Bitcoin and Bitcoin Cash will trade to parity

Discussion in 'Crypto Assets' started by BrandNewTrader, Aug 20, 2017.

  1. This just occurred to me. Follow my back of the envelope eureka logic for a moment.

    Earlier today I read some technical summaries and debates about the reasons for the fork and who among the miner developer community supports segwit vs cash and the possibilities of a segwit2x in the next few months, so 3 versions of bitcoin... dare i say it but these 3 coins will all trade at par.

    From a miners perspective the cost/benefit of mining each coin depends on electricity cost, price of the coin, and algo difficulty. These 3 factors fluctuate relative to one another in such a way that the miners are constantly switching back and forth based on economics, so the relative price SHOULD average out to intrinsic value.

    In addition, aside from miners, you also have developers and the user base as the 3 main constituent classes, each with a different economic relationship with the absolute price, similar to the traditional manufacturers, sales contractors and consumers relationship. The effect of the interplay of these 3 constituencies on the relative price is similar to the cost/benefit effect referred to in the above paragraph. The coins will settle at an organic intrinsic relative price based on their UTILITY and COST/BENEFIT to these 3 constituencies.

    I am making the leap that the relative prices will be equal, at least for the initial stages of the debt to crypto transition. Once crypto begins to mature then real differences will emerge within the cost/benefit and utility to each bitcoin demographic.

    Bcash is at 900(?) right now... BC at 4150... they will trade to par and continue that way. If and when segwit2x occurs the same will happen.

    I bought some BITCOINXB SEK and they sent me a missive about the pre aug 8th fork and that they would hold both coins and allow the price to determine their path with the best interests of shareholders in mind. Basically meaning they will just hold the coins and use the main bitcoin as the price reference until the price of bcash is greater than, at which time it will be better for the sponsors of Bitcoin Tracker One to use the higher bcash price as their reference. Why? Because the shares are not shortable. So investors trade for price appreciation. If the Tracker has a relationship with bitcoin/cash that doesn't make economic sense traders and investors would not trade it. so product implosion for the sponsors. Tracker One is an example of a constituent making cost benefit and utility decisions that inevitably end up with the decision to just hold both coins because why? there is no infrastructure to fully utlize their different features, yet.

    so they will all trade at par. this is going to guide my trading until proven wrong.
    Hoi likes this.
  2. Hoi


    This can become an interesting thread...

    About the miners: Normally, miners are incentives-followers (not the price setters). Meaning that they will point their miners to what ever coin they can earn more (and do this even completely automated in real-time). But in this case, the situation isn't normal: it's highly political driven. So as long as their favorite coin's price is above their cost-base to produce that coin, they will point their miners there.
    I heard somewhere (cannot verify) that the current costs for mining one Bitcoin is $1000, so at current prices of $4000 they can play their political game.

    For all other participants (users, investors, exchanges, companies) the most secure coin is the one they will want to have. Of all the features a coin can offer, it's security and trust that really counts. This means that the coin with the highest hashrate (most miners) has the best chances to win. But it's not only hashrate which makes a coin secure. It's faultless code plays a big role too. One bug or attach-vector during the forking process will have huge consequences.

    There's a lot more to discuss, but lack the time for now... maybe later...
    m1nt likes this.
  3. At some point with more of these forks people are going to wake up to the fact that they are being hustled, these coins are all worthless, and the technology is what matters. I find your usage of the word "intrinsic" rather interesting. How do you go about calculating the intrinsic value of a digital token?

    At the end of all this hype a coin that is useful for real world transactions will be the winner. I do not believe it will be one that burns electricity at an insane rate. But in the meantime smart people are making their fortunes. Who would have thought that a fork to essentially litecoin would have made bitcoin holders another fortune in a matter of weeks lol.
  4. gkishot


    How do you calculate the intrinsic value of fiat currency?
    BrandNewTrader likes this.
  5. I don't know how to do that either. :)
  6. lovethetrade

    lovethetrade Guest

    Bitcoin Cash also has the backing of the 2 biggest exchanges in the world by volume, Bithumb and Bitfinex. What implications do you see that having on the whole crypto ecosystem and in particular in Asia?

    As soon as i heard Bithumb and Bitfinex were supporting it, I was confident it would gain the support its now getting.
  7. Pekelo


    I kind of zoned out after the first few sentences. But yes, it is not impossible all 3 will be trading at pair, just not 4 digits valuation. So once bitcoin goes below 1K or even 2 digits, yes they can trade at pair after all the supply just went threefold...

    And before you counter argue, let me ask this question: Using the internet as an analogy, what do you think where are cryptos today? Because if you say where the net was 1995-98, then imagine the crypto explosion that is coming, just like it happened to the internet.

    And when that happens valuation is going to take a dive....Remember when we used to pay for email? Or online storage space? Or movies? Now they are all free or ridiculously cheap. So will be cryptos...
    Last edited: Aug 20, 2017
  8. O(1)


    I like your thought process. My first thought when I read your post is that it seems unlikely.

    But after thinking about it.. If you are right and there would be 3 bitcoin types of similar value in the future.. Then maybe there was a fundamental flaw in believing that we would only have 21M coins in circulation and that it would curve inflation... If instead of only having one strong coin, we will have 3+ relatively similar coins.

    It will be interesting to see when all 21M bitcoin are printed.

    Mining profitability:

    Disclosure: I own some bitcoin
  9. Pekelo


    [QUOTE="O(1), post: 4504229, member: 495598"
    Then maybe there was a fundamental flaw in believing that we would only have 21M coins in circulation and that it would curve inflation...

    Yeap. As long as other coins exist, there is no such a thing as limited supply...
  10. ETH and ETC aren't trading at par. Far from it. I don't think all three bitcoins trade at par either.
    Last edited: Aug 20, 2017
    #10     Aug 20, 2017