Bitcoin is Dead! Long Live Bitcoin!
New successful fork, deserves a new forum for the Wall Street Technologist blog which actually showcases one of the many new use cases which have been made possible thanks to the return to the original dream of Satoshi and his little invention, and Bitcoin Cash fork. The original dream of an electronic peer-to-peer cash system. Cash system. Not Gold, not a settlement layer, not a decentralized computer, nor a decentralized ledger. Sure it can act as some or all of those things with differing degrees of success, but that wasn't the raison etre of Bitcoin, even though many others since Satoshi's disappearance have tried to change Bitcoin into these things.
Unless you have missed the big news since Aug 1st, Bitcoin Cash successfully has forked away from legacy coin/segwit2x and has been stable (in terms of block times more or less averaging 10m/block for the last month). This has given legacy Bitcoin a true competitor for the digital cash crown, as the distribution of Bitcoin Cash was exactly the same as that for Bitcoin as of Aug 1st 2017. Which means if you owned any Bitcoins on that day, you suddenly own exactly the same amount in BCC as well. Free helicopter money from heaven, as it were.
Thanks to the successful use of Emergency Difficulty Adjustment (EDA) implemented in Bitcoin Cash, it was able to fork off with a minority hash power and remain a viable coin to act as a stable hedge against chain congestion and high fees on legacy Bitcoin. The detractors were proven wrong. Adam Back & friends have been proven wrong. All who said that hard forks were dangerous and would cause a market crash were shown to be wrong. Instead of the crash that pretty much every 'wizard' warned about for years, we had the biggest bull run of the year after the Bitcoin Cash fork. The price went from 2700 USD to almost 5000 USD over the month of August.
Segwit itself activated on Aug 12 when the price was around 3600, and we have discovered that in the month after the hype of its activation has died, we are back to pre-segwit prices, around 3400 as of today. No matter how the core supporters and hardliners will try to spin it, 2 things have been clearly proven to all observers, 2 things which we have been spending the last 2 years debating needlessly on:
- Hard Forks are not harmful and do not have any negative effects on market sentiment nor price, nor security of the main chain.
- Segwit is largely ineffectual as a block size increase and also pretty useless as a measure to keep fees low while increasing transactional flow, and mostly an overhyped patch that puts some complex groundwork for future layer 2 networks to be built on top of Bitcoin.
I won't go into long list of evidence that have been collected over the last 2 years of core developers saying that Hard Forks would be the nigh end of Bitcoin. I will save you the headache, it won't take longer than 1 google search in order to find at least 10 mentions. The important thing is that now Bitcoin Cash is around, there is finally a 'hedge' against design issues, bugs, or poor leadership in legacy Bitcoin proper. Bitcoin cash futures were traded on ViaBTC exchange before the fork actually happened and the starting price of 500USD was found as the market equilibrium before and immediately after the fork. Since then the price has traded between 200USD and 970USD illustrating the impressive predictive ability of the market to smoothly migrate a single market price of one asset into a 2 separate ones.
Shaping the Future
This event market the first large scale Bitcoin conference held in China which featured many foreign visitors and also many Chinese Bitcoin startups. They even produced a video (the first done in China and featuring many Chinese Bitcoin luminaries) and at the following tech session, Craig Wright and nChain revealed the next steps in the Bitcoin evolution which involves what he calls "threshold signatures". This technology, if it works as described, could make coinjoin mixing on-chain possible and also increase the privacy of transactions to a large degree. This is a welcome change to the roadmap of Bitcoin which has been for the better part of the last year been primarily focused on scaling txs/s. Also what may have not been too much of a shock to many, Craig came out supporting Bitcoin Cash exclusively. This makes the future of Bitcoin Cash bright, as they seem to be getting a good head start on a lot of the features that Bitcoin has been neglecting for too long.
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