Coming in a week or so is the upcoming Bitcoin Segwit hardfork. Please note that I am a user not a miner so this article is written from my perspective and bias.
I assume most readers know what is going on with that already. For those who are new here is a definition of the 3 coins under discussion as Bitcoin:
Coming in a week or so will be the BS1 & BS2 fork where BS1 is Bitcoin Segwit 1MB Block Size & BS2 is Bitcoin Segwit 2MB Blocksize. BS1's proper name is BTC and BS2's proper name is not certain yet but a consensus seems to have formed calling it B2X. Additionally there was another recent fork of Bitcoin called Bitcoin Cash with 8MB Block size which is called BCH and called by people who don't like it as Bcash in an attempt to remove the Bitcoin brand for its name and on some exchanges called BCC referring to the same thing.
So once again for sake of discussion we have BS1, BS2, BCH. All three coins claim to be the real "Bitcoin"
But which one is the real Bitcoin? Can we not assume that the "real" Bitcoin will have the highest long term value? If we could only afford one of the 3 coins which is the best to get?
The short answer is that in a way all three are actually Bitcoin as they all use the Bitcoin protocol some degree modifications, but in a way all of them are also not exactly Bitcoin either.
BS1: (Currently referred to as BTC i.e. Bitcoin)
There was a "Bitcoin" and ceased to exist, but it did not die in the sense that the value of it was transfered into BS1 which still has the original Bitcoin BTC symbol. However, what most people do not understand is that BS1 is an alt-coin in Bitcoin clothing much as a wolf in sheep clothing as the code was fundamentally changed from the original "Bitcoin" to use a new "proof of work". This new proof of work is called the "Segwit" protocol and there are plenty of other articles on line to read about it. However, most people do not care about the details as long as the price keeps going up, and as long as BS1 continues to have the Bitcoin clothing (BTC ticker symbol, highest per coin value, highest market cap, fast transaction time) then it will widely be considered to be the "real Bitcoin". If you have used BS1 then you know currently it has all the clothing of a "Bitcoin" EXCEPT in on fundamentally important area which is transaction time. BS1 seems fundamentally slower than the original "Bitcoin" and there are those (the people who created BCH) who would argue that it is NOT Bitcoin. DETAILS: Technically the BS1 coins actually is a coin which has two different coins and two different wallets built in which was a soft fork to where people could leave their BTC in a "legacy" wallet or choose to move the coin into a "Segwit" activated wallet. TRICKY: Although BS1 is only 1MB block size, if you move your coin to a Segwit activated wallet it can be up to a 4MB Blocksize. There appears to be a financial motivation by those who activated Segwit that they want to restrict and sell access to the Bitcoin network by using off chain segwit transactions. BS2 is an upcoming fork of BS1. It is just as much a Bitcoin as is BS1 coin, but also just as much NOT Bitcoin as it also has the Segwit on it.
BCH (Currently referred to as Bitcoin Cash)
When the original "Bitcoin" was about to activate the Segwit soft fork, there was a "window of opportunity" for people who did not want to fundamentally alter the proof of work to fork off using a hard fork into a different coin which preserved the property of the original "Bitcoin" of having the signatures be "on chain", and Bitcoin Cash (BCH) split off from the original "Bitcoin" BEFORE it died and was replaced by BS1 coin. So in that sense people agree that BCH is more true to the original vision of the mysterious founder of Bitcoin than is BS1 coin. So there is an argument that it is actually "Bitcoin". But it is not either in some regards and is in others. It is an alt-coin and no-one denies that either. But, it is a very special alt-coin, as it came from a fork of the "Bitcoin" and is actually the most similar to the "Bitcoin" in the way it works. But it also comes with some extra stuff like being premined and with a new special feature called the difficulty adjustment algorithm which makes the mining of the coin somewhat erratic, but guarantees that it will stay competitive for mining with both BS1 & BS2 when BS2 comes into existence. From its existence it made for erratic mining as the Difficulty adjustment algorithm would go up and down in seemingly too large a degree making the coin very profitable then not profitable to mine at all and profit seeking miners would switch back and forth between BS1 and BCH.
Hope you are with me so far, let me recap:
The original "Bitcoin" no longer exists instead there is only BS1 (with a legacy and a segwit wallet) and BCH at this time.
Both are from "Bitcon" but neither is exactly the same. Instead the fairest explanation is that BS1 is an alt-coin which goes by the name of Bitcoin and BCH goes by the name of being an alt-coin but is actually more close to the original as Bitcoin but does not use the BTC ticker as does BS1.
So now that you have the background here is what is going to happen and how I think it will play out as far as price action goes.
Currently there is BS1 & BCH. After BS1 forks instead of two there will be three competing "Bitcoin" i.e. BS1, BS2, BCH.
Of the 3, the only one guaranteed to survive is BCH as it has a difficulty adjustment algorithm. The BCH development team recently announced they would be giving the difficulty adjustment algorithm a significant upgrade right before the BS1/BS2 fork which means that BCH will be very competitive for mining power. Even if the price of BCH is lower than wither BS1 or BS2, BCH can adjust to reduce the mining difficulty to give more coins to miners (a quasi-inflation though total number of coins in existence still capped same as original "Bitcoin"). This insures that it is profitable for miners to continue mining BCH no matter what is the price of BS1 or BS1 after the fork. As long as there are miners then transactions can process in a reasonable time for a reasonable fee on the BCH network as the BCH network has already scaled with 8MB Block size.
What is going to happen with BS1 & BS2 is uncertain as although the majority of users seem to support BS1, the majority of miners supposedly support BS2 as evidenced by some sort of agreement (called the NY agreement where a bunch of companies agreed to make BS2 as a compromise to both introduce Segwit then to increase block size to 2MB instead of 1MB). If almost all miners abandon BS1 after the fork, it will no doubt keep working but much much slower with much higher transaction fees. Also although the majority (~70% of miners) are saying they support BS2 they are not actually bound to do so, and likely they will just mine whichever chain is most profitable after the fork (which could very well be BCH because of its difficulty adjustment algorithm).
RECENT PRICE ACTION PORTENDS THE FUTURE:
To predict the future we need to look at the past. The past week in particular has been amazing as BS1 has soared to new all time highs of at least temporarily over $7500 per coin which is amazing. However, the price of $7500 no doubt factors in the demand for BS2 as for every BS1 you buy now you will get a free BS2 coin when the fork happens. Because of this the $7500 value no doubt is very approximately factoring in a $5800 BS1 value and a $1700 BS2 value since BS1 only a few weeks ago only worth ~5800 and BS2 futures currently put it at ~1700. Additionally in the last week the price of Bitcoin Cash (BCH) more than doubled from a low of ~$300 to now over $600. So in the immediate past both BS1 & BCH have increased significantly in value and here is what I think it means: Whereas BS1 is going up in anticipation of free BS2 coins coming soon, BCH is going up in anticipation of it "outcompeting" both BS1 & BS2 after the fork for miners. This makes BCH look very juicy. It's more like original Bitcoin, it's impossible to kill, and will be guaranteed to be competitive for miners. Looking at it that way, it seems that in the long run there there is no doubt that a BCH coins should at least be worth as much of the lesser of the two BS1/BS2 coins which is currently BS2 with futures as $1700/coin.
PREDICTIONS.
There is no reason that BCH should not be worth as much as BS2. So the BCH should be worth $1700 not $600. This leaves it plenty of room to grown and will most likely double after the fork ($1200 by end of November) especially if either of BS1 or BS2 go down in value after the fork, that value will go into BCH most likely. Once the price is at $1200-$1700 by end of November for BCH, it will likely handily reach $2000 by end of December is my prediction. BS1 coin will likely retract sharply after the fork from $7500 back down to $6000 range, but will likely continue to grow following its linear trend and reach at least 10k maybe 20k by Christmas. BS2 is likely to come out at $1700 as the futures put it then drop down to about $1200 reaching a price parity with BCH at about the $1000-$1200 level. I do not believe that BS2 will go below $1000 for long as it is technically superior to BS1 since it has both larger blocks (2MB instead of 1MB as well as more miners, and thus new users will likely adopt it even if old users refuse to use it). Regardless even the old users will use it since they got it for free as they will use it at least to sell it if you they don't like it. However, in my opinion both BS1 & BS2 are both inferior to Bitcoin Cash (BCH) as they both have the Segwit protocol on them and have inferior block sizes and do not have a difficulty adjustment algorithm to stay competitive for miners. So long term, I think BCH will not only reach parity with but will surpass BS2 by end of December. I do not think BCH will surpass BS1 by end of year as there is too much of a spread, but I do think it will reach price parity by end of next year and then surpass it by year after next at least.
HOW I'M HANDLING THE FORK
I've putting 3/4 of my funds into BS1 before the BS2 fork and 1/4 into BCH. I will look for strategic opportunities to move more BS1 and/or BS2 into BCH up to 50% of my funds if a good arbitrage opportunity arises. My gut says to put all my funds into Bitcoin Cash but my head says to be cautious hence my cautiously optimistic allocation into BCH. I got rid of any significant holding in other alt-coins. Although their prices are low right now, the potential growth of Bitcoin has all but eclipsed them right now.
Hope you have enjoyed this article, please up vote if you like.
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NOTICE: Disclaimer: Not a financial advisor, information not advice, do your own research, never invest more than you can afford to lose.