Bitcoin Miners and Investors Should Pay Careful Attention to July 31 – Plus an Update!

Bitcoin Miners and Investors Should Pay Careful Attention to July 31 – Plus an Update!
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This blog has covered the topic of Bitcoin and digital (“crypto”) currencies a number of times over the past couple of years. As these “crypto” currencies have developed over time, users (such as the “miners” who identify new Bitcoin and either hold or use it upon discovery) have enjoyed their privacy and relative anonymity through the blockchain digital “ledger”. And many have been rewarded, such as when the value of a Bitcoin topped $3,000 in June (currently –i.e., at the minute this piece is being prepared– around $1,900). (For digital currency trackers, check out Coindesk, Bitcoin, or Coinbase.)

Being an unregulated (“Wild West” as it were) currency, of course presents material risks. As was explained in a July 14, 2017 Washington Post/Associated Press article by Ryan Nakashima entitled “AP Explains: Bitcoin’s possible financial panic” (also posted on July 15, 2017 in the Gainesville Sun), a dispute inside the Bitcoin ecospace regarding the speed of payments has caused a potential rift among certain Bitcoin advocates and other software developer/”reformers” which threatens the “stability” of the current “marketplace”. The reformers intend to launch a new software system on July 31, 2017 intended to speed those payments. The effect of that launch could be problematic to existing and active Bitcoin “miners” and investors who (i) may not have post-July 31 Bitcoin transactions recognized and (ii) may have their then-current stock of Bitcoin no longer have any meaningful value.

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One of the central organizations supporting Bitcoin is Bitcoin.org, which has weighed-in on the possible post-July 31 issues in “Potential network disruption.” Among the self-protective strategies suggested in that piece is for Bitcoin participants to temporarily suspend transactions a little prior to July 31 until the dust settles. Bitcoin.org provides a number of specific strategies in the linked piece. Bitcoin participants should consider taking some time to review those suggestions, and to research others to protect their interests.

A useful source for staying attuned to the digital currency industry is the Chamber of Digital Commerce. (Full disclosure: The founder and President of the Chamber is a former student of the author of this piece.)

An absolute and unrelated side-note: Timely stories such as this emerging Bitcoin dislocation are why it is important to always pay attention to news sources, even sometimes to “dead tree” newspapers such as the one in which this topic was originally found. Think of it as a simple and inexpensive proactive risk management investment.

UPDATE!

As mentioned could occur in the July 17’s original blog posting [posted above], the popular cryptocurrency medium Bitcoin did split on July 31. As a result, Bitcoin users and investors now have two “Bitcoin” crypto currency options.

The first option remains “traditional” Bitcoin. The second option, classified by its blockchain “hard fork” shift based on its new (and potentially faster as to transactions processed per second) software platform, is called “Bitcoin Cash.” A description of the basis and nature of the Bitcoin split is found in the previously mentioned July 17 article.

It appears at this point that Bitcoin Cash is being exchanged at a lower rate than “traditional” Bitcoin. Check Coindesk to track the price of Bitcoin and see the price of Bitcoin Cash at CoinGecko. As noted previously a useful resource for staying attuned to the digital currency industry and its large-scale developments is the Chamber of Digital Commerce.

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