and what would happen during/after a fork?
Now, that is a very interesting question.
If said ETF did their homework properly, their handling of a fork should be described in detail in their prospectus.
Not that I would ever buy a BTC ETF since it precisely negates what I believe Bitcoin to be useful for, but if I had to, I'd pick the one that would convert the forked coins back to BTC immediately after the fork.
If enough ETFs actually promise to apply this policy in their statutes, that would make it quite a hump to get over for a would-be forker, knowing the immediate price hit the forked coin would take because of the ETF immediately dumping it.
Would it actually be clear which fork is the winning one?
My understanding taken from:
1. https://www.nasdaq.com/articles/bitcoin-etf-hurdles%3A-cash-... "In the event of a fork diverting from the main chain, trusts associated with the ETFs are expected to relinquish any entitlements."
2. Grayscale prospectus, https://www.sec.gov/Archives/edgar/data/1588489/000119312524...:
> Shareholders will not receive the benefits of any forks or airdrops.
> The Bitcoin Network operates using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and miners of Bitcoin adopt the modification. When a modification is introduced and a substantial majority of users and miners’ consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and miners’ consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “hard fork” of the Bitcoin Network, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of Bitcoin running in parallel, yet lacking interchangeability. In addition to forks, a digital asset may become subject to a similar occurrence known as an “airdrop.” In an airdrop, the promotors of a new digital asset announce to holders of another digital asset that such holders will be entitled to claim a certain amount of the new digital asset for free, based on the fact that they hold such other digital asset. We refer to the right to receive any benefits arising from a fork, airdrop of similar event as an “Incidental Right” and any such virtual currency acquired through an Incidental Right as “IR Virtual Currency.”
> With respect to any fork, airdrop or similar event, the Sponsor will cause the Trust to irrevocably abandon the Incidental Rights and any IR Virtual Currency associated with such event. As such, shareholders will not receive the benefits of any forks, and the Trust is not able to participate in any airdrop.
> In the event the Sponsor seeks to change the Trust’s policy with respect to Incidental Rights or IR Virtual Currency, an application would need to be filed with the SEC by NYSE Arca seeking approval to amend its listing rules to permit the Trust to distribute the Incidental Rights or IR Virtual Currency in-kind to an agent of the shareholders for resale by such agent. However, there can be no assurance as to whether or when the Sponsor would make such a decision, or when NYSE Arca will seek or obtain this approval, if at all.
> Even if such regulatory approval is sought and obtained, shareholders may not receive the benefits of any forks, the Trust may not choose, or be able, to participate in an airdrop, and the timing of receiving any benefits from a fork, airdrop or similar event is uncertain. Any inability to recognize the economic benefit of a hard fork or airdrop could adversely affect the value of the Shares.
Here's a list of 45(!) Bitcoin forks and 11 airdrops that have happened so far: https://forkdrop.io/how-many-bitcoin-forks-are-there
What happens when the fork snapshotted the chain at some arbitrary point in the past such that it's not possible to match it up with ownership of the ETF?
There have been 'forks' of altcoins made where the 'official' software was expressly backdoored. They even lead to some fringe exchanges being robbed.
There was a brief flurry of forks when exchanges felt compelled to list them-- they were a way for altcoin creators to avoid the huge listing bribes demanded by exchanges (which also has made it so that only premined altcoins are viable to create anymore)... but after exchanges decided to stop listing them (and esp Archer v Coinbase established that exchanges could just keep the fork coins, if that was their policy) most of the fork creation stopped.
(somewhat to my saddness: diligently dumping fork coins made me a lot of money...)
Earlier discussion from 2017, when customers wanted to sue Coinbase for keeping the Bitcoin Cash (BCH) fork corresponding to their deposits:
https://news.ycombinator.com/item?id=14910822
I remember Gemini crediting me with my BCH eventually. (Unfortunately, long after the peak to $4k.) LocalBitcoins gave some classic BTC credit to make up for it.
Some silly analogies I made: https://news.ycombinator.com/item?id=14913261
I believe that fears of a similar situation are what led a lot of people to temporarily pull ETH off of exchanges and out of smartcontracts over the time of the ETH switch from PoW to PoS, as that spawned another fork.
Yeah I know what you mean, although one competitive advantage of the fund is it can be invested in a tax-free savings accounts not subject to capital gains tax (I haven't seen a practical way to do the same with the raw commodity).
But is there actually a difference for pure buy-and-hold investors in most jurisdictions?
I know of at least one jurisdiction where an ETF is actually disadvantaged against physically holding cryptocurrency.
This seems unlikely.
Many TradFi custodians ignore/do not support (publicly) forks of client assets held, sometimes just until they reach some arbitrary level of social traction.
They just sold the coins on the inferior chain and gave a one time dividend.
Mate that isn't how it work. If Coinbase or Fidelity don't recognise the real blockchain then they no longer have real bitcoin, they have a forked coin (because they are not on the true bitcoin chain). The Bitcoin chain is determined by consensus of the majority of miners/nodes (not bitcoin holders!) and if they break from that they now have a substantially devalued asset (look up the price of BCH and BTG these days).
You seem to be under a misapprehension that owning the most bitcoin gives an institution or individual power over the network. It does not.
Bitcoin, by definition, cannot exist on two separate chains. If an institution attempted what you are saying all they will have done is reverse alchemy: turned gold (bitcoin) into lead (an unrecognised chain with no mining occurring, no recognition by nodes etc).
again, the cheerleaders who might know math (usually not even that) forget about the ruthless of business
https://www.investopedia.com/terms/1/51-attack.asp
> forget about the ruthless of business
Noone has forgot a thing just aren't clowns like you who think businesses are some substitute god who can't be beat. Fidelity doesn't "hold" the transactions. Transactions to be relevant MUST be broadcast to the network and if this doesn't happen then the blockchain plods along as if they didn't happen.
Honestly, learn a bit more about how this stuff actually works before commenting.
I have read this comment five times, and I simply cannot make heads or tails of it.
What is "THEIR fork"? If there's a fork, everyone has keys which underpin addresses on both forks. How do you know which fork belongs to "fidelity et all"?
And more importantly, why is that relevant? Isn't the longest chain the only determiner of canon? Or has that changed recently?