The effect of bifurcation in cryptocurrencies: The example of bitcoin

The ever-increasing and diversification of human needs has led to the barter economy. In our increasingly digitalized world, this economy has developed and brought with it the discovery of money. Over time, money has taken different forms and today has become a virtual currency and crypto money has emerged. Cryptocurrencies continue to be mentioned frequently today by arousing curiosity in people day by day. In recent years, as a result of the spread of digital technologies, there has been an increased tendency to focus on the concepts of cryptocurrency and blockchain. To understand crypto money, it is necessary to know blockchain technology. In this sense, it is possible to summarize the functioning of blockchain technology as follows. Saved copies of the data are stored on computers. These computers located all over the world form a blockchain. When a new transaction is made, the previous data is not deleted from the system. Because data is copied and stored in the memory of computers. The data collected here is accessible to users. Therefore, security technology is guaranteed (Aliyev, 2022: 38). In crypto money projects, it was necessary to make some updates and revisions in order to both eliminate some risks and make the system more reliable with some improvements. Bifurcation is generally referred to as the continuation of the software as a new chain by approving these revisions and innovations. The research was conducted on cryptocurrencies such as Bitcoin Cash, Bitcoin Diamond and Bitcoin Gold, which changed as different currencies after the fork. The aim of the study is to determine the relationship between the new cryptocurrencies formed as a result of forking in cryptocurrencies and the old ones, and to make people who will invest in Bitcoin Cash, Bitcoin Diamond and Bitcoin Gold have information on both price, return and volatility. If there is an interaction between the variables, it is to present an investment strategy accordingly. For Bitcoin, the data set used for the research was taken into account from 2009 to the date of the fork. For Bitcon Cash, Bitcoin Diamond and Bitcoin Gold, the period from the date of the fork to 2023 data is taken as a basis. Data before and after bifurcation were analyzed separately. Augmented Dickey-Fuller (ADF), Kwiatkowski Phillips Schmidt Shin (KPSS), Fourier KPSS unit root tests were applied and Breitung – Candelon Grenger causality test was used in the research. While a permanent causal relationship is detected between Bitcoin diamond and Bitcoin and between Bitcoin Gold and Bitcoin Diamond in the price series after the applied tests, there is no causality relationship between Bitcoin and Bitcoin Cash. However, when the return series are examined in general, there is a long-term causality relationship between Bitcoin Diamond and Bitcoin Cash, between Bitcoin Cash and Bitcoin Diamond, and between Bitcoin Gold and Bitcoin Diamond. Key Concepts: Bitcoin, Bifurcation, Cryptocurrency Fork, Cryptocurrency, Blockchain