Cryptocurrency Trading Opportunities Solid Amid Hard Forks and All
Cryptocurrency news and developments are starting to make it more and more into mainstream media. For good reasons too. With an impressive price surge of more than 700% for Bitcoin and 4000% for Ethereum year to date, it is fair to say that Cryptocurrencies have outperformed and by far other types of investments.
The Cryptocurrency market and the news of skyrocketing prices of Altcoins is fascinating. Today, we are regularly seeing traditional media outlets such as CNBC reporting on the Sector. A particular favorite is Bitcoin.
In fact, Bitcoin is continuously setting new all-time highs and the recent Bitcoin hard forks are hands down the most notable events in the Cryptocurrency market. Bitcoin’s Segwit upgrade is probably the event that attracted the most attention this year in the Cryptocurrency market and drove the most price speculation.
The Debate Surrounding Bitcoin Scaling Proposal
Bitcoin’s Segwit upgrade has been at the center of discussion and debate in the Bitcoin community for months now. What started as an upgrade proposal soon became the center of an ideological debate and drifted from the technical aspect to be more about internal politics and diverging agendas.
Bitcoin developers were debating the ideological aspect and whether to stick with Satoshi’s vision 100% or upgrade to a solution that will increase Bitcoin’s scalability regardless of the initial vision. Bitcoin miners were trying to protect their profit margins while the Bitcoin community was trying to prevent miners from monopolizing and centralizing a cryptocurrency which appeal stems from its decentralization.
Bitcoin Hard Forks in 2017
Because of these conflicting interests and visions, it was difficult for the Bitcoin community to reach consensus. Therefore, multiple proposals for Bitcoin’s upgrade were presented. More than one proposal was supported by members of the Bitcoin community and we ended up with 2 hard forks so far for 2017:
- The first Bitcoin hard fork of 2017 was in August after the deployment of the Segwit upgrade or Bitcoin Improvement Proposal 141. The upgrade led to a chain split and the creation of Bitcoin Cash which runs the same segregated witness code as Bitcoin after the hard fork but with a larger Block size of 2 MB for better scalability. After an initial drop, Bitcoin Cash’s market cap has managed to grow and exceeding for a few hours this week Ethereum’s market cap.
- November the 12th, a second Bitcoin hard fork leads to the creation of Bitcoin Gold. This version of Bitcoin has an alternative mining algorithm aiming at countering the centralization of Bitcoin’s mining.
- A third potential Bitcoin hard fork, Segwit2x, was planned in November to increase Bitcoin’s Block size to 8MB. At press time, the fork has been called off for lack of consensus.
For traders aware of the developments on the matter and familiar with how to read Crypto charts and trade accordingly, the profits during this volatile period were substantial. Here is why.
The Impact of Hard Forks on Bitcoin Trading
Within the Bitcoin community, the group that might have benefited the most from the build up of tension and speculation around Bitcoin’s hard forks are traders and investors.
After every hard fork, there is a possibility of a chainsplit that could lead to the creation of a new coin which might or might not share the same history as the previous one. Whenever this happens, investors and traders holding Bitcoin during the hard fork will be credited with a new coin for every Bitcoin they own.
These “free” airdropped coins encouraged traders to buy and hold Bitcoin prior to the forks and collect the free “dividend”. The practice also contributed to driving Bitcoin prices to new heights and for those who were able to trade these events right, the profit was substantial.
As said, Cryptocurrencies have had impressive price surges since the start of 2017. But that doesn’t mean that the rally is exhausted as this might be just the beginning of this Bull market. Even today, and with all the talk in the media about Bitcoin and Cryptocurrencies in general, the adoption rate is still bourgeoning. The real price surge will happen as more conventional investors warm up to cryptocurrencies notably large institutional investors. That is when we will truly see the value of Bitcoin and cryptocurrencies boom. Until then, there are still opportunities for traders to buy dips and profit from this booming market.