A Tax on the Clones: The Strange Case of Bitcoin Cash

Abstract

The 2017 were remarkable times for Bitcoin and other cryptocurrencies.In January 2017, the market price for one unit of Bitcoin (1 BTC)' was approximately $1,000; by December 2017, it had climbed to almost $20,000.2Despite the collapse of this speculative bubble, Bitcoin remains an important development in economics, finance, technology, and law.Also in 2017, Bitcoin produced an offshoot cryptocurrency, Bitcoin Cash.Bitcoin Cash arose because members of the Bitcoin community disagreed on how Bitcoin should change in response to its growing popularity and allow for a greater number of transactions. 3 Bitcoin and other cryptocurrencies are governed by "communities" and "consensus.' Community members who wanted deeper, more structural, changes effectively departed the Bitcoin community and created a new one, Bitcoin Cash.The dissidents did not create Bitcoin Cash from scratch.Instead, they cloned Bitcoin as it existed on August 1, 2017 and grafted their desired changes onto the cloned system.sSince Bitcoin is not backed by any external assets or business enterprise, 6 the dissidents could create Bitcoin Cash seemingly out of thin air, writing some computer code and garnering support of users.There was no severance, spin off, or other division of the Bitcoin system in a formal or legal sense.Since its creation, Bitcoin Cash has become a successful cryptocurrency, currently ranking sixth in terms of market ' See infra Part III.B.