eBusiness Weekly
Jeffrey Gogo
Investors on the Harare-based virtual money exchange Golix.io are to receive hundreds of thousands of dollars equivalent to their bitcoin for free after the currency split again for the second time in three months, officials say.
The latest “hard fork” of October 24 created a new cryptocurrency called bitcoin gold.
For each bitcoin already held, investors will get one bitcoin gold extra. It is much like your rights issue in common stocks, just that this time you do not pay for it. So, sssentially, bitcoin investors will get some free money — around $143 for each coin of bitcoin gold, latest prices from coinmarketcap.com show.
The current price is an above 70 percent decline from two weeks ago, at the time of the fork, as the price corrected amid concerns over bitcoin gold’s stability and future.
“What this (hard fork) means is that if you’re a bitcoin holder you will get free units of the new bitcoin fork that is equivalent to the amount of bitcoin you were holding,” Tawanda Kembo, Golix.io chief executive, told the Business Weekly, by email.
“If you are or were holding your bitcoin on Golix at the time of the fork then you do not need to take any action as we’ll credit your will credit your wallet for you automatically.”
What is the “hard fork”?
The technology behind bitcoin is a complex one. Put simply, the system rounds up transactions by investors into what are known as “blocks”, to be solved by math – the so-called blockchain technology.
To do this, one needs very powerful computers to work out a solution whether the transaction was possible. This is what is called bitcoin mining, often a capital and energy intensive process run by a few. Once the other “miners” confirm the solution, the transaction goes through, with “miners” earning bitcoin for their sweat.
But not everyone is thrilled bitcoin mining remains a preserve for a few companies with top-end mining equipment. So, people like Jack Liao, the Chinese bitcoin mining machinery maker, has been trying to level the playing field, to encourage greater participation by “miners” with weaker computers, including individuals.
His plan is bitcoin gold, which on October 24 picked a “block” from where it “forked” (split).
Not first split. This is not the first bitcoin split. In August, another “fork” created bitcoin cash. As with bitcoin gold, investors on Golix.io were credited the equivalent of their bitcoin at the time of the split as bitcoin cash, currently trading at $1,100 on the local exchange.
Kembo, the Golix.io chief executive, said the exchange will only credit the bitcoin gold to wallets (the online purse for storing virtual money) when another “fork” called Segregated Witness 2 (Segwit2x) completes mid-November. The delay was “to minimise downtime, disruptions and to allow us more time for testing the security and stability of the bitcoin gold chain,” he said.
However, Segwit2x was this week put on hold by its developers amid bickering in the bitcoin ecosystem. The SegWit2x “fork” had aimed to fix rising market fees for transacting in bitcoin and other issues, which have slowed transactions from going through fast enough. After these developments, it is not clear how soon enough will local bitcoin users on Golix.io will receive their bitcoin gold.
Across the world, many exchanges have yet started to trade in bitcoin gold, and wallet providers have not developed specific wallets for the new currency. Bitcoin investor Kobus van Rooyen, who has interests in South Africa and here, said bitcoin forks could speed up transacting times and encourage wider use of the cryptocurrencies, but had reservations.
“Even though investors might get some coins from a fork, bitcoin splits are not necessarily a good thing for the crypto-currency industry,” Kobus said in a voice message.
“The whole bitcoin issue is built around a non-tangible and a fixed amount of bitcoins that can be created. The “forks” are creating different coins which aren’t really valued in any sense. The new coins are owned by CEOs of the splitting companies whereas bitcoin is not owned by anyone, but all the people of the world.”
Van Rooyen said the corks “were creating a false perception of what the whole bitcoin industry was about.”
Meanwhile, the local price of bitcoin this week raced to a new high of $13 300, up 11 percent from a week earlier.
