is backed up with real cash, so if you use that bitcoin to buy a Fiat the dealer can get the cash, if you used the forked bitcoin, where is the cash to pay the dealer? Where is the cash coming from?

        As far as I can tell, when the fork happened it was "okay, you now have bitcoins with a real world value of 10 million" without removing the cash from original bitcoin into forked bitcoin, they just said "here it is, spend it however you like"

        1. DuncanLarge Bronze badge

          Re: Where does the money come from?

          BitCoin Cash got its value the same way any other crypto currency did. It was bought and sold on exchanges.

          When it was created it took no value from bitcoin, it had no value at the instance of creation. Somebody somewhere had enough spare cash to buy more BCC at an asking price given by someone selling BCC. Then bam, it has value.

          If I take the design plans for a famous and valuable antique chair, creating a reproduction from those plans does not diminish the value of the antique chairs. My new chairs however will have a lesser value, assuming that I can in fact sell them and cover any costs I incurred from making them. If I cant then all I have done is made myself some chairs.

          I can imagine this discussion coming up again when we invent replicators (as in Star Treck not Star Gate!) and we start to question the value of a replicated antique watch vs the original antique watch and if you can tell the difference.

        2. Brangdon

          Re: where does the cash come from

          The original bitcoin is not backed by real world cash. It's backed by confidence that other people will accept it in exchange for goods and services. Which is mostly true because Bitcoin is a useful way of transferring value.

          The increase in Bitcoin's value came because SegWit and Bitcoin Cash represent software upgrades that a lot of people wanted. The value of Bitcoin had been artificially depressed because of uncertainty about whether the upgrade would ever come. Now SegWit is here, that uncertainty is (mostly) gone, and other technology such as the Lightening Network can be build on top.

          The value in Bitcoin comes from making transactions. These upgrades increase the number of transactions that can be made per second. Hence they increase the value Bitcoin delivers.

  3. Anonymous Coward
    Anonymous Coward

    The nice thing about Tulips

    is that they come in so many colours.

    1. Anonymous Coward
      Anonymous Coward

      Re: The nice thing about Tulips

      What's better than roses on your piano?

      Tulips on your organ.

  4. Winkypop Silver badge
    Trollface

    Bit wait!

    Is there enough pop-corn in the world to cover when this whole thing goes BITS-up?

    1. Anonymous Coward
      Anonymous Coward

      Re: Bit wait!

      I believe the tiny violin supply will run dry before the pop-corn does.

  5. Elmer Phud Silver badge

    Strong? Stable?

    Bit Coin was to be the big one -- proper unicorn poo and all that.

    But as usual with money, others want a bigger slice each time and eventually the the cake gets so divided that crumbs are more important than the original ethos of cryptocurrency.

    1. DropBear Silver badge

      Re: Strong? Stable?

      On the other hand, "we need to stand united" is never a good enough argument against never, ever challenging established orthodoxy.

    2. Michael Kean

      Re: Strong? Stable?

      "Bit Coin was to be the big one -- proper unicorn poo and all that."

      Bitcoin Cash keeps to the original vision of Bitcoin - that is that it can scale up to Visa / Mastercard size (transaaction wise) simply by having larger blocks. It removes the temporary 1MB limit that has hindered its growth.

      The original Bitcoin (with or without SegWit) is still hobbled by the 1MB limit, resulting in much higher fees for use - hence a financial motivation for the miners on that chain to stick to it to the detriment of Bitcoin's growth potential.

  6. Anonymous Coward
    Anonymous Coward

    The thing to remember about about Bitcoin is...

    ...it ain't Sparticus.

  7. handleoclast Silver badge

    Intrinsic value

    Is an oxymoron. Economists use it in a specialized way that allows them to pretend it isn't an oxymoron, but it's still an oxymoron even then (because they're fooling themsevles).

    Value is subjective. It is therefore not an intrinsic property of an object but a subjective appraisal. I could name several foods that induce a vomit reflex in me but which most people love. Other people are happy to pay money for those foods whereas I am not. It's subjective.

    Insane economists (those trained at the Chicago School of Economics, or the Austrian School, or plain-nutjob libertarians) counter this by claiming that the intrinsic value of an object is proportional to the labour involved in producing it. They're wrong. What they're calling intrinsic value is, at best, intrinsic cost.

    A concrete example. Somebody spends years creating a chair made of his own turds. It takes him years because he's not very good at it. Unless he can sell it to the Tate Gullible, the value most people would place on it is less than zero (if one got dumped in their garden they'd pay to have it taken away). The intrinsic cost is high (many man-years of labour) but the value is not.

    Suppose he perfects his skills so he can produce his turd-chair in a couple of weeks. The intrinsic cost is a lot less than his earlier turd-chairs, but the value remains negative.

    Money (e.g., a bank note) has an intrinsic cost: the cost needed to make it. The value is a subjective appraisal most of us place on it. The difference between a stable currency and hyperinflation is a matter of subjective beliefs about that currency.

    Anybody who believes objects have an intrinsic value is delusional. Objects do have intrinsic costs, but that is only useful when comparing similar objects.

    Note that this is also true, to an extent, of "hard" money like gold and silver. Both have industrial uses, so people would pay softer money for them. They can also be used to make bling, but that's a trivial use. Most gold is hoarded. It has value not because of what it can be used for but because of its scarcity. If somebody came up with a cheap way of extracting gold from seawater the value of gold would plummet.

    Bitcoin's intrinsic cost is the cost of mining it. Its perceived value is partly due to its scarcity, but is mainly due a mass delusion. Much like any form of currency. Once people lose faith, the value plummets.

    1. Anonymous Coward
      Anonymous Coward

      Re: Intrinsic value

      The only reason that a paper note has more value than plain paper is that the government Rune Masters made it, and attest to its value. YMMV.

  8. Stevie Silver badge

    Bah!

    There will soon be as many Bitcoins as here are New York Pizza Parlors, and each variant as confusingly named as the Pizza joints are.

    Ray's. Original Ray's. Ray's Original. Original Ray's Original.

    Madness.

    As The Scaffold used to sing during Decimal Five: Give more, get rooked.

    1. Anonymous Coward
      Anonymous Coward

      Re: Bah!

      Don't forgot Cosmic Ray's...

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