In early 2017, I expressed my concerns that a fast rising tide in the crypto world would result in another Bitcoin Bubble (which just means perennial overvaluations with subsequent bear markets, as has happened on 3 prior occasions to Bitcoin — it does not mean Bitcoin will die!). At the time of writing, the Bitcoin price has peaked to just below $20k in early December 2017 with a subsequent low of around $12k — and is now hovering around $13k. Not quite a bubble burst, but seems to be a correction in the making. That being said, this is still a pretty healthy state of consolidation for Bitcoin and my worst fears around unhealthy exuberance appears to be have been overcome with overall general positivity for Bitcoin by a fast growing global crypto enthused community.

The other major concern that I had written about did actually happen: Bitcoin forked into two major forks — Bitcoin & Bitcoin Cash. The success of the Bitcoin Cash fork, which resulted in a new coin being valued at around $10bn at the time of the fork (and now over $40bn), encouraged others to fork, and as a result, we have Bitcoin Gold, Bitcoin Diamond, etc. I went publicly bearish on Bitcoin earlier in 2017 because I truly believed that the market couldn’t sustain high transaction fees as a result of a higher Bitcoin price, if scaling was not resolved — but the viewpoint amongst Bitcoin supporters changed somewhat and it is now being seen as “Digital Gold” or a “Store of Value” — and not as a digital currency with low transaction fees.

When Bitcoin Cash forked out of Bitcoin, if you were holding Bitcoin — you would receive 1 Bitcoin Cash for every 1 Bitcoin you owned. The key difference is that each fork has a different set of miners and developers working on taking it in whatever direction they deem is best, with support from their respective communities. The key here is that no-one loses — you can hold both coins and see which fork of the chain becomes the best or most widely adopted. If you buy a coin after the fork, you risk that the other fork(s) wins out. For this reasons, I highly recommend that people do not sell their forked coins until we can see how all these forks play out . I believe you should maintain at least 1 Bitcoin Cash for each Bitcoin that you own, for example.

I was very bearish on the idea of a fork of Bitcoin primarily for a simple reason: Nobody owns the brand “Bitcoin”. It’s a very interesting dilemma that in a trustless, global, open source environment where government resistant software is being built to decentralize value and money, that the lack of governance or controls means that anyone can fork the code and create a variation of Bitcoin, and ironically, there is no government that you could appeal to, for help.

This also leads to the problem of fork inflation (creating more coins out of thin air) — we now have multiple Bitcoins on the market, and in the case of Bitcoin Cash, there is significant market cap (c. $40bn) which reduces Bitcoin’s market dominance (as forks are classified as alts) and creates/transfers value to another chain with another set of 21m coins. The market right now is very confused with all the new forks emerging, but eventually, I think it will rationalize.