XBT ETN Will Support Bitcoin Cash Only if it Becomes the Dominant Coin

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The world’s first bitcoin-referenced security listed on Stockholm’s NASDAQ which tracks bitcoin’s price and is available in 197 countries, traded like any other instrument on Stockholm’s NASDAQ, has stated neutrality regarding the August 1st bitcoin fork.

“The Issuer’s Certificates will, after a fork, be referenced to the coin which the bitcoin community and exchanges define, and consider to be, ‘bitcoin’,” XBT Provider says.

Investors that buy the ETN have only a claim on the certificates, the tracker says. They do not have a claim of the bitcoins themselves. As such, after the fork, their holdings will only refer to the dominant bitcoin.

“As the holder of bitcoin, the group companies of the Guarantor will be entitled to hold both coins resulting from any fork,” XBT says, before emphasizing they will aim to “do all that can practicably be done in the circumstances to maximize value.”

They are to undergo a three months observation period to see how events play out and thus decide what course of action to take in order to maximize returns.

“The Issuer and Guarantor will monitor the relative success (or lack thereof) of the resultant coins, with a particular focus on monitoring the extent to which a consensus develops within the bitcoin community as to which coin is to be regarded as being ‘bitcoin’,” they say.

If both coins remain in existence they will then decide what approach to take and issue a new notice informing investors thereof.

Something which appears likely as Bitcoin Cash is currently trading at around $335 in ViaBTC futures with daily trading volumes of around $10 million.

The current futures price of Bitcoin Cash

But whether it will become the dominant coin is a much more difficult question to answer as there has been no impartial bitcoin holders token vote on the matter.

However, Bitcoin Core’s segwit and the segwit2x client, which are currently in consensus, is to retain the bitcoin brand and BTC ticker, at least for now.

If the market values BCC much higher, with a corresponding decrease in BTC’s price, that may change, but inertia may play a role as BCC is starting off as a minority coin.

But hashrate follows price, as probably do businesses, so that could change, especially if the 2x part of segwit2x does not go through, which would probably lead to another chain-split or to a significant appreciation of BCC’s price.

Therefore, the three months window may be too short, but the general principle stated above by the ETN will probably continue to apply.

As such, it appears likely that the free market alone, by constantly judging the value of BCC and BTC, will decide which is to become known as bitcoin in the medium to long term.

 

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