Is Bitcoin Giving Out Free Money?

Based on current developments, it looks like Bitcoin will have a third hard fork and a new token will be created called Bitcoin2x. Many new investors think forks are "free money" because they are getting another token of value. However, this issue isn't that straightforward. Bitcoin is a blockchain. Bitcoin would split when there is disagreement in the community and a group of users leave, starting a new chain. The disagreement creates two chains that aren't interoperable. Hard forks are important features of blockchains because instead of hostile factions continuing to fight, one party can break off and build the way it wants.

Bitcoin Giving Out Free Money

In the case of Bitcoin2x, one party wants the block sizes to only be 1MB while the other party wants the block sizes to be 2MB. A hard fork allows each faction to independently develop their blockchain and let the community decide which blockchain they should use. Bitcoin isn't choosing to give out a second token, but rather a set of users/developers are giving the community new tokens for their new blockchain. In the short term, you might get "free money", but it doesn't necessarily mean that a hard fork is creating more value for the community. Ultimately, the problems with a hard fork are that it creates uncertainty in the community.

It's possible that both chains will survive or just one, but it's also possible that users, miners, and developers will move over to a whole new blockchain. As unlikely as it might sound, people might even migrate over to Litecoin because it's viewed as more stable. So, Is Bitcoin Giving Out Free Money? The answer is, ultimately, no. Bitcoin is a decentralized, open-source protocol. A bunch of developers, users, and miners are deciding to break away from Bitcoin and give everyone who owns Bitcoin a corresponding amount of new tokens which will be called Bitcoin2x.

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~ Ari Lewis | Follow Ari on Twitter @amlewis4

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