BTC vs BCH. Full chronics of epic battle for cryptocurrency domination (round 1)
November 12. Bitcoin lost 25% in price, top cryptocurrency exchange crashed several times, transaction fees spiked up to $20, top miners abandoned BTC, people couldn’t move their funds because transactions stuck in mempool, crypto market saw huge panic sales and massive capital moves, trading volume skyrocketed, mass media spread news that Bitcoin bubble is about to burst.
What happened?
It was a revolution that cryptocurrency community has never seen before.
A well-coordinated attack on Bitcoin (BTC) chain from Bitcoin Cash (BCH) community. Both sides reasonably claim that their chains are the most congruent with the original vision of Satoshi Nakamoto (creator of bitcoin). You can read about their difference here.
Last two weeks were crazy and it was hard to keep track of all news appearing on cryptopanic. In this article I’ve decided to put all major events together in a chronological order so we can see a broader picture.
Full chronics
Nov 9, 3:14 UTC
Rick Falkvinge (founder of the Swedish Pirate Party) publicly supported Bitcoin Cash (BCH).
More interesting is that CEO of Blockstream, a company behind original Bitcoin (BTC), Adam Back also retwitted it. I’m still confused about this move because he doesn’t look like a Bitcoin Cash (BCH) supporter.
Nov 10, 19:25 UTC
Bitcoin Cash (BCH) became extremely popular on Korean exchanges with $2.5 billion daily trading volume.
Main theories:
- Blockstream, a company behind original Bitcoin (BTC) has high influence only in English-speaking world, thus Asian market naturally moved to a currency with low transaction fees and similar brand name.
- Chinese miners were pumping Bitcoin Cash (BCH) on Korean exchanges, because all their own exchanges were closed by the government in September.
Nov 11, 06:34 UTC
Bitcoin Cash (BCH) gained 46% in a day and a few times went above $1000.
Nov 11, 15:57 UTC
Early bitcoin developer and Satoshi Nakamoto’s confidant Gavin Andresen endorsed Bitcoin Cash (BCH).
Nov 11, 23:37 UTC
Max Keiser (journalist from RT) criticized Bitcoin Cash (BCH).
November 12, 2017
Nov 12, 01:30 UTC
Mike Belshe (CEO at BitGo) stated that original Bitcoin (BTC) transaction fees jumped up to almost $20.
According to some theories Bitcoin (BTC) network was under a spam attack.
A few days later there will be an interesting analysis claiming that there were no spam attacks, but people were massively moving their funds trying to exchange falling Bitcoin (BTC) for rapidly growing Bitcoin Cash (BCH).
(1,5 hour later)
Nov 12, 03:13 UTC
Andreas M. Antonopoulos (famous bitcoin public speaker) took a neutral position inviting both camps to focus on work, rather than fighting and feeding the drama.
(44 mins later)
Nov 12, 03:57 UTC
Bitcoin Cash (BCH) skyrocketed to $1780 and thus overtook ethereum by market cap and became the second largest crypto currency with almost $30 billion market cap.
Vitalik Buterin (Ethereum co-creator) officially endorsed Bitcoin Cash (BCH).
(Two days later he will explain his viewpoint.)
(2 hours later)
Nov 12, 06:13 UTC
One of the main Bitcoin Cash (BCH) leaders Roger Ver transfered 25k BTC (~$150 millions) to presumably Bitfinex exchange.
Main theories:
- Roger wants to sell 25k BTC (~$150 millions) and pump BCH.
- Roger publicly shows intentions to sell 25k BTC, so others start a panic sale “before the dump”, which might not happen.
- Roger is sidetracking attention to Bitfinex with just 25k BTC, while main trade will happen on another exchange. His low estimated capital is 100k BTC (~$600 millions) up to 300k BTC (~$1.8 billions) by other sources.
In any case it was a very strong market signal and some people called it a market manipulation.
(There will be many events for the next hour so it’s hard to be 100% accurate on timing)
Nov 12, 06:34 UTC
For less than 2 days original Bitcoin (BTC) lost almost 25% in price and finally crashed to $5,616 first time since October, 25.
At the same time Bitcoin Cash (BCH) experienced a massive pump and gained more than $20 billions market cap in less than 2 hours with approximately $2,800 price at its pick. Its hard to determine what was the highest price because everything happened so fast that different sources have very different numbers and very different graphics.
Nov 12, 06:45 UTC (approx)
Around that time Korean exchange Bithumb, the biggest cryptocurrency exchange in the world by trading volume, crashed exactly when Bitcoin Cash (BCH) was at its ATH (all-time high) of $2,800.
Shortly after that the price fell down by almost 50% in just 20 minutes.
Nov 12, 07:00 UTC
Despite a massive dump that already happened a few minutes ago, someone put a wall on Kraken exchange to buy 12,000 BCH for 6,000 BTC (~$35 millions at that time), so the price didn’t go down for the whole hour. That was something you never see for top crypto currencies with a market cap above $20 billions.
That buy-wall created an enormous opportunity for arbitrage so people could buy BCH for USD, sell it into the wall for BTC, then exchange for USD with a good profit and repeat. However, Kraken was working extremely slow during that time because of a huge traffic spike (and may be DDoS attack), so it took a whole hour to eat that wall.
Why did a whale (very rich investor) put that buy-wall for?
Well, according to most theories it was a huge mistake and he lost half of his money due to panic, FOMO or serious Kraken lags. However, I can clearly see at least one scenario in which a whale could make a huge profit using some wash trade techniques and was selling his BCH to fish for enormously high price for a whole hour. The explanation is too big so you can read about all theories in a separate article here (coming soon).
What can we state for sure is that after a huge pump there was even a bigger dump that exploded like a bomb and spread massive panic on the market. Price was swinging up and down like crazy. People were gaining and losing capitals in just minutes, especially those who used margin trade.
Nov 12, 07:00 UTC (approx)
Michael Novogratz, a billionaire and Fortress ex-hedge fund manager, claimed that he bought around $20 million worth of Bitcoin (BTC) at its dip. That helped stop the panic sale and since main Bitcoin Cash (BCH) legions were offline due to Bithumb’s crash, BCH didn’t have any support to continue the fight, so people started massively move their funds back to BTC.
Oversimplified explanation for Bitcoin (BTC) chart can look like this:
(Next day Michael Novogratz will explain his position.)
Later Korean exchange Bithumb will reopened again, but the price will be approximately 700,000 KRM ($640) lower despite having no trades during the down time.
Two days later customers of Bithumb will start preparing a collective lawsuit against the company and police will visit its office.
Main theories:
- Bithumb’s servers were overloaded with traffic, because people were rushing out to exchange BTC for BCH, thus it crashed.
- There was a serious DDoS attack on Bithumb (and on other exchanges) that crashed servers to save original Bitcoin (BTC) from flipping.
- There was a serious hacker attack on Bithumb to exploit some potential security vulnerability and steal money.
- There was a massive amount of deposits and withdrawals while BTC mempool was overloaded and transactions stayed unconfirmed for hours, so Bithumb closed during rush hours to avoid legal issues.
- Bithumb intentionally disabled access to gain the profit from an insane Bitcoin Cash (BCH) arbitrage by itself (very unlikely version, but possible).
And there were many small posts, news and tweets that other exchanges also suffered a few outages during those pick hours, as well as big public cryptocurrency owners were complaining about hacker attacks on their accounts.
For the rest of the day the price of Bitcoin Cash (BCH) will jump up and down for around 50%.
Nov 12, 07:25 UTC
Adam Back (CEO of Blockstream) reminded that segwit was an essential fix to enable LN (Lighting Network) for global scaling of Bitcoin (BTC).
Nov 12, 08:48 UTC
Bitcoin Cash (BCH) surpassed original Bitcoin (BTC) by daily trade volume, reaching astonishing $10 billions.
Nov 12, 10:29 UTC
Due to serious price change, it became more profitable to mine Bitcoin Cash. While many miners switched to Bitcoin Cash (BCH), Slush Pool became the biggest BTC mining pool because continued to mine Bitcoin (BTC) even though it was less lucrative.
(Later Bitcoin community will strongly appreciate Slush Pool for securing the network.)
Nov 12, 11:04 UTC
Charlie Lee (creator of Litecoin) acknowledged Bitcoin Cash’s (BCH) success, but doubted that it can flip an original Bitcoin (BTC).
Nov 12, 17:37 UTC
Since Bitcoin Cash price skyrocketed but block difficulty stayed very low, many miners switched to Bitcoin Cash (BCH), thus its absolute hashrate first time ever became almost twice more than for original Bitcoin (BTC).
Nov 12, 18:48 UTC
The main argument against Bitcoin Cash (BCH) is that increasing a block size can potentially lead to further mining centralization, while decentralization is a core value of bitcoin.
Security expert and BCH supporter John McAfee said that mining centralization is inevitable in any case.
Some people believe that mining centralization is mainly caused by electricity price, while increasing a block size won’t lead to centralization if it remains in line with Moore’s law and also low fees will increase bitcoin adoption and thus more miners and nodes will appear.
Nov 12, 19:16 UTC
The amount of unconfirmed transactions in Bitcoin (BTC) network grew exponentially with almost 160K at its pick.
Average transaction fee also increased exponentially making lots of people angry and unsatisfied.
By “VerCoin” OP meant Bitcoin Cash (BCH) since Roger Ver is its main advocate.
Nov 12, 23:43 UTC
Kim Dotcom publicly supported Bitcoin Cash (BCH).
November 13, 2017
Exodus temporary disabled exchanges involving Bitcoin (BTC) until the network returns to normal.
Nov 13, 13:03 UTC
Jameson Lopp (engineer at BitGo) claimed that 55% Bitcoin Cash (BCH) nodes are hosted by Hangzhou Alibaba which is a centralization issue.
According to graphics one can assume that the amount of Bitcoin Cash (BCH) nodes might be increased artificially.
Nov 13, 15:16 UTC
Bitcoin Cash (BCH) transaction fees continue to be low (a few cents per transaction) comparative to Bitcoin (BTC).
However, Bitcoin Cash (BCH) transaction fees are still more expensive than Ethereum’s and Litecoin’s which is crucial for micro-payments.
Nov 13, 20:27 UTC
Peter Smith (CEO at blockchain.info) accused both parties in using sock puppets to manipulate the media and market price.
Nov 13, 21:47 UTC
Bitcoin Cash (BCH) successfully turned on the EDA (Emergency Difficulty Adjustment) so new blocks will be mined on average every 10 minutes regardless of the amount of mining power on the network.
November 14, 2017
Nov 14, 11:08 UTC
Since Bitcoin is a big threat to a whole banking system, there are many conspiracy theories that bankers manipulated a core Bitcoin (BTC) team to keep a small block size with high fees and long confirmation time which slowed down scaling and decreased the adoption.
Someone (not real Gregory Maxwell) pointed out that originally Bitcoin (BTC) core developers used to support bigger block sizes before they started “working for bankers” as Bitcoin Cash (BCH) community claims.
Nov 14, 18:50 UTC
_mrb stated that there was no spam attack on BTC network and people were just rushing out to exchange BTC for BCH, because a graphic of unconfirmed transactions matches with a price of Bitcoin Cash (BCH).
Nov 14, 19:33 UTC
People still have difficulties moving funds on original Bitcoin (BTC) chain.
Nov 14, 20:07 UTC
Bitcoin Cash (BCH) tipping rapidly growing, thus increasing adoption.
Nov 14, 20:30 UTC
Two communities continued fighting on reddit, twitter, youtube and all other social media platforms using all their fan-base, sock puppets, moderators’ censorship and bots for upvoting or downvoting a content.
November 15, 2017
Nov 15, 00:25 UTC
Deadalnix (Bitcoin Cash lead developer) proposed a change to Bitcoin Cash (BCH) address format, because currently people mistakenly send BCH to BTC address and vice versa. Approximate deployment date is around January 14.
Nov 15, 12:25 UTC
November 16
Nov 16, 19:43
Antoine Le Calvez claimed that for the first time BTC.com helped recover funds that were mistakenly sent to original Bitcoin (BTC) SegWit address.
If you made the same mistake, you can contact a pool that found the block in which your error transaction was included and ask them for help. There is a chance to get funds back if you offer some reward and play it good.
(Five days later someone will claim 493 BCH (~$600k) that were mistakenly sent to SegWit addresses and will start helping people recover their funds with 30% fee for his work. He will do it only until December the 5th, so hurry up!)
November 17
Nov 17, 01:27 UTC
Tony Gallippi (co-founder and chairman of BitPay) said that more than 57% of all Bitcoin (BTC) balances are currently unspendable due to high fees.
November 18
Nov 18, 14:47 UTC
Bitcoin Cash (BCH) adoption unprecedentedly exploded in a last week. Many exchanges and merchants are being added every day.
Next attack is coming soon
There are many predictions whenever the next attack will happen, most of them agree that BCH centurions will strike after the next difficulty adjustment on BTC network which will happen on November 25th.
According to these theories, the market is being heavily manipulated, so Bitcoin Cash (BCH) price stays low and thus miners continue mining original BTC chain until the adjustment date when difficulty will be increased.
After that Bitcoin Cash (BCH) price will be heavily pumped again making it more profitable to mine and thus leaving original Bitcoin (BTC) without mining power, triggering panic sales and finally causing a spiral chain death.
Conclusion
It’s very clear that this brand war won’t finish anytime soon. Both camps have strong leaders, many supporters, rich investors, and tons of sock puppets. Big money and huge egos are fighting for a total domination.
Altcoins
The brutal attack on BTC network on November 12th reminded people about the importance of diversification and risk-management. As a result we saw a rapid growth of altcoins market. Investors bought many altcoins to minimize their risks and thus giving a boost to development of all cool projects like ETH (+35%), IOTA (+50%), NEO (+25%), EOS (+65%) and others.
Bitcoin (BTC)
It’s very unlikely that original Bitcoin (BTC) price will fall flat overnight even if the network will be totally down for two weeks until the next difficulty adjustment, because people already accepted Bitcoin (BTC) as a store of value without means of exchange.
And that’s great for the whole cryptocurrency community, because it shows bitcoin’s resistance to any kind of economical crisis, regulations and inside wars. That’s what regular people are looking for.
The moment we, as a whole crypto community, fail to sustain the price of a Bitcoin (BTC), mass media will spread the news that finally bubble burst, people will lose trust in any crypto currency and we all will enter a year of stagnation as it already happened in 2014–2016.
Likely, there are many “hodlers” in Bitcoin (BTC) and many institutional investors are waiting for the next dip to enter the game. Most people who sold BTC on November 12th are either BCH supporters or weak hands, who already lost money on that and will act much wiser next time.
Bitcoin Cash (BCH)
On the other hand we see a very strong and pro-active community with a controversial, but yet charismatic leader with some crazy interesting ideas like founding a libertarian country.
BCH has a huge support in Asia and its adoption is exploding rapidly all across the globe. Low fees, fast transactions, similar brand name and huge marketing campaign is a very strong combination for a success.
Hopefully BCH community will be less aggressive towards other competitors and will choose a less bloody long-term “flipping” strategy rather than a brutal revolution.
And according to most technical analyzes I’ve seen in a last week, Bitcoin Cash (BCH) is going to the moon any time soon.
Philakone, a technical analyst that previously predicted that Bitcoin Cash will hit exactly $2,800, is more skeptical now and says that on the next wave BCH will shoot just to $2,000 after a small correction.
Use the most secure, private and intuitive way to exchange ether (ETH) with others for your local currency — LocalEthereum. You can either create a new password-protected account or log in with your favorite wallet like Ledger, MetaMask, or mobile apps like imToken.
- If you want to save your money, read why you shouldn’t scan two-factor authentication QR codes.
- Follow me on medium and twitter to read about the second wave.
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Disclaimer: this article is for educational purpose only and it’s not a financial advice. Seek a duly licensed professional for investment advice.
