After bitcoin endured a split back in August, creating the new Bitcoin cash cryptocurrency, it happened again on Tuesday. This time, the aim was to create a new coin called Bitcoin Gold.
From $0 to $2,900 – and seemingly everywhere in between.
Bitcoin Gold, a new fork of the bitcoin software, may not have been officially launched (or distributed to users), but that isn’t stopping the cryptocurrency markets from seeking to determine its potential value (or profiting from its eventual existence).
In an interesting twist on a typical distribution, a number of exchanges are now listing a token that represents a claim on the future delivery of bitcoin gold (in advance of it becoming available to all bitcoin users). Ahead of that event, however, traders are seeking to value the asset, which proposes an alternative to the difficulty of competing for rewards on bitcoin’s mining network.
Still, it’s safe to say there’s disagreement so far.
In interview, analysts expressed a reservation about bitcoin gold, both when speaking about its developer team, and when characterizing the protocol’s potential market opportunity.
Safiri Felix, a researcher at financial publisher Empiricus, for example, believes that while bitcoin gold is likely to encourage others to clone bitcoin’s blockchain, and thus capitalize on the potential to appeal to its expansive user base, he sees this trajectory as limited.
Indeed, most industry observers surveyed don’t expect the project to compete with bitcoin or bitcoin cash, predicting its market capitalization would likely be similar to less valuable networks.
This belief seems reflected on exchanges, where BTG tokens traded for a high of $2,900 on Bitfinex, before dropping 96.64 percent to $97 on Tuesday. By Wednesday, prices stabilized around $137 at press time, though order books are heavy with sell orders in available markets.
At current prices, the value of all bitcoin gold (once released) would be worth a mere 43 percent of BCH and 2 percent of BTC. As such, it seems unlikely to surpass the value of those currencies in the immediate future.
Likewise, exchange interest also seems subdued. Currently, only a handful of exchanges, Bitfinex, HitBTC, Yobit, Bleutrade, Bitstar and Coinnest, support BTG/BTC and BTG/USD trading pairs.
As for what that means for those considering how to handle their holdings, it’s worth noting that such market shifts are common when it comes to the price determination of a new asset.
For instance, bitcoin cash (BCH) – which forked off bitcoin in August – traded for highs of nearly $1000 before dropping to trade between $300 to $400 in its first month. Likewise, at points, zcash traded for millions of dollars per token (though that was due to issues with its distribution).
NOTICE ABOUT BITCOIN GOLD
We have received inquiries about Bitcoin Gold and whether we intend to support it. Until the software is released for review, we cannot commit to distribution nor can we pledge to support it. The reason for this is that we cannot be certain about the security and stability of the software, nor the state or health of the network prior to launch. Further, regardless of what the project team behind the new token may assert to the exchanges prior to launch, we must be confident that a blockchain token does not require dangerous and questionable activities in order to support it.
We’ve stated in the past that the safety of our users’ tokens is our chief concern. As such, we have refused to support a forked token unless it had implemented replay protection. We would like to further urge our users to be immensely cautious of any token that expects to be given private keys that control value on another blockchain. This is dangerous and unnecessary, even for an alt like BTG that seeks to distribute tokens using the state of an existing blockchain.
Some reminders that apply to all balance-duplicating alts:
- If you wish to be guaranteed tokens distributed according to existing blockchain address balances, you should keep your tokens in addresses for which you control the private keys.
- If we credit accounts with forked tokens, we will do so according to balances at the time of the fork. If you have tokens on loan at the time of any fork related to that token, they are not in your balance, therefore you will not receive any forked tokens for them.
- Under no circumstances will we redeem tokens distributed according to the balances of addresses that contain customer funds and keep them for ourselves. Should we redeem them, we would only do so to distribute them to our users.