In the past month, there was a Bitcoin God. Bitcoin Pizza became available in January. Date of launch Bitcoin Private… still kept secret.
And these are just a few examples of the growing family of so-called forks of branches, in which the developers copy the Bitcoin code, releasing it under a new name, with the new token, and, sometimes, new functional features. Often the authors of these projects seek to capitalize on the sensational name of Bitcoin and make it a lot, even virtually, money.
And if last year we witnessed a 19 forks, according to Lex Sokolin, Director of financial technological strategies of company Autonomous Research, this year we will have up to 50 attempts to copy and modify the code. It is possible that this figure is not the limit, since it is now available on the network web site Forkgen, allowing anyone who has basic programming skills to run your own clone of bitcoin. Managing hedge Fund Capital BlockTower Erie Floor in his tweet 14 January predicted that more than 10% of the current value of Bitcoin and the Bitcoin Cash will settle in their new “offspring”.
The basis of such initiatives are the most different motives. Some enthusiasts want to improve the performance of the original cryptocurrency. Others are just looking for a quick gain. Developers tend to quickly accumulate a supply of newly issued digital coins through participation in their mining immediately after launch the network (so-called post-mining). However the high cost of new tokens may be stored for long.
“Unfortunately, most of the projects on the basis of pre-forked instances observed today represent a rather blatant attempts to “grab the money” — says George Kaminis, CEO of Coinomi wallet that allows holders of Bitcoin to earn tokens new forks. — In a few years we will look back on this time and probably will call them mutations, which appeared with the assistance of blinded by the greed of investors and not honest attempts to contribute to the blockchain ecosystem”.
According to the forecasts of Kimihisa, forking might replace the second more popular alternative called ICO, in which startups raise funds by selling brand new tokens. This market last year experienced a boom in 2017, the participants were able to receive funding worth more than $3.7 billion Today, it has grown so much that small players it is hard to compete.
The main advantage of all the fork is in the name of his predecessor — the world’s most famous cryptocurrency. Typically, these ppl were giving anyone at the time of launch was bitcoins, the possibility to obtain an equivalent number of new coins. This allows freshly baked cryptocurrency instantly get access to a huge user base. Most coins immediately have a more or less recognizable name, as it already has the word Bitcoin. As example, Bitcoin Diamond, and the price first went up, but this growth did not last long.
“Bitcoin forks is something like a new kind of altcoins, — shared his opinion of Rhett Creighton, one of the authors of the upcoming fork Bitcoin Private. — Soon we will see other bitcoin forks that will win their places in the first hundred altcoins”.
Bitcoin Private promises to provide a broader function of protecting privacy of the transaction compared with the original Bitcoin.
According to Susan ETIS, Director of the WinterGreen Research, the forks can also help start-UPS to raise funds in countries such as China, where there is a ban on the holding of ICO.
Billions of market value
A few years ago, entrepreneurs used the code to launch Bitcoin alternative cryptocurrencies, such as Litecoin and Dogecoin appeared later, in an effort to create something new, not only in terms of names, but often, and in terms of functionality. However, Dogecoin, whose market price is now at $744 billion pales in comparison with younger clones, as Bitcoin Cash, Bitcoin and Gold. Launched in August Bitcoin Cash is now in fourth place in the list of most expensive cryptocurrency. According CoinMarketCap.com its market value is estimated at $27 billion.
“Bitcoin is Cash managed to achieve really good results and quickly gain momentum, — shared his opinion Charlie Hayter, Director of research firm CryptoCompare. Now other traders are closely watching the rest of the fork, expecting the same growth from them.”
Fork can often bring millions of dollars in profits as its developers and server farms that support the new network. Bitcoin Gold has allocated 100 thousand tokens, which cost is now estimated at more than $190, to create a Fund to Finance ecosystem and development. About 5 thousand coins went to the accounts team who worked on the launch of the fork. If these tokens will increase in value, their owners will also receive a large sum of money.
Miners, computers, and servers which provide the processing of cryptocurrency transactions, assist in the creation of new coins, in the hope of getting large rewards. For example, Bitbank and some Chinese miners played an important role when the original Bitcoin developer Jeff garzik’s created UnitedBitcoin, the fork of which was held in December. As is often the case with the other fork, the new “coin” you mine on old hardware, no longer able to compete with the modern machinery operating in the Bitcoin network. So if UnitedBitcoin “off”, owners of the old miners, who decided to support him, will be able to participate in the launch of this digital currency.
Rank and file miners
Many of the new forks tend to attract small and individual miners are forced out of competition, industrial server farms. Some forks allow you to mine using GPUs, making participation in the process possible for all owners of graphics cards.
“It’s something like “setup for mining in the garage,” says Nick Dooley, a member of the team Bitcoin Interest. Video card is at all, and most people can afford to buy a video card that can mined a bit coin”
Even some of the forks themselves become the basis for new forks. For example, the network of Bitcoin Cash is about to be used as a basis to start a new fork called Bitcoin Candy.
Support from miners is not always sufficient to maintain price levels. According to one of the developers of the fork SegWit2x that occurred in late December, the new network has managed to attract more than 10 thousand miners. However, now the price of B2X quickly goes down, already having lost more than 90% of its December value.
“We provide our users a choice, allowing them to decide for themselves what assets they wish to use and which are not, says Cimini of Coinomi. — We don’t make decisions for them.”