Why Cashless Society is Paving the Way for Cryptocurrencies

Samuel Larreal
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Why Cashless Society is Paving the Way for Cryptocurrencies

Our society has changed over time especially with the way payments are being transacted. From paper bills to credit cards and now bills getting paid through cryptocurrencies, with Bitcoin having the most adoption considering the fact that many companies have started to notice and Bitcoin ATMs proliferating all over the globe.

Paper Bills to Cryptocurrency

Despite the global common knowledge that Satoshi Nakamoto was the founder of Bitcoin, reports show that in 2008, Bitcoin was launched by a group led by Charles Bry, Vladimir Oksman and Neal Kin who filed a patent for an encrypted currency.

The supposed founders described the new currency as “a system for electronic transactions without relying on trust” and opened the Bitcoin.org domain anonymously. Parity with the traditional currency established as the cryptocurrency grew in popularity.

While Bitcoin may not necessarily be considered as electronic denomination or legal tender in most countries, it has an advantage of decentralizing currency exchange and gives people the freedom to transfer assets from different parts of the world in ideally a few minutes. Even confirmations of transactions tend to be shorted when compared to current solutions in place such as Western Union, PayPal, among others.

The cashless society is creating a big leap towards cryptocurrency because of the advantages of using it – less hassle and more profit than your regular paper bills. Since Bitcoin is also perceived as an exciting investment opportunity, holding the record of skyrocketing recently to almost $5,000 due to various factors, including geopolitical issues leading many East Asians to find refuge in the decentralize digital currency. For those who consider Bitcoin as an alternative investment (comparable to IRA), historical gains show much higher yields versus if you buy shares in a popular company, like Apple, or store your money in a bank.

Moreover, cryptocurrencies seem a near perfect solution to the many obstacles and risks of traditional cash management. Everyday more and more stores opt to accept Bitcoin as payment option. This is applicable if you currently most use Visa or MasterCard.

In effect, cryptocurrency is becoming the future of cashless society. Such has grown because of its accessibility, flexibility and advance investment opportunity for everyone.

Changes in Government and People

The cashless society will help increase more awareness for the cryptocurrencies through the blockchain technology. This technology tremendously changed the cryptocurrency as it offers a decentralized and distributed ledger for all of a user’s transaction and activity.

Moreover, the government recently shown interest in the cashless society and this could be an advantage and disadvantage. The cryptocurrency enthusiasts are now likely to foresee an end to the heavily regulated transactions.

The government as well as banks have seen advantage of the blockchain technology. Even some countries like Russia, Canada, China and Japan are now starting to study how to create the cryptocurrency to their financial system.

On the other hand, as the government, banks and even retailers see the benefit of cryptocurrency, the need for cash will be greatly reduced as the need for encrypted currency and blockchain technology increases.

Paul Sciglar, CFA

Token Sales (December 19th, 2017)

Shashank Pattekar
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Token Sales (December 19th, 2017)

It’s been another hot period of activity in the token sales world, with fundraising for this new mechanism passing yet another milestone in the last week. According to fintech research firm Autonomous NEXT, token offerings have now raised more than $4.2 billion in 2017, which easily outstrips the $265 million that was raised between the beginning of 2014 and the end of 2016. And there has been a more varied dispersion of project types this year, with the most-funded industries being core technology (such as new blockchains) and finance.Crowdfunding giant Indiegogo also plans to boost token sale activity after it announced last week that it is to launch a new platform exclusively for such offerings. The investment platform will enable token sales for those who choose to set up a crowdfunding campaign, and Indiegogo founder and chief business officer Slava Rubin believes that one thing that has been missing to date is a platform that can make token sales “accessible to a global audience, while maintaining the strictest standards for legal compliance and quality control. This is a big step towards achieving our mission of democratizing finance around the world.”

The platform will support both utility and security tokens, and it will help start-ups comply with SEC regulations governing securities offerings. The website will also operate under the proviso that non-accredited investors will be able to invest up to $10,000 in each token sale — even for those registered as securities — although there will be restrictions set in place and each company will be limited to $1 million in contributions from this class of investor.

And speaking of regulatory compliance, SEC Chairman Jay Clayton issued an official statement on behalf of the US financial regulator, advising investors about token sales. “If an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution,” the statement recommends. Clayton has also reminded investors that no token sale has been officially registered with the SEC as of yet, and as such, they should be approached with due caution. Clayton added, “I encourage Main Street investors to be open to these opportunities, but to ask good questions, demand clear answers, and apply good common sense when doing so”, whilst also providing a list of recommended questions that the finance industry watchdog encourages being asked prior to investing, including “Where is my money going?” and “Is the blockchain open and public?”

Shortly after the SEC’s statement, the US regulator closed down the token sale of Munchee with a cease and desist order on Monday. The $15 million raised during the sale must also be returned to their respective investors. The company was looking to launch a decentralised blockchain-based food review and social platform, as well as a downloadable app. But with Munchee classifying its MUN token as a ‘utility’ token, which means that it would mainly be used within the company’s ecosystem rather than to fund operations, the SEC discovered that the company was actually using the token as a ‘security’ instead.

According to the SEC’s Clayton, “Merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security.  Tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others continue to contain the hallmarks of a security under U.S. law.” Clayton nonetheless believes that token sales remain useful ways for entrepreneurs and others to raise funding, including for innovative projects. However, any such activity that involves an offering of securities must be accompanied by the important disclosures, processes and other investor protections that our securities laws require.”

The Centra token offering, which was promoted by none other than Floyd Mayweather, Jr., is currently facing a new class-action complaint. The lawsuit, which was filed on Wednesday, accuses Centra Tech of violating U.S. securities law through a token sale that raised $30 million for the development of a cryptocurrency-focused debit card. According to the complaint, “Defendants raised over $30 million in digital cryptocurrencies by offering and selling unregistered securities in direct violation of the Securities Act.” The complaint also accuses Centra of misleading investors about the nature of its relationship with Visa and Mastercard, as well as listing fake team members on its website.

In response, Centra has stated that the lawsuit “appears to repeat unfounded claims regarding Centra Tech, [and] alleges that Centra Tech’s offering of Centra Tokens was an unregistered sale of securities. The plaintiff’s complaint attempts to mimic claims and allegations the Securities and Exchange Commission has lodged against other cryptocurrency offerors,” the start-up wrote, adding: “Centra Tech disputes the allegations in the complaint.” The class-action also comes over a month after two of the firm’s founders left the company.

The highly renowned Russian blockchain platform Waves is aiming to establish new standards for the token sales industry. The initiative intends to provide an array of services across various areas including legal, tax and accounting, business due diligence, and KYC for emerging companies in the domain. The project is also being set up in conjunction with other industry luminaries such as Deloitte CIS and Ethereum Competencies Center. Indeed, it will be the second collaboration between Deloitte and Waves after the blockchain’s USD fiat gateway was launched in June.

Waves also explained that this new regulatory body is open to all crypto market leaders including professional services firms, blockchain platforms, token sale platforms, and notable individuals associated with the industry. It is also keen for industry incumbents to welcome self-regulation as a positive step for the sector, with CEO and founder Alexander Ivanov explaining further: “Regulation is clearly an emerging phenomenon and concern in the crypto space. If certain jurisdictions have not yet announced their intentions, then it’s only a matter of time. Waves has always been clear that regulation — the right kind of regulation — is a good thing for the crypto space. We have also been clear that we want to be a part of that emerging dialogue. We want a seat at the table to be able to shape the future of regulation…”. With the project receiving much positive feedback, Waves will now spend the coming months registering the association in Switzerland, with the final standards expected to be completed in January.

Cryptocurrency Market Review (December 11th-17th )

Shashank Pattekar
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Cryptocurrency Market Review (December 11th-17th )

Although Bitcoin fell agonizingly short of the $20,000 mark, it was another breath-taking week of gains for the world’s leading digital currency – as well as for the entire cryptocurrency complex. Nearly every coin registered double digit returns, with Litecoin being a star performer among the biggest currencies. With the aggregate market capitalization having recently breached $600 million, moreover, the cryptocurrency market as a whole is now more valuable than Facebook. That is some feat!

And while some may think Bitcoin is entering ‘bubble’ territory, it seems that the majority of investors are expecting even more stratospheric returns next year. According to a recent survey, most US-based Bitcoin investors are expecting the world’s dominant cryptocurrency to perform better in 2018, compared with this year’s seventeen-fold gains. Digital student loan company LendEDU has polled over 500 Americans and found that roughly 77% of respondents expect the Bitcoin’s price to go more rapidly than it did in 2017. Indeed, nearly 75% of participants are planning to increase their Bitcoin investments next year, while only 10% do not plan to do so.

Other findings from the survey include the fact that 31.5% of respondents plan to sell at least some of their bitcoin in 2018, with 40% against selling and 28.5% being unsure. 51% are anticipating making at least one physical purchase using the cryptocurrency, with 30% being unsure if they would or not. Meanwhile, LendEDU itself believes that regulation could help stabilize Bitcoin’s price, but that excessive regulation could go against the cryptocurrency’s founding core principles, and thus repel some investors. Of the survey respondents 50% would not like to see more regulation, while about 30% want more rules.

And somewhat encouragingly given the economic quagmire it currently finds itself in, Venezuela is seeing adoption of Bitcoin at record levels. Indeed, given the country’s hyperinflation which has rendered the national currency the bolivar practically worthless, many Venezuelans now consider Bitcoin to be a genuine life-saver. Reports last week emerged of ordinary Venezuelan citizens using Bitcoin for almost all their transactions; indeed, one story emerged of people being unable to find badly needed medications within the country over the last few year, but now they can purchase them online from abroad with Bitcoin and use courier services to deliver them to the country.

Russia’s biggest bank, Sberbank, has now began its own blockchain educational programme. With the number of blockchain-related projects initiated at the bank having climbed significantly throughout the year, the academy of technology and data at Sberbank’s university now welcomes the educational blockchain programme, which aims to boost the involvement of top management with blockchain projects, as well as promote the use the technology with efficiency. The course will also provide a general overview of the major blockchain projects and platforms, information regarding potential applications of blockchain for financial markets, and the legal and regulatory aspects of blockchain and cryptocurrency.

In November, Sberbank was the first Russian bank to adopt the pilot bank-to-bank transaction on the base of IBM Blockchain platform and HyperLedger Fabric. And according to the head of Sberbank SIB Igor Bulancev, the bank sees massive potential in the development of blockchain economy and thus wants to work closely with “corporate clients, governmental entities and financial institutes for wider implementation of blockchain technology”. Bulancev added that the bank is currently focused on development of the programme for internal corporate use only, “but in future, we may consider the possibility to share our knowledge and experience with the professional community.”

The European Union has agreed on implementing some rule changes in order to designed to prevent criminals and terrorists from using digital exchange platforms for terrorism and money laundering. EU lawmakers announced on Friday that “more transparency to improve the prevention of money laundering and to cut off terrorist financing” will be introduced, according to Justice Commissioner Vera Jourova. Specifically, the rules will require wallet providers and cryptocurrency exchanges to take the appropriate steps to properly identify customers. In addition, restrictions on pre-paid credit cards will be imposed, while transparency requirements for trust beneficiaries and companies will be strengthened.

The new rules come more than two years after the European Commission recommended that action should be taken following the 2015 terror attacks in Paris. With some countries opposed to changes in certain rules, however, the negotiations have taken considerable time and debate before being finalized. The new measures will now be taken up by EU member states, with legislators in those nations having 18 months to adopt the proposals and pass them into law.

The European Parliament has also given a big vote of confidence to cryptocurrencies, with members declaring last week that digital money is here to stay. MEP Sorin Moisa led discussions at a policy dialogue organized by ORCA Alliance and EU40 at the European Parliament on Saturday, arguing for clear policy framework for the cryptocurrency market one that should be aimed at “eliminating the impostors and revision of the Anti-Money Laundering Directive which will help to kick-start this process”. And fellow MEP Eva Kaili backed this up by saying that cryptocurrencies will increase decentralization and thus lower the need for centralized intermediaries, but cautioned that policymakers should perhaps wait for more testing to be conducted by the market.

Meanwhile, Peteris Zilgalvis who is the head of Start-ups and Innovation for DG CONNECT at the European Commission, observed that the Commission is approaching the space from an innovation perspective, acknowledging that a “Blockchain Observatory” will be launched in January 2018 and will see “a close collaboration with innovators and look at the different use cases of cryptocurrency and decide whether it will be worth intervening or leaving the market alone”. A FinTech Action Plan that will be published by the Commission in March 2018 will also touch upon this issue.

Crypto-Economics

Irwin Stein
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Crypto-Economics

A lot has been written of late about crypto-currency. Given that the subject matter claims to be currency, it would seem appropriate for the discussion about crypto-currency to include an economist or two. To date, very few peer reviewed papers on the subject have been written by economists but it is not difficult to imagine what they would say.
If you had stayed awake in my Economics class when I lectured about currency, you might have made a note about Gresham’s Law. It provides what is probably the best argument why crypto-currency might actually supplant modern fiat currency.

Simply stated, Gresham’s Law says that

“bad money will drive out good money”.

It is credited to economist H. D. Macleod in 1858, who named it after Sir Thomas Gresham, a Tudor era financier. Most scholars agree that the law or at least the observation at its core has been around since the ancient Greeks.

“Bad money drives out good money” refers to a time when money was “coined” and the coins were either gold or silver. Gold was considered to be superior and when both were in circulation at the same time at a fixed rate of exchange people would hoard the gold coins and spend the silver.

I witnessed Gresham’s Law at work in the mid-1960s when the US Government started circulating silver quarters that were only 40% silver. The older quarters which were 90% silver soon disappeared. People would roll them up and sell them for their silver content value effectively taking them out of circulation.

Fiat currency (paper money) has no intrinsic value. One of my Economics Department colleagues used to suggest that gold should have no particular value either and only has value because people in antiquity found it to be shiny, malleable and rare. Value, he would say, is in the eyes of the beholder. Gold has value only by popular acceptance.

The argument can certainly be made that is true of the US dollar and other fiat currencies. Fiat currency works because it is accepted. Over the centuries, there have been specific times when the fiat currencies have become significantly devalued, e.g. the Weimar Republic, because the government itself became devalued.

The US dollar is legal tender for all debts, public and private in the US. It is backed by the full faith and credit of the US Government and all of the assets that the US Government holds. Those assets include a fair amount of gold and a lot of valuable land. So I think that the argument can be made that US currency is superior to any crypto-currency, none of which have any of these attributes or backing. This should be good news for crypto-currency advocates because Gresham’s Law would suggest that their inferior currency will ultimately prevail as the standard medium of exchange.

I did find one article that argued that Gresham’s Law would be the end of crypto-currency because crypto-currency was the superior currency. I do not agree that assumption but at least it was a cogent, academic argument. If the crypto-currency world needs anything it is a healthy dose of rigorous academic discussion.

Any currency must be an accepted medium of exchange. Up until this point in time very few retail establishments have accepted crypto-currency as an exchange for goods. Japan has led the way in this regard and the jury is still out as to whether the current experiment in crypto-currency will be continue to be acceptable to the retail merchants.

Any currency must also be a stable store of value. One of the most common and popular crypto-currencies, bitcoins, has seen its price decline by 10% or more in a single day at least a dozen times in the last 12 months only to see it bounce back quickly. This volatility has to give pause to any merchant who would accept bitcoins in exchange for merchandise. Merchants will not be willing to accept the loss if the customer returns the goods 30 days after purchase and the price of a bitcoin they tendered and now want returned has gone up 10% or more.

A great many people approach crypto-currency from a technological perspective and favor it for no other reason than it is based upon block chain technology. Their goal is to utilize crypto-currency as part of a new global system of payments and settlements that will replace banks. They believe that block chain technology will enable them to build a system that is faster, better and less expensive.Blockchain or distributed ledger technology (DLT) involves a distributed database maintained over a network of computers connected on a peer-to-peer basis. The network participants can share and retain identical, cryptographically secured records in a decentralized manner. In a decentralized system there is no real governing body.
In the current system I can make a long distance purchase and put it on my credit card. If I am not happy when the goods arrive I can notify the credit card company and get the charge removed. There are no credit cards or middlemen in a DLT system.

If I put my money in a bank and a bank employee steals it by moving the money out of my account, I get my money back because the employee is bonded. If the bank goes belly-up, the US government will guarantee my deposits. Not so in a DLT system.

In the last 50 years of the 19th Century in the US alone several thousand banks failed. Depositors lost their money overnight and the trickle-down effect of businesses losing their funds caused a great many companies to fail and people to be put out of work. Banks operated in a relatively decentralized, unregulated environment.

Over time the Federal Reserve, the FDIC and a lot of regulations were put into place to keep the bankers honest and the banking industry stable. The regulations did not always keep the bankers honest but fewer and fewer banks actually failed and the people’s trust in them increased. Given this history is seems questionable that a new, decentralized and relatively unregulated system would be better.

Bitcoin’s inventor set a limit on the number of bitcoins that can be created stating that there would only ever be 21 million bitcoins in total. If you assume that Gresham’s Law does operate as advertised and bitcoins replace all US currency or all global currency in circulation it should be obvious that more will be needed. How many more and who decides?

If you just take off the cap and allow bitcoins to be created ad infinitum you are likely going to have either too few or too many depending upon other market conditions. The amount of crypto-currency in circulation will then either be inflationary or deflationary. If you set up a governing board to determine the supply of bitcoins in circulation then you are performing the function of a central bank and on a slippery slope to other regulations.
I do not think that there is much of a question but that the existing banking system could absorb and apply block chain technology if it is truly more efficient. But I do not think that we also need crypto-currency, if, at the end of the day, it probably going to require a system that is not too different from the one that we already have.

Irwin Stein / 40-Year Experienced Corporate, Securities & RE Attorney

Central Banks Dip Their Toes into the Cryptocurrency Waters

Dima Zaitsev
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Central Banks Dip Their Toes into the Cryptocurrency Waters

Bitcoin and other cryptocurrencies are moving towards the mainstream

Cryptocurrencies were initially seen as a challenge and standing in opposition to traditional centralized banking. So far, they have made only small steps towards entering the everyday economy. Legislative restrictions passed in various countries have hindered progress towards their acceptance. For example, the United States SEC recently stated that some cryptocurrencies had features akin to digital assets or securities. Singaporean fiscal regulators, on the other hand, see cryptocurrencies as closer to a legal tender than an asset.

In any event, cryptocurrencies are slowly gaining more recognition among regulators, which means that they are no longer perceived as an existential challenge to central banks. The process of incorporating them into the overall financial system has already begun, but some hurdles remain.

Widespread money laundering through cryptocurrencies is a concern that is often raised. Katrina Arden, attorney and founder of the Blockchain Law Group, notes that “the issue of anti-money-laundering/know your customer is definitely slowing down the wider acceptance of cryptocurrencies. Even though the adoption of AML/KYC procedures will mean that the parties in transactions are no longer anonymous, this does not loom as large as the overall benefit of greater integration of cryptocurrency payments.”

The anti-money-laundering requirements in force in many countries, including the tough American requirements, can be implemented through blockchain solutions already offered by fintech companies. AML BitCoin is one possible solution. Marcus Andrade, CEO of NAC Foundation: “Until now, banks and governments have been wary of the use of cryptocurrencies, since they are not AML compliant: they don’t conform to American banking standards, the provisions of the Patriot Act, and other regulatory norms. We developed AML Bitcoin to address these concerns and put a fully legal, compliant alternative on the market. A number of American banks are already testing our product for use in interbank transfers. We are convinced that our solution will save millions in exchange fees.”

Central banks will of course want to keep close control over the introduction of blockchain. Many central banks are considering cryptocurrencies of their own; some have already explored their options in this area and are looking at various models. Settlements could be made by the central bank with a mobile app that uses the blockchain infrastructure.

Vladimir Gorbunov, CCO and Co-Founder of Crypterium, had this to say

“banks are now starting to set up blockchain networks among themselves. These networks let them exchange information on transactions more quickly, speed up their accounting, and decentralize information storage. It’s obvious why banks would want to use blockchain technology: it makes it possible to reach a consensus where none exists, provides a higher level of trust, and protects the entire system. This is why banks have started integrating blockchain and are expected to do so actively going forward.”

Blockchain will certainly bring greater convenience and lower costs for users, but the question of anonymity remains. Blockchain participants are themselves anonymous, but the contents of their wallets and the transactions they make are transparent and publicly available. The increasing number of transactions should eventually lead to a situation where transaction data could be connected to data on wallet holders. For better or for worse, the overall transparency to the government of the financial sector and the economy will increase considerably in the era of central bank blockchain currencies.

The move to blockchain will also facilitate a reduction in the amount of cash in circulation (which is used mainly in consumer retail transactions). Cash is a hindrance to effective monetary policy, and countries have long sought a way to gradually move away from banknotes and coins. Benefits of this would include reduced fraud and increased transparency.

Daniil Rausov, CEO and Founder of KYC.LEGAL, says: “I think that for many countries the likelihood of creating a single cryptocurrency at the state level is a question for the near future. I tend to agree with the assessment made by MIT Technology Review on this. National analogues of bitcoin will be needed in places where cash is becoming less popular or where the financial system needs to be modernized. The most striking examples of this in recent months have been Sweden, where the country’s central bank estimates that less than 15% of payments were made in cash, and India, where the government is pursuing a deliberate policy of reducing the circulation of cash in the country.”

Some central banks have already begun to move operations to mobile payments and blockchain. Denmark’s Central Bank launched the app Danske Bank MobilePay in 2013. Sweden has a similar mobile app named Swish, through which more than 100 million transactions are already made every year. Estonia is considering issuing its own cryptocurrency, dubbed EstCoin; this would make Estonia the first country to hold a government-supported ICO. There have been reports that the Reserve Bank of India is planning launch a digital currency. It is not yet clear how serious these plans are, but a name has apparently already been chosen: the Lakshmi, named for the goddess of wealth and prosperity.

These ongoing experiments are being watched attentively; there is much we can learn about the future of finance by doing so.

Dima Zaitsev, PhD – Business Analytics Department Chief at ICOBox

What Is a Blockchain Fork? And What Does It Mean to You?

Jeanne Grunert
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What Is a Blockchain Fork? And What Does It Mean to You?

This fall the Bitcoin blockchain will see some changes as two “hardforks” arrive: Bitcoin Gold, which took place on October 24, 2017, and SegWit2x, which is expected to arrive on or about November 18th. I say “on or about” because blockchain forks occur at specific blocks, rather than at specific dates and times. We may get to the affected block sooner or later than the estimated dates depending on the volume of changes moving through the BTC blockchain.

What the heck is a hardfork, anyway? It sounds like a really nasty dining implement. In reality, it means a new route, or chain, forks away from the main blockchain. It’s generally defined as a radical or extensive change to the current protocol running the blockchain on which the fork occurs.

First, a complete snapshot is taken of the chain so that it can be recreated without losing any data. Next, the rules, or protocols governing the BTC blockchain are updated. With the new rules in place, everything is updated, recreated, and reconfigured so that the new rules are in place.

Bitcoin Gold occurred at block 491,407, and the changes created a new token, Bitcoin Gold.

Why did this hardfork occur?  Some people thought that miners (as a group) had too much influence over the entire Bitcoin network. Bitcoin gold replaced the current mining algorithm in the Bitcoin blockchain with one that cheaper graphics processing units can mine. This should, theoretically, open up opportunities for more miners. More miners, less control to the original group.

What a Hardfork Means to the Average BTC Owner

Now that you know what a hardfork is and what this latest fork means in general, let’s talk about what it means to you, personally. Unlike the first hardfork that resulted in Bitcoin adopting SegWit and Bitcoin Cash being born, the original Bitcoin blockchain did not undergo any changes or updates during this recent hardfork.

In the first instance, Bitcoin was undergoing a Segwit upgrade and Bitcoin Cash forked in order to retain the old Bitcoin blockchain – one with no SegWit. In the recent instance, Bitcoin didn’t have any upgrade. A fork occurred, but Bitcoin remained the same and a “upgraded” Bitcoin Gold blockchain was born with new mining protocols.

During a hardfork, BTC transactions can potentially take a lot longer to be completed on the blockchain. That’s because there are fewer active nodes. As more nodes are updated, and more come back online, activity picks up back to its usual pace.

A few tips to weather these hardforks from the perspective of the average bitcoin owner:

  • First you need to decide whether you are looking for safety and security during the fork or if you are trying to profit from it.
  • If you are looking for safety, you should choose a trusted exchange that has been around for a while and has liquidity or you should consider keeping your Bitcoins in an offline wallet.
  • Both before and after a hardfork, the price of Bitcoin can jump and plunge due to people buying and selling. Expect the unexpected when it comes to Bitcoin prices.
  • If you decide to hold onto your existing BTC, prepare at least 24-48 hours before the anticipated fork date. Remember, forks can occur a little earlier or later than anticipated because they are timed to blocks rather than dates. If the miners on the blockchain reach that block sooner than expected, the fork may occur faster than estimated.
  • It’s not clear whether storing your BTC on an exchange or a custodial service that holds your private key will mean you eventually receive BTC, Bitcoin Gold (BTG) or SegWit2x (B2X). Look for your service’s official statement about the forks. Know what your service plans to do and provide for you. If a user intends to sell their forked coin, keeping some Bitcoin on a trusted exchange that plans to support the forked coin allows for quick and easy liquidation. Finding a wallet that supports the new coin, accessing the coins and transferring them to an exchange takes a lot of time and is not always successful.
  • The safest method is to control your private key yourself, but it might not be the most practical.
  • Want to obtain the forked coin, then sell it fast? You might want to leave some Bitcoin on an exchange as well as keep the remainder in a private wallet for which you control the key.

After the latest hardfork, things should settle down when Bitcoin Gold launches around November 1. SegWit2x may play out differently. The world of cryptocurrency and blockchain is always shifting, so stay tuned for updates!

By Jeanne Grunert – Editorial Director, iAM Marketing

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