Bitcoin’s Messy Divorce

Bitcoin Cash is Born

What most thought would be merely a Bitmain contingency plan against BIP148, Bitcoin Cash surprised us all with the creation of their own chain beginning on Aug 1st, 2017. At roughly 2:14pm Aug 1st Bitcoin Cash or (BCH) mined its 1st block. This split took a little time because 1st miners mining the BCH chain had to find a block with the same difficulty as Legacy Bitcoin or BTC, but with a fraction of the hashing or mining power. This difficulty is rapidly scaling down because of the considerable less mining power to target 10 minute block times just like BTC. BCH or Bitcoin Cash is very similar to BTC or legacy Bitcoin with 2 main differences: BCH has a default of 8mb block size and with BTC there is a default of 1mb block size. This means that BCH will be able to process more transactions per unit of time given that the difficulty adjusts to get BCH back to a 10 min block time schedule. Also, BCH does not have Segregated Witness, a feature that BTC has adopted as part of their scaling solution. It should be noted that Segregated Witness or SegWit claims to fix other long standing problems with BTC like transaction malleability.

One interesting thing about BCH is that if you held your private keys to any BTC before 12:20 UTC Aug 1st, then you have that exact same amount of BCH now! As of this writing BTC is up since the split and BCH is trading for around $336. So this means you received something for nothing so far. If you would like to learn how to claim your BCH and you store your BTC on either a Ledger, Trezor or Electrum wallet this tutorial has a great step by step. And to be clear a BCH address is the same as a BTC address for now so if you generated a paper wallet for your BTC and want to make a separate paper wallet for your BCH you can use something like bitaddress.org. Or if you want to import your BCH private keys into supporting BCH wallet software, you can do this the same as you would with a BTC paper wallet. If you want to move your BCH from a BTC paper wallet to a BCH paper wallet, I WOULD SUGGEST MOVING YOUR BTC TO A DIFFERENT BTC PAPER WALLET 1ST.  Then use the old BTC paper wallet private key and import to new BCH address from there. Here is a tutorial on how to make a BTC or BCH paper wallet.

Some good news for Coinbase BTC holders. If you were one of those that just held your BTC in Coinbase through all of this, it seems they have changed their stance on issuance of BCH in your favor. Only catch is you can’t get it until Jan 1st, 2o18. All I can say about that, is I’m ready for a better alternative to Coinbase at this point.

 

SegWit Locks In

Segregated Witness or SegWit for short, is a mechanism to give BTC more transactions per block without really raising the base block size. Sound like magic? It’s not. It’s really just separating signatures from transaction data, creating more space for transactions and thus more transactions in each block.  Here is a great description of SegWit for those geeks that want to go deep. In any case, this proposal BIP144 has now locked in and we are just waiting for the grace period of another 2016 blocks after this period to end until it activates. For those who don’t want to do the math, this will most likely happen on Aug 22nd. This will be seen as a positive sign for BTC but we might not go to the moon just yet as we still have the 2x part of SegWit2x agreement coming up 3 months later, likely mid-November. Let’s cross THAT bridge when we come to it, for now let’s just acknowledge SegWit lock in and imminent activation in coming days.

 

Is Bitcoin About To Boom In Australia

Two Australian senators are pushing to make Bitcoin an official currency in their county. Some reasoning behind this push is competitiveness with Asian countries that already have officially recognized Bitcoin as a currency. Last month, Austraila removed its double taxation of the digital currency marking progress towards the acceptance of cryptocurrencies in general. If these two senators get their way, this would mark a huge leap forward for Australia in becoming a Bitcoin friendly haven for investors and entrepreneurs.

What’s even more surprising is Living Room of Satoshi, a bill pay service in AUS that already accepts BTC and seven other major cryptocurrencies, now accepts BCH or Bitcoin Cash. Wow, that was quick!

 

Tax Accounting Help for Bitcoin

If you have been looking for a one step solution to figuring out your bitcoin taxes, this might be for you. Node40 has announced that they will offer support for bitcoin tax accounting. I can not speak to this particular service as I have never used it, but I may give it a try this year.  Like most of us, I  don’t like the idea of forking over my hard earned bitcoin, but I also don’t want to go to jail and I have a wife and kids. Anyway just wanted to drop this in as a service sort of thing, let me know if anyone has any luck with this.

**UPDATE**

Here is another Bitcoin and altcoin tax resource I found that I thought looked interesting as well. Bitcoin.tax.

 

 

2 thoughts on “Bitcoin’s Messy Divorce

  1. Thanks for all the info and insight! Definitely taking note of the tax accounting link. I’ve anticipating next Spring to be a nightmare, with shapeshifts and what not.

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