foxberg (OP)
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November 03, 2017, 05:41:53 PM |
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I'm only a noob trying to learn. With that said, when Coinbase adopts B2X and gives identical amount, where does the money come from. I just don't get how they can split a blockchain and give people "free money." Do they just make up a price? Any links to articles help and any help in general is appreciated.
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naf
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November 03, 2017, 05:44:25 PM |
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This is a very good question! There is no such thing as free money. So, I suppose that BT2X value comes from people trust (just like it is with dollars..)
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foxberg (OP)
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November 03, 2017, 05:48:02 PM |
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This is a very good question! There is no such thing as free money. So, I suppose that BT2X value comes from people trust (just like it is with dollars..)
So the idea is that these exchanges are using the money they've made from fees and using it to fund B2X? |
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cryptoriches13
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November 03, 2017, 05:53:57 PM |
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from my understanding, the b2x you get will only have value when a buyer comes in with a particular price. it may reach the b2x futures price, or may not.
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mobnepal
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November 03, 2017, 06:05:36 PM |
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I'm only a noob trying to learn. With that said, when Coinbase adopts B2X and gives identical amount, where does the money come from. I just don't get how they can split a blockchain and give people "free money." Do they just make up a price? Any links to articles help and any help in general is appreciated.
During every fork all bitcoin addresses that have positive bitcoin balance will get equal amount of forked coin. What coinbase will do is they will move all user's balance to their bitcoin address (cold wallet) at the time or before the fork, during that time 24 hour before and 24 hour after the fork they will disable deposit/withdrawals of bitcoin so that they can move those bitcoin back to their hot wallet after fork. They are getting free B2X coin after fork so they are not giving anything out of their pocket or from thin air. |
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foxberg (OP)
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November 03, 2017, 06:10:57 PM |
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I'm only a noob trying to learn. With that said, when Coinbase adopts B2X and gives identical amount, where does the money come from. I just don't get how they can split a blockchain and give people "free money." Do they just make up a price? Any links to articles help and any help in general is appreciated.
During every fork all bitcoin addresses that have positive bitcoin balance will get equal amount of forked coin. What coinbase will do is they will move all user's balance to their bitcoin address (cold wallet) at the time or before the fork, during that time 24 hour before and 24 hour after the fork they will disable deposit/withdrawals of bitcoin so that they can move those bitcoin back to their hot wallet after fork. They are getting free B2X coin after fork so they are not giving anything out of their pocket or from thin air. Okay that makes sense about the cold and hot wallet. But if they are giving B2X after fork, how is not that giving free money? From my understanding, if you have 5 BTC, they will give you 5 B2X totaling: 5 BTC and 5 B2X. |
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flippener
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November 03, 2017, 11:22:29 PM |
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Okay that makes sense about the cold and hot wallet. But if they are giving B2X after fork, how is not that giving free money? From my understanding, if you have 5 BTC, they will give you 5 B2X totaling: 5 BTC and 5 B2X.
That's true, but there's no value yet in the B2X, it's just an entry in an account. It only gains value when someone (outside the exchange) puts in an order to buy at a given price. When they buy, the B2X has a value - the money has not come from Coinbase, it has come from the buyer. |
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illinest
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November 03, 2017, 11:34:34 PM |
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I'm only a noob trying to learn. With that said, when Coinbase adopts B2X and gives identical amount, where does the money come from. I just don't get how they can split a blockchain and give people "free money." Do they just make up a price? Any links to articles help and any help in general is appreciated.
It's only "free money" if there is market demand to buy it. So, there needs to be B2X bids that you can sell into. If there is really market demand for B2X, then we should expect that this represents a dilution of BTC investment. So one way to think about this: if B2X has value, it is likely cannibalizing BTC (taking away some of its investors). In that sense, the money is not "free" -- it's coming from the pockets of BTC holders. Now, that doesn't mean that BTC necessarily has to fall in value (although that's likely in the case of a major split). It could just rise slower than it would have otherwise. |
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Celebrity
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November 03, 2017, 11:36:50 PM |
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I'm only a noob trying to learn. With that said, when Coinbase adopts B2X and gives identical amount, where does the money come from. I just don't get how they can split a blockchain and give people "free money." Do they just make up a price? Any links to articles help and any help in general is appreciated.
No money comes to you from somwhere, the nature of bitcoin blockchain tend to be divided into sub chains. The ratio is 1:1 here. But the thing is that, there is a demand for the new forked bitcoin and that's why you think you're getting money from somewhere. Actually nobody sends you money. |
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digaran
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November 04, 2017, 12:58:10 AM |
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Remember this when you are trying to do something in crypto, never invest anything on a coin other than Bitcoin, if you want to invest on Bitcoin then do it, never invest the money that you wanted to invest on Bitcoin on anything else.
Also if you are depositing into Coinbase in order to claim any free money you should know that they could just keep all the Bitcoins and never give them back, I'm not saying they will, they have all of your Bitcoins, you don't have the private keys, if you want to claim your 2X coins later you should keep your Bitcoins on your wallet with access to your private keys.
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YIz
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November 04, 2017, 01:03:06 AM |
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from my understanding, the b2x you get will only have value when a buyer comes in with a particular price. it may reach the b2x futures price, or may not.
Futures are usually manipulated to make the forks hyped and pump the price. The volume is usually a few million dollars. |
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STRAKS
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November 04, 2017, 02:07:35 AM |
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It is all theoretic that extra money is created during forks. When a fork occurs and people get additional coins they hold no value of significance until there are buyers in the picture. So to get the market going that still also will require some liquidity injection. This will have to come from other cryptos and even bitcoin.
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