Hypothetical ETF disaster hardfork

[takuma sato]

Who is "the Sponsor" in this?

Even if they act in good faith picking the correct chain, I'm missing details on what happens to the value in a possible Fork chain. When the BCH Fork happened, the value of the Forkcoin varied, but could have been sold for 10-20% of the Bitcoin value. If they keep that instead of sharing it with the ETF investors, it just adds to the list of reasons to keep your own keys.

This is from Blackrock's filling. I assume all other ETFs have a similar take? It is a sort of a disclaimer. "We cannot guarantee that this is the most valuable fork if it splits". Of course you got to realize that all of these are under US jurisdiction, so the government could step in and say, "make this or that fork as the legally abiding one". And there you have it, now all exchanges and miners are forced to mine whatever UScoin fork. This is the problem with the ETFs. Back then we had separate entities as big holders, now all these ETFs will centralize a big stack on the same hands. The only hope would be that big whales dump on UScoin fork as everyone would get a split of each other coins on both blockchains post-split and cause a crash on USfork. But you would also need to get miners out of US jurisdiction reach. I know companies like MARA are expanding overseas but they would still be subject to US jurisdiction, and im not sure if UAE would be any better (they are doing some business there).

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[Wind_FURY]

They are their own entity giving themselves the power to consider which fork will be "Bitcoin". They can use that to start a hash war in my opinion.

If they get away with that (after numerous lawsuits), they don't need to start a hash war. They can just sell the "not Bitcoin" they own, and if that happens to be the most valuable chain, it's pure profit for them.

But that's actually the problem, isn't it. The Cabal probably WANTS to start a hash war in order to make their fork "officially" the "real fork". They won't only need the miners, they will need the support of Bitcoin services like Coinbase, some influential community members, and the support of at least one Bitcoin Core developer.

- We should probably be suspicious if BlackRock starts donating money/giving grants for Bitcoin's development. Open source development of the biggest decentralized money network + donations/grants to the developers should probably not happen?

[takuma sato]

They are their own entity giving themselves the power to consider which fork will be "Bitcoin". They can use that to start a hash war in my opinion.

If they get away with that (after numerous lawsuits), they don't need to start a hash war. They can just sell the "not Bitcoin" they own, and if that happens to be the most valuable chain, it's pure profit for them.

But that's actually the problem, isn't it. The Cabal probably WANTS to start a hash war in order to make their fork "officially" the "real fork". They won't only need the miners, they will need the support of Bitcoin services like Coinbase, some influential community members, and the support of at least one Bitcoin Core developer.

- We should probably be suspicious if BlackRock starts donating money/giving grants for Bitcoin's development. Open source development of the biggest decentralized money network + donations/grants to the developers should probably not happen?

Also notice that Coinbase is conveniently the custodian of everyone involved, except a very few ones that are self custodian. The rest is just a big single point of failure called Coinbase, basically, US government, since Brian Armstrong will do whatever the US government does in order to stay in business. You aren't going to get anywhere without their approval. This is not great for BTC in terms of decentralization. I guess other nation states will eventually jump in and the different agendas between parties will allow for some macro decentralization where they aren't all on the same page. This would split BTC into different coins for different states and the outcome is not predictable. Im hoping the community of individual holders will not align with any of these and dump on their chains when they receive their split.

[Wind_FURY]

They are their own entity giving themselves the power to consider which fork will be "Bitcoin". They can use that to start a hash war in my opinion.

If they get away with that (after numerous lawsuits), they don't need to start a hash war. They can just sell the "not Bitcoin" they own, and if that happens to be the most valuable chain, it's pure profit for them.

But that's actually the problem, isn't it. The Cabal probably WANTS to start a hash war in order to make their fork "officially" the "real fork". They won't only need the miners, they will need the support of Bitcoin services like Coinbase, some influential community members, and the support of at least one Bitcoin Core developer.

- We should probably be suspicious if BlackRock starts donating money/giving grants for Bitcoin's development. Open source development of the biggest decentralized money network + donations/grants to the developers should probably not happen?

Also notice that Coinbase is conveniently the custodian of everyone involved, except a very few ones that are self custodian. The rest is just a big single point of failure called Coinbase, basically, US government, since Brian Armstrong will do whatever the US government does in order to stay in business. You aren't going to get anywhere without their approval. This is not great for BTC in terms of decentralization. I guess other nation states will eventually jump in and the different agendas between parties will allow for some macro decentralization where they aren't all on the same page. This would split BTC into different coins for different states and the outcome is not predictable. Im hoping the community of individual holders will not align with any of these and dump on their chains when they receive their split.

I believe not. He's merely a CEO who's forced to conform to the rules of the country where Coinbase is located. Wouldn't you as a CEO would like to make your business more compliant? That's absolutely understandable in my opinion.

BUT what Brian Armstrong actually did was support Bitcoin XT, https://medium.com/the-coinbase-blog/scaling-bitcoin-the-great-block-size-debate-d2cba9021db0

Which, tin-foil hats on, he probably thought he could manipulate Gavin Andersen because he will never have any opportunity to manipulate the Core Developers.

He also expressed his disapproval of the Core Developers before, saying that they are the biggest systemic risk for Bitcoin, https://medium.com/the-coinbase-blog/what-happened-at-the-satoshi-roundtable-6c11a10d8cdf#.qaggpgms9

He also gave his support for Bitcoin Classic, https://bitcoinwiki.org/wiki/bitcoin-classic

Bitcoin XT, Bitcoin Classic, Bitcoin Cash - before it became an altcoin - were actual attacks on the Bitcoin network, socially, philosophically and most importantly technically. They wanted to take control, fork Bitcoin, and leave the Core Developers behind. I believe that's their real agenda.

[LoyceV]

This is from Blackrock's filling. I assume all other ETFs have a similar take? It is a sort of a disclaimer. "We cannot guarantee that this is the most valuable fork if it splits". Of course you got to realize that all of these are under US jurisdiction, so the government could step in and say, "make this or that fork as the legally abiding one". And there you have it, now all exchanges and miners are forced to mine whatever UScoin fork. This is the problem with the ETFs.

I don't think this will force miners to do anything. Some will mine Bitcoin, some will mine whatever Fork they want.

I think it would have been better if their terms would say the value of any potential Fork is added to the total ETF. I get they don't want to deal with each worthless Fork. I can create Bitcoin LV (Loyce Vision) today and nobody cares. That's okay. But if a Fork has value, they should not just choose the most valuable Fork, they should sell the other Forks and pay dividend to the ETF holders.
Then again, I also get that this could become complicated: what if Bitcoin LV is initially worthless, but after 2 years it's worth $42. That would mean they can still sell the Fork, but the ETF holders at that moment are different than the ETF holders during Fork days. So distributing the divident to the right people is complicated.

[shield132]

I think that companies won't mess with forks if there is not a huge support on the fork, they'll follow the one that is the most supported by the network and the people, e.g. the default Bitcoin. It will simply ruin the situation for worse for absolutely everyone. They already have some control and that's all that matters for them, here we have blockchain analysis companies and miners that might filter transactions. To my mind that's all they wanted.

This is from Blackrock's filling. I assume all other ETFs have a similar take? It is a sort of a disclaimer. "We cannot guarantee that this is the most valuable fork if it splits". Of course you got to realize that all of these are under US jurisdiction, so the government could step in and say, "make this or that fork as the legally abiding one". And there you have it, now all exchanges and miners are forced to mine whatever UScoin fork. This is the problem with the ETFs.

I don't think this will force miners to do anything. Some will mine Bitcoin, some will mine whatever Fork they want.

I think it would have been better if their terms would say the value of any potential Fork is added to the total ETF. I get they don't want to deal with each worthless Fork. I can create Bitcoin LV (Loyce Vision) today and nobody cares. That's okay. But if a Fork has value, they should not just choose the most valuable Fork, they should sell the other Forks and pay dividend to the ETF holders.
Then again, I also get that this could become complicated: what if Bitcoin LV is initially worthless, but after 2 years it's worth $42. That would mean they can still sell the Fork, but the ETF holders at that moment are different than the ETF holders during Fork days. So distributing the divident to the right people is complicated.

When there was a Bitcoin hard fork in 2017 and BCH was created, I remember that many casinos, exchanges and other companies were suggesting people to withdraw bitcoins during the fork because they weren't supporting the fork. Then, after some months or probably after a year, everyone did it differently, they donated people with Bitcoin Cash that was equal to their balance.
I think it isn't and shouldn't be their responsibility to take care of every fork and they won't do that because then they will have to approve the ETF of that fork, just my two cents.

[LoyceV]

When there was a Bitcoin hard fork in 2017 and BCH was created, I remember that many casinos, exchanges and other companies were suggesting people to withdraw bitcoins during the fork because they weren't supporting the fork.

That works, as long as users are dealing with Bitcoin. Now imagine an ETF holding a million Bitcoins in the future: "withdrawing" all Bitcoins means selling them. The Bitcoin market will crash hard, and boom again when they buy back after the Fork.

Then, after some months or probably after a year, everyone did it differently, they donated people with Bitcoin Cash that was equal to their balance.
I think it isn't and shouldn't be their responsibility to take care of every fork and they won't do that because then they will have to approve the ETF of that fork, just my two cents.

I guess we're going to disagree on this. A Fork is like dividend: any other ETF takes care of the dividend for it's users, and in exchange they charge their users a "fund fee".
Here, different (stock) brokers advertise with "dividend leakage": depending on how they deal with taxes, you may or may not be able to get back the paid dividend tax. That's a difference of about 0.1-0.2% per year, and it makes a huge difference in the long run.
It's probably a matter of time for Bitcoin ETF brokers to offer something similar: if one Bitcoin ETF keeps any "Fork dividend" for themselves, and a competing ETF gives it to customers, the latter will be more attractive to the informed investor.

[shield132]

When there was a Bitcoin hard fork in 2017 and BCH was created, I remember that many casinos, exchanges and other companies were suggesting people to withdraw bitcoins during the fork because they weren't supporting the fork.

That works, as long as users are dealing with Bitcoin. Now imagine an ETF holding a million Bitcoins in the future: "withdrawing" all Bitcoins means selling them. The Bitcoin market will crash hard, and boom again when they buy back after the Fork.

You have a good point but that again proves that Bitcoin ETFs are not meant for advanced users, it's meant for those who want to buy it easily without taking the responsibility of holding on their own. I think that half of Bitcoin ETF users have no idea about hard forks and another half probably understands that they won't be able to claim forks.

I guess we're going to disagree on this. A Fork is like dividend: any other ETF takes care of the dividend for it's users, and in exchange they charge their users a "fund fee".

Doesn't the ETF of each coin need to be approved? Approval of Bitcoin ETF doesn't mean that its forks like Bitcoin Cash, Bitcoin SV, BitCore, Bitcoin Gold, and others are automatically approved as ETF.
I think that no one has thought about how the claiming of forked coins would work in the crypto ETF world.

[LoyceV]

I think that half of Bitcoin ETF users have no idea about hard forks and another half probably understands that they won't be able to claim forks.

They will realize it once it hits the media.

Doesn't the ETF of each coin need to be approved?

I don't think so. They won't create "Bitcoin Fork #2987 ETF", they'll just sell Bitcoin Fork #2987. The dividend infrastructure is pretty standard for brokers, so it shouldn't be too hard to deal with.

Approval of Bitcoin ETF doesn't mean that its forks like Bitcoin Cash, Bitcoin SV, BitCore, Bitcoin Gold, and others are automatically approved as ETF.

I'm not talking about past forks, I'm talking about future forks. Past forks are irrelevant.

I think that no one has thought about how the claiming of forked coins would work in the crypto ETF world.

I'm pretty sure someone has thought about it, and decided keeping the money is the easiest solution.

[takuma sato]

They are their own entity giving themselves the power to consider which fork will be "Bitcoin". They can use that to start a hash war in my opinion.

If they get away with that (after numerous lawsuits), they don't need to start a hash war. They can just sell the "not Bitcoin" they own, and if that happens to be the most valuable chain, it's pure profit for them.

But that's actually the problem, isn't it. The Cabal probably WANTS to start a hash war in order to make their fork "officially" the "real fork". They won't only need the miners, they will need the support of Bitcoin services like Coinbase, some influential community members, and the support of at least one Bitcoin Core developer.

- We should probably be suspicious if BlackRock starts donating money/giving grants for Bitcoin's development. Open source development of the biggest decentralized money network + donations/grants to the developers should probably not happen?

Also notice that Coinbase is conveniently the custodian of everyone involved, except a very few ones that are self custodian. The rest is just a big single point of failure called Coinbase, basically, US government, since Brian Armstrong will do whatever the US government does in order to stay in business. You aren't going to get anywhere without their approval. This is not great for BTC in terms of decentralization. I guess other nation states will eventually jump in and the different agendas between parties will allow for some macro decentralization where they aren't all on the same page. This would split BTC into different coins for different states and the outcome is not predictable. Im hoping the community of individual holders will not align with any of these and dump on their chains when they receive their split.

I believe not. He's merely a CEO who's forced to conform to the rules of the country where Coinbase is located. Wouldn't you as a CEO would like to make your business more compliant? That's absolutely understandable in my opinion.

BUT what Brian Armstrong actually did was support Bitcoin XT, https://medium.com/the-coinbase-blog/scaling-bitcoin-the-great-block-size-debate-d2cba9021db0

Which, tin-foil hats on, he probably thought he could manipulate Gavin Andersen because he will never have any opportunity to manipulate the Core Developers.

He also expressed his disapproval of the Core Developers before, saying that they are the biggest systemic risk for Bitcoin, https://medium.com/the-coinbase-blog/what-happened-at-the-satoshi-roundtable-6c11a10d8cdf#.qaggpgms9

He also gave his support for Bitcoin Classic, https://bitcoinwiki.org/wiki/bitcoin-classic

Bitcoin XT, Bitcoin Classic, Bitcoin Cash - before it became an altcoin - were actual attacks on the Bitcoin network, socially, philosophically and most importantly technically. They wanted to take control, fork Bitcoin, and leave the Core Developers behind. I believe that's their real agenda.

I remember that, Gavin said Mike Hearn would be the benevolent of Bitcoin XT:

https://coinjournal.net/news/gavin-andresen-mike-hearn-will-be-the-benevolent-dictator-of-bitcoinxt/

I think Barry Silbert was always on board with some hardfork business at some point, which is now selling his coins to Blackrock basically with the Grayscale outflows going to Larry Fink. I think this will end up in another hardfork battle between ETFs, and Fidelity may be the only one to be trusted (if I were to trust one, which I don't).

[takuma sato]

When I started this thread I wouldn't have imagined ETF inflows being this high. Looks like Blackrock is determined to become one of the biggest holders in Bitcoin. To me it is clear now that what I said will happen sooner or later. Either by accident or in purpose, we will see some sort of hardfork attempt by the ETFs that are US based, perhaps forcing any other US soil hosted custodian to follow, very likely actually, they then will try to do an ESG Bitcoin fork or what have you. It is just a matter of time. The question is, how will the community react to this. We are letting in a bunch of people that will not care about the consequences in the network, they will just want their money back. Best case scenario some sort of class action is done against them and the conflict is resolved, if not then it will be another Bitcoin was as seen in previous hardfork episodes were all attempts failed.

[ABCbits]

When I started this thread I wouldn't have imagined ETF inflows being this high. Looks like Blackrock is determined to become one of the biggest holders in Bitcoin. To me it is clear now that what I said will happen sooner or later. Either by accident or in purpose, we will see some sort of hardfork attempt by the ETFs that are US based, perhaps forcing any other US soil hosted custodian to follow, very likely actually, they then will try to do an ESG Bitcoin fork or what have you. It is just a matter of time. The question is, how will the community react to this. We are letting in a bunch of people that will not care about the consequences in the network, they will just want their money back. Best case scenario some sort of class action is done against them and the conflict is resolved, if not then it will be another Bitcoin was as seen in previous hardfork episodes were all attempts failed.

Bitcoin supposed to be permissionless, so we can't stop those people from owning Bitcoin. Bitcoin community never like hard-fork, so it's obvious such hard-fork will face tons of critic or rejection. I also doubt they could show argument to sway portion of Bitcoin community into keeping their forked coin alive.

[LoyceV]

Looks like Blackrock is determined to become one of the biggest holders in Bitcoin.

I'm starting to wonder how secure this is. Many exchanges have been hacked in the past. Given enough ETFs with enough people with inside access and enough money to be stolen, at some point an ETF could be drained on-chain.

[franky1]

Looks like Blackrock is determined to become one of the biggest holders in Bitcoin.

I'm starting to wonder how secure this is. Many exchanges have been hacked in the past. Given enough ETFs with enough people with inside access and enough money to be stolen, at some point an ETF could be drained on-chain.

blackrock does not have access to the coins........ coinbase does.. thats the point of custodians
#not-your-key-not-your-coin

[d5000]

Either by accident or in purpose, we will see some sort of hardfork attempt by the ETFs that are US based, perhaps forcing any other US soil hosted custodian to follow, very likely actually, they then will try to do an ESG Bitcoin fork or what have you.

How can you hardfork "by accident"? At least if you are not a miner yourself?

If you are an economic node (like the BTC custodians are) then you will need a lot of effort to reach the goal of an alternative implementation to reach your goal (pay developers, start a campaign to bring miners on board, start another campaign to explain the hardfork to your customers and try to convince Bitcoin idealists too) before you can even try a hardfork. So this is quite a complex endeavour and cannot happen "by accident".

The question is, how will the community react to this. We are letting in a bunch of people that will not care about the consequences in the network, they will just want their money back.

In addition to what ABCbits already wrote: I think if a "hardfork war" possibility emerges eventually, we will see a lot of discussion in the community. There will be campaigns from both sides. A side will win if they have the better arguments about the economic value of Bitcoin. And immutability is one of Bitcoin's USPs.

Best case scenario some sort of class action is done against them and the conflict is resolved, if not then it will be another Bitcoin was as seen in previous hardfork episodes were all attempts failed.

A "class action" cannot do anything in Bitcoin's ecosystem. It will affect only a country or group of countries (let's say in the EU), but Bitcoin is international. Would e.g. Russian miners abide to a class action on an US court?