Bitcoin forks and ETFs

[Bitcoiner317]

As I was thinking about the whole debate on ordinals and segwit, it had me wonder.

Forks might still happen in the future of Bitcoin. When you own your coins, you're sort of protected financially in the sense that you now own coins on both networks and will still be on the train whether a chain or another keeps traction as the other loses popularity. When you own shares of a Bitcoin ETF, you don't get to choose what path you want to take and if the community decides the new fork is the way to go.. I doubt the financial institution would take the risk of switching networks.

With all the hassle it seems to be to get an ETF approved, do you think financial institution would go through the hassle of giving their share holders their owned value of the second chain? How would that work exactly? And most importantly, doesn't that mean that the more ETFs gain traction, the more the original chain would keep its value over the other one? Since tradfi got in the game, it kinda gives an unfair advantage to pre-fork bitcoin chain.

What are your thoughts on this?

Edit: It’s funny. I also posted this on reddit and it got removed by a moderator. Probably because I mentioned ordinals, which wasn’t even the subject of the post? Really goes to show they do not encourage discussion over there.

[PrivacyG]

With all the hassle it seems to be to get an ETF approved, do you think financial institution would go through the hassle of giving their share holders their owned value of the second chain?

I doubt they would go through this trouble.  I do not even know yet.  Are ETFs actually legitimately backed by Bitcoin or not?

Even Exchanges barely go through the trouble of sharing Forked Coins with the customers.  Besides the known Bitcoin Forks, I imagine there are hundreds if not thousands more that we did not care about.  If they take this route, they would need to do the same for every single Fork that pops up.  Right?

By investing in an ETF you do not get a Bitcoin Address of yours.  An On Chain Transaction never happens.  It is close to what PayPal used to do back when they added Bitcoin to their Service for the first time.  You buy or sell Bitcoin, but only on paper.  I would be in fact surprised if they announce ETF share holders will be eligible for claiming Forked rewards.

But.  Expect something like this to become the new trend of Scams all over the internet some day.

[tranthidung]

Bitcoin Spot ETFs will be like centralized exchanges and they also rely on their custodians. We know most of Bitcoin Spot ETFs choose Coinbase as their custodians so we will go back to a centralized exchange.

Centralized exchanges, as they shown with past Bitcoin forks and altcoin forks, will have their own criteria and support (or don't support) a fork. If they support it, they will do technical steps to claim forked coins and credit it to their user accounts.

In a bad scenario, if they don't support a fork, their users will not receive forked coins.

If you worry about loss on forked coins, store your Bitcoin and altcoins in your non custodial wallets and claim forked coins by yourself in future. Claiming forked coins is risky practice because it leaks your private keys.

LoyceV's Bitcoin Fork claiming guide (and service).

[LoyceV]

do you think financial institution would go through the hassle of giving their share holders their owned value of the second chain?

I've seen a discussion about this before, and it looks like the ETF will just choose which chain they think is the real one.

My take:

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 dividend to the right people is complicated.

I'd expect competition between ETFs to eventually lead to this solution, but I'm afraid it's only going to be implemented after customers lose money if a new valuable Fork emerges.

[kotajikikox]

With all the hassle it seems to be to get an ETF approved, do you think financial institution would go through the hassle of giving their share holders their owned value of the second chain? How would that work exactly? And most importantly, doesn't that mean that the more ETFs gain traction, the more the original chain would keep its value over the other one? Since tradfi got in the game, it kinda gives an unfair advantage to pre-fork bitcoin chain.

I think it depends on what path the institution want to go down on.

These institutions only care about what would be both convenient and beneficial to them. Yes they could distribute the equal amount of coins in the second chain to their customers but I don’t think they would be as you said go through all that hassle. They would just be making their heads hurt with all the additional regulatory requirements attached to it if ever.

Edit: It’s funny. I also posted this on reddit and it got removed by a moderator. Probably because I mentioned ordinals, which wasn’t even the subject of the post? Really goes to show they do not encourage discussion over there.

Well reddit was made for all kinds of community and general discussion but this forum is primarily made for bitcoin and cryptocurrencies so you should expect that you can onky get this kind of valuable discussion here.

[YUriy1991]

Admittedly, ETFs are an easy and considered the most convenient way for investors to invest without having to learn in detail about BTC.  But do you know what's a little lacking in BTC ETFs, users will never be free (not flexible) in deciding when such options exist for example and will continue to be in the dick of its manager. I think, having direct coin ownership makes it all easier without having to hang on every change in the situation. Whether there will be more changes later depends on the manager as well.

[Lucius]

People who choose to invest in Bitcoin through ETFs must be aware that their choice has certain advantages, but also disadvantages. I therefore think that there may even be a part that regulates forked coins in the terms of business of companies that enable trading with ETFs - because it does not seem to me that such large and serious companies would leave such a possibility undefined.

What I see as a much bigger problem is the fact that these companies clearly state in their conditions (at least as far as BlackRock is concerned) that they reserve the right to choose the chain that they consider to be correct. This would mean that they can orchestrate a fork and then say that it is the real BTC - and regardless of whether the community can choose to continue following the original chain, on the other hand we would have far more powerful enemies than the BCH gang that once tried to push their coin as real BTC.

[God bless u]

As I was thinking about the whole debate on ordinals and segwit, it had me wonder.

Forks might still happen in the future of Bitcoin. When you own your coins, you're sort of protected financially in the sense that you now own coins on both networks and will still be on the train whether a chain or another keeps traction as the other loses popularity. When you own shares of a Bitcoin ETF, you don't get to choose what path you want to take and if the community decides the new fork is the way to go.. I doubt the financial institution would take the risk of switching networks.

With all the hassle it seems to be to get an ETF approved, do you think financial institution would go through the hassle of giving their share holders their owned value of the second chain? How would that work exactly? And most importantly, doesn't that mean that the more ETFs gain traction, the more the original chain would keep its value over the other one? Since tradfi got in the game, it kinda gives an unfair advantage to pre-fork bitcoin chain.

What are your thoughts on this?

Edit: It’s funny. I also posted this on reddit and it got removed by a moderator. Probably because I mentioned ordinals, which wasn’t even the subject of the post? Really goes to show they do not encourage discussion over there.

Yes ETF approval is a very important factor that plays a part in the development and advancement of a particular coin or project but we should not think if that much far into the Future.

I think crypto is a long term investment asset but we should try to take the profits and exit from the market. In my opinion no coin like BTC will come again into the market and there will be no miracle like that.we have to make profits and enjoy.

[Wiwo]

Edit: It’s funny. I also posted this on reddit and it got removed by a moderator. Probably because I mentioned ordinals, which wasn’t even the subject of the post? Really goes to show they do not encourage discussion over there.

I don't know but reddit have been one of the worst expirencce for me, may be because of their policy of the platform,  I hardly mentioned cryptocurrency or bitcoin without it been deleted,  so I understand you.

[PrivacyG]

I don't know but reddit have been one of the worst expirencce for me, may be because of their policy of the platform,  I hardly mentioned cryptocurrency or bitcoin without it been deleted,  so I understand you.

Bitcoin Talk is probably one of the least moderated Forums on all clear net Internet right now.  And even here, Authorities are starting to zip mouths and prevent specific subjects from being discussed.

Reddit is a hell hole.  I can not even imagine Reddit sitting close to the sphere of Freedom.  No matter the Subreddit, they are all overly moderated by weird Moderators.  So have no hope in using Reddit freely.

[mk4]

When you own shares of a Bitcoin ETF, you don't get to choose what path you want to take and if the community decides the new fork is the way to go.. I doubt the financial institution would take the risk of switching networks.

It's more likely that the institution will decide which bitcoin version the ETF will be holding; and I could almost guarantee that they're just going to pick the bitcoin version with the highest marketcap.

With all the hassle it seems to be to get an ETF approved, do you think financial institution would go through the hassle of giving their share holders their owned value of the second chain? How would that work exactly?

Unless some of the processes change, I doubt it. Even though Coinbase has provided the forks in the past.

Edit: It’s funny. I also posted this on reddit and it got removed by a moderator. Probably because I mentioned ordinals, which wasn’t even the subject of the post? Really goes to show they do not encourage discussion over there.

Reddit r/bitcoin is honestly the worst. Just a teeny tiny mention of an altcoin will have your post deleted even if it's relevant to the story/topic that revolves around BTC.

[Hamza2424]

As I was thinking about the whole debate on ordinals and segwit, it had me wonder.
What are your thoughts on this?

Edit: It’s funny. I also posted this on reddit and it got removed by a moderator. Probably because I mentioned ordinals, which wasn’t even the subject of the post? Really goes to show they do not encourage discussion over there.

Hmm, Reddit sucks anyway here on the forum you are free to discuss anything, I was quite interested in studying the forks and their future scope, but I think it's not worth it because you know now after Bitcoin's ETF approval and consideration of the Bitcoin as a commodity we don't need such huge turns in the current Blockchain technology for the usage of the network in another dimension there are some alternate solution, such as L2 an other blockchains which are more scaleable.

[Medusah]

Forks might still happen in the future of Bitcoin.

Bitcoin will inevitably undergo forks in the future; otherwise, it risks becoming obsolete with the advent of quantum computers.  There will also be soft forks for various reasons, including scaling issues.

Are ETFs actually legitimately backed by Bitcoin or not?

I believe they're tied at a 1:1 ratio, but you have to take their word for it.  They won't provide us with a signed message, will they? 

Reddit r/bitcoin is honestly the worst. Just a teeny tiny mention of an altcoin will have your post deleted even if it's relevant to the story/topic that revolves around BTC.

True.  Isn't theymos also an admin or moderator there?  Why the heavy censorship?

[yhiaali3]

ETF companies are primarily for-profit companies so they will most likely choose the network that they believe will give them the greatest profits in the event of a hard fork.

This means that they will most likely choose the network in which the price is higher or the number of investors is greater. As for ETF investors, they do not have the right to object or choose the network that suits them because in reality they do not own Bitcoin, but rather own shares in these companies, and therefore they are forced to accept the choice of networks that the companies choose.

Then investors will face great risks because if companies choose one of the networks and it becomes worthless over time, this means that investors have lost their money.

[thecodebear]

What happens during a fork would likely be in the legal agreement between ETF issuer, custodian, and ETF clients. Since Coinbase is the primary custodian of the BTC ETFs that means they ultimately control the actual coins, so the firm that issues the ETF would no doubt have some legal agreement about forks. Likewise the ETF issuer, based on whatever agreement they have with the custodian, would decide if clients get a fork. I very much doubt clients would get access to any forks as they are buying an ETF for Bitcoin and not Bitcoin plus forks. So either the custodian or the ETF issuer is gonna own the coins from any forks. In terms of affecting bitcoin, I don't see how it would. If anything they'd just sell off the forked coins (the non-bitcoin chain) to make extra money.

[tbct_mt2]

ETF companies are primarily for-profit companies so they will most likely choose the network that they believe will give them the greatest profits in the event of a hard fork.

As big capital management companies, they will think of safety for capital they are managed, not profit first. Because profit can be gained later when chaos ends and risk is smaller, they can find new opportunities to get profit. If they lose capital of their customers, they will go bankrupted and go into jails.

ETF companies don't own private keys and they will have to depend on their partners, the custodians like Coinbase, to claim forked coins. If Coinbase support, I believe they will do, fork claims, ETF companies will not lose anything.

The 2017 hard fork create Bitcoin and Bitcoin Cash, but we see the main chain, Bitcoin continues to grow, higher and higher in hash rate and price. Bitcoin Cash, the forked coin is like a bonus.

This means that they will most likely choose the network in which the price is higher or the number of investors is greater. As for ETF investors, they do not have the right to object or choose the network that suits them because in reality they do not own Bitcoin, but rather own shares in these companies, and therefore they are forced to accept the choice of networks that the companies choose.

ETF investors depend on ETF companies which in turn depend on their third-party partners, custodians for example Coinbase. It is like chain of risk from customers to ETF companies to Custodian service providers.