More Forking Forks in 2018?! (BTCP, BTC, and ZCL Analysis)
Forked coins dominated the atmosphere in 2017, with the Ethereum we are all familiar with being a Fork of ETH Classic. Bitcoin had many forks in 2017; Bitcoin Cash, Bitcoin Gold, and Bitcoin God to name a few. The question persists is there any value to these forked coins? Yes. The most valuable fork of them all, in the author’s opinion, is coming within thirty days; Bitcoin Private.
What is a Fork?
To keep it simple there are two types of forks; a hard fork and a soft fork. A hard fork occurs when a blockchain splits into two new chains (incompatible with each other). These hard forks often result in a software upgrade or an expansion of the rules governing the blockchain. A soft fork occurs when there is a change of rules that creates blocks recognized as valid that would not have been previously. A user-activated soft (“USAF”) fork is controversial as it explores how to perform blockchain upgrades that are not supported by the network’s original hashing power. The differences between a soft and hard fork enters into the technical side of the blockchain. The important part to understand is some forks result in new coins and other forks solely result in a change to the original structure of the coin’s blockchain. The upcoming fork occurring with Bitcoin (“BTC”) and ZClassic (“ZCL”) will result in Bitcoin Private (“BTCP”).
A hard fork is when a single cryptocurrency splits in two (in some instances). It occurs when a cryptocurrency’s existing code is changed, resulting in both old an old and new version. In some instances the old version becomes obsolete, so solely one coin remains. The case between BTC and ZCL is unique because they will be “co-forked” into BTCP.
ZClassic and Bitcoin (ZCL & BTC)
BTCP has been in discussion since early December when ZCL had a run from under $2 to over $100. In January ZCL approached $200 and then the market correction occurred. This was coupled with most expecting BTCP to be a January fork. The result was ZCL losing 40 percent of its value in weeks, as did most of the market. Most would say ZCL has peaked (given its 70x run in two months). However, the forked coin being provided to ZCL is the same value of the forked coin being provided to BTC. BTC costs almost $12,000 per coin and ZCL currently is $140 per coin. The IGNIS airdrop drove the market cap of NXT to over $2 billion, solely because of the FOMO (fear of missing out) associated with free coins.
There will be FOMO associated with BTCP, but there will also be real-life use. ZCL has a market cap of approximately $400 million. BTC has a market cap of approximately $190 billion (yes with a “b”). Yet they are both providing the same forked coin, BTCP. To an investor a forked coin looks very much like a dividend, and here you have a coin worth $140 providing the same dividend as one valued at $12,000. A discussion of the valuation of BTCP will occur later, but whatever the future value of BTCP is should correlate to the current minimum price of ZCL.
Many people are well aware of the issues that have been plaguing Bitcoin for years. The cost of transactions, the transparency of the blockchain (positive or negative depends on your view), the time it took to transact, the minimal number of total tokens, etc. The list of what was wrong with bitcoin was longer than what was right. Bitcoin was the first, it will always be respected (deservingly so), but the purpose of forks is to improve in the imperfections of the original. To deal with scalability issues, bitcoin implemented SegWit. Part of the main plan was to remove signature data from each block. Signature data had been estimated to account for 65 percent of all data processed in each Bitcoin block. This along with a few other upgrades attempted to solve bitcoin’s scalability issues. However, Bitcoin Cash forked and took another approach to the scalability issues plaguing BTC.
Bitcoin Cash (BCH)
BTC miners and developers grew concerned that BTC, even with the SegWit2x update wouldn’t be able to scale effectively. They also thought it did not address fundamental problems or follow the roadmap outlined by Satoshi Nakamoto. Their main concern was how the introduction and implementation of SegWit2x were not transparent which undermined the decentralization and democratization of currency (which is what BTC was meant for). Bitcoin cash implemented an increased block size of 8MB. This greatly accelerated the verification speed, regardless of the total number of miners supporting it. The more miners supporting a coin generally, the safer the blockchain, this is where any security-related concerns of BCH are generally raised. However, BCH set out to accomplish aspects it believed BTC was failing in and has become a successful cryptocurrency.
Bitcoin Private (BTCP)
BCH is currently trading around $1600 after having broken $3000 on their Coinbase news. Similarly, for most coins, they had their 40 percent correction in January as well. The question becomes what will the market adoption of BTCP be and will the price of BTCP be above the current price of ZCL. The answer seems to be a resounding yes. Bitcoin Gold is trading at $185 per coin following January’s correction. Bitcoin Cash is trading at $1600. Even Bitcoin God which had significantly less support is valued at almost $100 per coin and was well above $150 prior to the January correction. It is likely BTCP is priced in the $300-$1000 range in the short term, making it a 100-800 percent one to three-month play, if you plan to purchase ZCL shares to accumulate BTCP.
The snapshot date was announced January 28, 2018, and will be occurring on February 28, 2018; this means the price of ZCL should increase rapidly as February 28 approaches. The mainnet launch for BTCP is approximately two days later. It is highly recommended keeping your ZCL and BTC off exchanges for the fork if you intend to take advantage of the free BTCP. It took Coinbase over six months to provide support for BCH. If you have any desire to exchange BTCP, do not rely on exchanges immediately, hold it in a wallet. It is likely in the next three weeks there will be many announcements regarding which exchanges will support the fork. With the announcement of each new exchange expect to see the price of ZCL to increase dramatically.
The total number of BTCP will be very limited at under 30 million total coins; the exact number will not be known until the day of the fork as individuals are still mining ZCL and BTC. However, what is known about BTCP is very exciting! According to the BTCP homepage:
“Bitcoin Private will use the same privacy technology as ZClassic. This means payments are published on a public blockchain, but the sender, recipient, and other transactional metadata remain unidentifiable.”
The BTCP Team is attempting to make BTC a privacy coin while still solving the issues associated with BCH and BTC. The benefits of decentralization will remain, but BTCP will get an upgrade compared to BTC as it will be a much faster blockchain. By slightly increasing the block size while being more anonymous they are able to be more secure, privacy-oriented, and BTC branded, while not sacrificing transaction speeds. BTCP’s entire codebase is publicly available for viewing because it is Open Source.
With a team of over seventy individuals and more than twenty developers, it seems this fork has a true Dev team and enthusiastic community. There is no “founder’s reward” no “tax” to the creators with BTCP, and it incorporates privacy and speed into the BTC blockchain. BCH made a significant splash when it entered the crypto space by speeding up BTC transactions. BTCP accomplishes the same speed advantages as BCH while also providing the anonymity so many chose to enjoy. Now the public has a choice to use a BTC branded privacy coin, that choice has significant value.
The Valuation of BTCP
This is by far the most difficult aspect to correctly predict. In analyzing other BTC forks, we see BCH trading at $1600, Bitcoin Gold trading at $185, and even Bitcoin God (the most recent fork) trading at almost $100. These are all down 40 percent from where they were one month ago. Assuming the market corrects and these return to their former fame they should all be trading 10-20 percent higher by February’s end. None of these forks of BTC provide one very unique aspect, privacy. There are entire coins solely dedicated to being privacy coins, but now there is a Bitcoin branded privacy coin. If you are asking yourself what is a brand worth or what is the BTC brand worth? Well, you my friend are in the wrong space. A brand is everything. Look at cars, watches, perfume; if it is labeled with a recognizable brand, it is worth exponentially more than if it solely served its purpose (even if it served its purpose well).
The most valuable brand name in cryptocurrency is, of course, Bitcoin. Bitcoin Private is intentionally trying to capitalize on the BTC branding, the BTC blockchain, and by incorporating the privacy aspect to BTC, truly has an opportunity to do it correctly! BTCP has its fork date predetermined for February 28 (announced yesterday). They have a huge team of developers working on the project continuously and have already begun holding meetups in Austin and San Francisco. This fork is not one of the many scams (like Bitcoin Pizza) but has potential to be the next BCH.
Conclusion – ZCL Should Increase Greatly
The only way to attain BTCP is to purchase BTC or ZCL and hold through the February 28 fork. Considering ZCL is $140, and BTC is $10,500 the easier approach is to purchase ZCL. The value of the forked coin is the exact same for both BTC and ZCL as they are providing a 1:1 ratio of BTCP for each share of BTC and ZCL that are held at the time of the fork on February 28. With the lesser accepted forks trading between $100 and $500 and the generally accepted ones trading around $1500, BTCP seems to be poised for a very successful start. BTCP has already established a large community excited about the prospect of a privacy-oriented BTC. Well, that time is here, the public is less than a month away, and the only way to accumulate BTCP is by owning ZCL or BTC.
The entire market just suffered a major correction and prior to the correction ZCL was trading at approximately $200 per coin. The correction occurred, and here we are at the $140 price mark. The value of BTCP has not decreased as it’s not even available for another thirty days. However, the value of the underlying asset to attain BTCP suffered greatly (ZCL). With BTC future traders expecting the price of BTC to climb this month with the upcoming Dallas Super Conference (and many others) coupled with the entire crypto rebound that occurs following massive corrections; there should be a sensational price climb associated with ZCL this month. BTC most likely will enjoy a similar northern price trend, but if BTC trends north 40 percent, the alts respond with greater ferocity increasing 60 percent. ZCL is considered one of these altcoins and is tied directly to the successful launch of the BTCP fork at the end of February.
Expect the entire market to trend North this month with BTC being the safest play and ZCL being a huge percentage gainer as long as the BTCP fork goes ahead as planned on February 28. There will be multiple catalysts leading up to the fork that will pump the price of ZCL and these should be exit points or sell/buy points depending on your specific trading technique. Any listing of an exchange, great market acceptance, important updates, meet-ups and continued publicity all directly impact the value of ZCL and the future value of BTCP. Look for BTC and ZCL to have very strong February’s with the release of BTC and ZCL’s co-fork, BTCP.