The Upcoming Bitcoin Cash Hard Fork is Great News for Almost Everyone
Bitcoin has been through an exhausting debate the last 4 years, and like a toxic marriage with irreconcilable differences, everyone is much happier in the end once we go our separate ways.
Those who want big blocks, big on-chain scaling, and peer to peer cash are divorcing those who want smaller blocks, second tier solutions, and a settlement layer.
The past is the past. If you want to know what happened, read the pizza story.
The Loss of the Network Effect?
Just like in a marriage, there’s certainly reasons for sticking together.
In Bitcoin, the main reason is called the ‘network effect’.
It means that Bitcoin’s advantage comes from the fact that it has the biggest network of users, merchants, developers, and investors. So I can understand why some people think it’s a bad idea to have any kind of network split or fork.
But sometimes, reasons for breaking up are more numerous and important than the ones for sticking together. And at this point, Bitcoin’s network effect may be over-valued, over-rated, and not put into its full context.
The Rise of the Alt Coins
Bitcoin went from having 95% of the cryptocurrency marketshare to only 40% in a few short months — basically from March 2017 to June 2017.
Granted, some of this was because Ethereum has been red hot. But, a large part of this is because Bitcoin became unusable as a low-fee payment system.
That means the userbase couldn’t grow. This is one of the big reasons for the divorce. What good is the network effect if the only direction you can go is down?
The Doors Are Now Wide Open for New Users
SegWit provides a capacity increase, but it is modest.
What about SegWit2x? Will the miners be able to follow through on the “2x” part of the agreement? Some have said that’s a promise that can’t be kept. And even if it is, will that be enough scaling to stay above demand and provide low fee transactions to everyone?
The answer is: Happily, it doesn’t matter anymore! If one chain cannot accommodate some users, the other chain will.
Let’s Keep it All in the Family
Most users will not be excited to pay high fees or use second tier solutions if they offer lower security with greater friction, and especially if they aren’t even ready today.
So if a user is going to use something other than ‘old chain Bitcoin’, wouldn’t you at least want them to use another version of Bitcoin, rather than some random alt coin? The cool thing is that if you own Bitcoin, you automatically own Bitcoin Cash.¹
That’s right, small-blockers: you’re invited to the party too!
Conversely, those that embrace Bitcoin Cash still own their Bitcoins. If the SegWit chain has the majority of the hashpower (for now), then we’ll keep our Bitcoins too and see how things play out.
I imagine some big-blockers may be upset about forking off without a clear majority, but I agree with the decision of those leading this movement. We do not want SegWit, and we do want bigger blocks now.
ETH and ETC Co-exist Peacefully and So Can We
All the non peaceful co-existing is just a bunch of noise, trolling, and rhetoric. Once there’s a split, the market can do its thing with price discovery, and that will be that.
No one is confused about ETH and ETC. And no one is having any issues over it.
We can all stop wasting our precious energy trying to change each other’s minds and let the market and reality decide. Everyone has freedom to do exactly what they want, run the code they want, use the chain they want…and again the best part is, you’ll own both coins!
You can take a risk and sell one chain, or you can hodl both. It’s completely up to you.
There May Also Be Symbiosis
Its possible both kinds of Bitcoin become dominant just as ETH and ETC have. I believe that with this fork, there will be less attraction to alt coins because much of the loss of dominance came as a result of high fees, slow confirmations, full blocks, and loss of confidence over a scaling solution.
Perhaps together, “Bitcoin(s)” will now rise back to gain 60, 70, 80, or even 90% of the market.
42 Million Coins?
It may be upsetting to think that Bitcoin just got ‘inflated’ but this is an illusion for a few reasons. First of all, Bitcoin has been getting less of the overall cryptocurrency pie already. This can change that trend.
Second, if you want you can think of the majority hashpower chain as “Bitcoin” which still has 21M coins.
Third, all the hodlers just got their stash doubled, so nothing really changed.
It’s Even Good for Alt-Coins
By the way, no I do not consider Bitcoin Cash to be an alt-coin, but rather a variation of Bitcoin — the one that “should have been”…but I’ll save that opinion for another article. If you want to think of the minority chain as an alt coin, that’s valid.
But I am talking about Dash, Monero, Litecoin, etc.
Even these coins will benefit from Bitcoin re-asserting itself, because the pie is going to get bigger for everyone. We’re proving that Bitcoin and cryptocurrencies can and will remain censorship free, as we usher in a new golden age.
1. To own Bitcoin Cash, you need to actually control the private keys; do not trust an exchange to do this for you unless they specifically promise it.