Will BCC affect the price of Bitcoin? This time even traders are 'split'

Bitcoin traders may soon be able to choose which version of the blockchain they prefer.

As if the debate over the development path of network technology over the years was not dramatic enough, we are about to see another "twist" in the debate over Bitcoin's expansion on Tuesday. Some miners and developers said they would create another network to prove that large blocks are the best solution to increase network capacity.

This Bitcoin Cash (BCC) will fork the existing Bitcoin software and transaction history, and in the process every Bitcoin user will also receive a cryptocurrency token on this new blockchain with different rules.

If a user holds two bitcoins, he can get the same amount of BCC on the BCC blockchain, which can create millions of dollars of new value for traders.

This is not without precedent: a similar incident occurred on the Ethereum blockchain last summer, when some community members created a new cryptocurrency to protect developers’ designs.

But if you think any level of uncertainty might scare off traders, you’d be wrong, the opposite is true, says Rafael Olaio, a Ripple gateway operator. Once the new network is expected to launch, Olaio and others believe traders will choose to hold off until they get their hands on the new money (BCC).

He said:

People want to double their coins, and no one is selling Bitcoin at the moment.

Overall, analysts offered a wide range of opinions on what will happen in the days and months ahead, describing what they believe will be the immediate and long-term impacts of a new, potentially widely traded cryptocurrency similar to bitcoin.

However, it should be noted that not all traders believe that BCC meets all of the above descriptions.

For example, Arthur Hayes, founder of cryptocurrency derivatives trading platform BitMEX, pointed out that "in theory" the launch of BCC could cause a drop in the price of Bitcoin. But he still doubts the reality of this situation. Because from previous examples, traders have never been very fond of assets that try to fork Bitcoin.

There have been many similar "minority forks" based on Bitcoin ownership before, but none of them caused a drop in Bitcoin prices, including bitcoin clams, byteball, etc. I think BCC will have little or no impact on Bitcoin prices.

Hayes continued:

Once holders immediately sell the 'free money' to buy Bitcoin, I don't think most holders expect the chain to survive in the long term.

Consumers are misled

Perhaps for traders, what they are most worried about is not whether two assets compete in a fair environment, but what will happen if the market fails to provide such fairness.

Charles Hayter, co-founder of cryptocurrency trading service CryptoCompare, pointed out that he believes consumers may be misled when choosing between two competing currencies - and he is not the only one who holds such a view.

He said:

In the long run, the similar naming of the two coins may cause confusion, which will undoubtedly cause some problems.

Dutch entrepreneur and venture capitalist Marc Van der Chijs said he believes bad actors might even deliberately confuse the two assets to profit that way.

I can imagine that a scammer might tell someone they are selling Bitcoin at a discount, when in reality they are not selling Bitcoin but BCC. This type of incident could add unnecessary frustration to a potential investor's first coin buying experience.

It is because of these and other unforeseen issues that Van der Chijs believes the combined value of Bitcoin and BCC will drop below $2,700.

Because of this uncertainty, people may exchange Bitcoin and BCC for ETH or other coins. Therefore, I think this is not good for the price of Bitcoin.

No ETC

Other market observers have stressed that because Bitcoin’s network effects are already entrenched, forked chains are less competitive than the main chain.

Unlike Ethereum Classic (ETC), which has been separated from the Ethereum network for less than a year, Bitcoin prices will remain stable as it benefits from a large number of stakeholders and a mature infrastructure.

Takao Asayama, CEO of cryptocurrency exchange Zaif, said:

Bitcoin is more like a currency, unlike Ethereum. Currently, a large number of payment services and other infrastructure have been built and deployed in the system.

Kevin Zhou, operator of cryptocurrency hedge fund Galois Capital, holds a similar view, arguing that the fork will lead to an “unequal” distribution of the network effects of the two competing technologies.

However, Zhou believes that this sends a positive signal that will enable existing Bitcoin users to invest more capital to support the deployment of their favorite technology.

What will happen in the future

As for what will happen now, no one can say.

Although miners and developers insist on carrying out the split, it is possible that the code to create the split will not be released at all. Some people worry that the split will cause high volatility in the price of the currency for a period of time, which will benefit experienced traders but will also cause ordinary investors to leave.

Investor Vinny Lingham, known for his accurate bitcoin price predictions, said he would pull his money out of the market during the “tumultuous months” for the bitcoin protocol.

High risk equals high reward, but also the potential for severe portfolio losses. I don't like what's happening right now, so I may stay on the sidelines for a long time.

As for useful advice, Zhou, like others, stressed that traders who plan to engage in any form of trading should withdraw their bitcoin from exchanges, as there are exchanges that will not support new cryptocurrencies such as BCC.

He said this was the quickest way to “dump BCC,” a useful tip for Bitcoin traders eager to take sides.

Zhou concluded:

I recommend you to transfer your bitcoins out of the exchange.