Why Bitcoin Cash Will Be MUCH Faster than Bitcoin after SegWit Activation
SegWit will be activated presumably on August 23. But observers will be astonished to learn that Bitcoin Cash will be much faster than Bitcoin with SegWit, at least in the first days after SegWit activation.
Today with the block 479808 the difficulty adjustment in the Bitcoin network took place. As result, the Bitcoin Cash mining difficulty fell to 12.50% of Bitcoin’s mining difficulty. It means that at the Bitcoin Cash price of 0.125 BTC a profitability parity between these two chains is met. Below that price, it is more profitable to mine Bitcoin. Above that price it is more profitable to mine Bitcoin Cash.
But what will happen when the Bitcoin Cash chain reaches the block 479808?
It depends on how fast the BCH blocks will be mined until then. Right now the speed is 4.46 blocks/hour and it is not expected to get faster due to the fact that at the current BCH price of about 0.1 BTC mining BCH is less profitable than mining BTC. With that speed, BCH reaches the block on August 22, just before SegWit activation on August 23 on the BTC chain.
And now the most interesting part comes:
With that block, Bitcoin Cash will adjust its difficulty as did Bitcoin, but the difficulty won’t rise, it will considerably drop! In the case the chain speed stays as now, the speed will drop to 53% of current difficulty. It means, the BCH difficulty will drop to only 6.7% of BTC’s difficulty. It will make mining BCH more profitable than mining BTC at every price above 0.067 BTC.
Right now, mining BTC brings around 25% more revenue than mining BCH with the same hash power, but on August 22 this ratio may flip, putting BTC in disadvantage. If the BCH price doesn’t fall further, BCH will then generate at least 50% more revenue for the miners than BTC.
It will certainly offer many miners a welcome escape route from the cut-throat Bitcoin competition, an irresistible invitation. It is to expect, than many miners, IMHO at least 10% of the BTC hash power will move to BCH (at least for the time till the next difficulty adjustment).
Right now the hashing power mining BCH is approximately 10% of that of BTC. If 10% more moves to BCH, BCH will have 20% hash power of BTC, With the difficulty of only 6.7% of BTC. That means, that the blocks will be produced every 3 minutes, while BTC blocks will need 11 minutes. BCH will mine almost 4 times as quickly as BTC.
And on August 23 together with Segwit activation, BTC will reach the next difficulty adjustment, which will increase its difficulty once again, again in favor of BCH.
Result
Just as SegWit gets activated, BTC will get smashed by his smaller brother BCH. It can be dangerous for the image of BTC, since the general public, unaware of the underlying technology, mining migration and general chain wars and dynamic between BTC and BCH, may assume the reason for the slowdown is in fact SegWit and the fans of Bitcoin Cash will do their best to convince the public they are the true Bitcoin and their technology is superior to the Segwit. But they themselves will be caught several days later by the same difficulty adjustment mechanism, that may make mining BCH upto 4 times more difficult again. So they will have to take advantage of these few days and use this situation to get the price of BCH as high as possible in order to be able to survive the next chain epoch.
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