Bitcoin's Big Test: November Fork

Bitcoin has a hard-fork coming up on November 16th.

There was a fork in August that boosted BTC's price; this one is different.

Even with confusion and two different coins, BTC should follow the same pattern and we'll see price increases after November 16.

Just about everyone has an opinion on Bitcoin’s price ($50,000?), inherent value (“digital gold” anyone?), or implementation these days. We have our prediction ($8,000 Bitcoin by year’s end)—and we’ve been right about these calls already.

But no one knows the future with any absolute certainty, and Bitcoin’s blockchain technology means it can elude even the finest of technical analysis.

Well, there are such thing in cryptocurrency as “forks,” and Bitcoin is going to have one—another one—in mid-November.

Let’s look over some basics on what forks are and the information we have on this one, and then we’ll talk about it means as an investor (both pre and post the fork date).

That date is November 16, and the “fork” means the blockchain that powers Bitcoin will be split into two, each holding the history of all previous ledger activity (I suggest going here for a primer on blockchain).

The split will take Bitcoin (as it’s known now) and a new chain which many are calling “2x” or “S2x” or even “Segwit2x,” which refers to seg-wit, an update to the blockchain that changes the way information is sent. That piece may not seem like a big deal, but the change is profound enough to double the size of each “block” within Bitcoin’s blockchain. Many see this as a solution enabling Bitcoin to scale—to take on more transactions per second and to do it at a lower cost.

Groups within the Bitcoin ecosystem—are there are separate groups like miners, developers, investors, exchanges—actually sort of struck a deal in New York in May on implementing this change (called the New York Agreement), but some have since dropped out.

There are more details to be found about this—particularly this Forbes article—each which can explain the technological aspects of this. The piece that’s most pertinent to this discussion is that many exchanges, because of the unknowns here, is going to be offering customers that hold Bitcoin the same amount in S2X coins, meaning Bitcoin owners will own both chains, for at least some time. Important also is that this has all already happened, most notably in August, with the creation of Bitcoin Cash (BCH), which forked off of Bitcoin. Investors knew this was coming at that point, but no one knew how to value BCH.