Bitcoin Hard Forks as Dividends

At Bloomberg, Justina Lee compared the recent Bitcoin Gold hard fork to a stock dividend:

On top of stupendous capital gains, investors in bitcoin are also getting a dividend — if they’re lucky.

A split in the blockchain created a new offshoot in the form of bitcoin gold on Tuesday, with bitcoin holders receiving one unit for every bitcoin they own, according to the offshoot’s developers. The cryptocurrency fell from a record high after the so-called hard fork, just as stocks typically drop after going ex-dividend.

Of course, not all token holders received the dividend. For example. anyone holding BTC through Coinbase missed out. Then there’s the problem of whether a 5% of less dividend means anything when prices can fluctuate 30% in a week anyway.

The Bitcoin Boom: Asset, Currency, Commodity or Collectible?

From Aswath Damodaran’s post The Bitcoin Boom: Asset, Currency, Commodity or Collectible? at Musings on Markets:

I find myself disagreeing with both its most virulent critics and its strongest proponents.  Unlike Jamie Dimon, I don’t believe that bitcoin is a fraud and that people who are “stupid enough to buy it” will pay a price for that stupidity. Unlike its biggest cheerleaders, I don’t believe that crypto currencies are now or ever will be an asset class or that these currencies can change fundamental truths about risk, investing and management.

He goes on to describe his process for determining how to classify bitcoin, beginning by describing has his asset class classifications as:

  • Cash Generating Asset
  • Commodity
  • Currency
  • Collectible

After concluding that Bitcoin is a currency, though a weak one currently given how much it is used as a means of exchange currently (which would make it closer to a collectible), he layout out three possible long term scenarios:

  • The Global Digital Currency
  • Gold for Millennials
  • The 21st Century Tulip Bulb

A very practical look at Bitcoin from a more traditional financial perspective.