[ur-whale]

> and what would happen during 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.

[rkagerer]

Not that I would ever buy a BTC ETF since it precisely negates what I believe Bitcoin to be useful for

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).

[MacsHeadroom]

You can hold raw Bitcoin in a self-directed IRA. You just hold it and do the paperwork. You can hold just about anything in a self-directed IRA, including beanie babies.

[rkagerer]

Is there an equivalent in Canada?

[lxgr]

Sure, being able to rebalance without incurring a tax bill is nice, as is not having to worry about procuring the right type of tax forms since your brokerage does most of the work for you.

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.

[postcynical]

> 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.

Would it actually be clear which fork is the winning one?

[zubairq]

Yes it would be clear. According to this site there have already been 105 forks of Bitcoin:

https://forkdrop.io/how-many-bitcoin-forks-are-there

[hn_throwaway_99]

Wow, this actually is a critical point, and I'm surprised at what the outcome is. Essentially, it seems to me that these ETFs are saying they will abandon any rights to forked coins. That seems insane to me, though, so perhaps I'm misunderstanding? I mean, if there is a hard fork, some percentage of total value will go with one chain and some percentage to the other - that's basically exactly what happened with the Bitcoin Cash fork - so how can the ETFs just say they'll abandon coins in the forked chain.

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.

[wmf]

Here's a theory: If they promise to capture value of forks then anyone can fork Bitcoin (it's pretty easy to do) and force the custody providers to do a bunch of work to support that fork. By preemptively disclaiming all forks, they also reduce the motivation to fork. (Stablecoins have the same effect on Ethereum.)

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

[nullc]

It's hard to make that promise too, what happens when the fork requires that you expose 200 bits of your private key to make a transaction?

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...)

[SilasX]

Since you mention the past disputes over custody and forks:

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.