SegWit2x's Failure Confirms Bitcoin's Status As Digital Gold

Tyler Durden's picture

Authored by Darryn Pollack via CoinTelegraph.com,

When 10,000 Bitcoins were used to buy two pizzas, the digital currency was a truly decentralized peer-to-peer payment network that operated across the globe instantly.

Today, the price has risen nearly a million-fold, but the network is no longer quite as functional as it was back in those days.

Bitcoin still struggles with its identity, as many would like it to revolutionize money, but they are equally happy sitting on hordes of it and watching it appreciate in value faster than perhaps any other asset in history.

image courtesy of CoinTelegraph

A single dollar invested in Bitcoin on the original Bitcoin pizza day would be worth over $3 mln today.

While upgrades have been made to Bitcoin along the way, it looks like Bitcoin is becoming less of a payment network and is instead evolving into digital gold. The failure of SegWit2x, which aimed to decrease transaction costs and improve confirmation speed, failed for a number of reasons.

Some of them were good, and some were mere straw men. But at the end of the day, one thing is clear: there is clearly no rush to increase Bitcoin’s capacity.

No problem with digital gold

Those who once pledged their support of 2x have slowly turned their back on the fork. They’ve cited all sorts of reasons, primarily lack of consensus in the community. Of course, it was clear that there would be difficulties launching a hard fork just a few months after implementing the SegWit soft fork.

But the failure of the community and the Bitcoin development team to express any sense of urgency at fixing the scalability issue has had lasting effects. In fact, it has seriously skewed the way people now view Bitcoin.

Because of developers’ apathy when it comes to speeding transactions and lowering fees, the Bitcoin network has become much less useful as a payment network. The currency has now effectively evolved into an entirely new type of asset for investors to get excited about.

Progress has been made in advancing its investability with the announcement of futures, and the backing of a number of Wall Street investors, but when it has come to its retail adoption and bettering as a payment method things have been sluggish.

Digital-marketing agency Cooperatize.com’s Co-Founder Roger Wu puts it quite simply:

“The biggest thing is are people willing to pay in Bitcoin?” Wu said. “The reality is that most of our customers are other businesses and other businesses don’t use Bitcoin."

Of course, this is also a two-edged sword as if people are not willing to spend their Bitcoin; then merchants will not race to make it a reality, which will again give people no reason to spend their digital gold.

“It’s quite possible that after a while you just realize it’s not worth the cost of tooling up to take it and you decide to drop it if the publicity has run its course,” said David Yermack, a professor at New York University Stern School of Business who studies Bitcoin.

Morgan Stanley delved deeper into the possibilities of Bitcoin and Blockchain in a 33-page report back in June.

“The Blockchain underpinnings of most cryptocurrencies scale too poorly for most currency-like uses,” Morgan Stanley analysts wrote. “Time to clear single transactions can often be from 10 minutes to more than an hour.”

Thus, the view that Bitcoin is digital gold sits nicely with the majority who are making huge profits off their investments and they would be damned to see some contentious rule change on the protocol damaging all that.

Still opportunities to be both

So, if Bitcoin has taken big strides towards being digital gold, while also leaving its payment system roots behind, what does this spell for the so-called ‘future of money’?

There are still chances for digital gold to work as a payment method though.

It is good that Bitcoin is settling on its core function, even if that function if different to what the white paper prescribed years ago. If Bitcoin becomes a solid, trustless and dependable store of wealth, then its payment network can be built on top of that base.

The most often-cited example of how a better payment system can come out of Bitcoin is the Lightning Network upgrade. This speeds things up dramatically as a network of cached transactions are sent between users rather than on-chain transactions.

Pick a direction

Having Bitcoin head solidly down one corridor, in this case the digital gold one, you are creating a digital asset first that can be used as a payment network later.

The reverse would have dire consequences, and it is the likes of Bitcoin Cash and other altcoins who are trying to be payment-first.

A payment system needs stable liquidity, and that stability cannot be reached if you aim to be a payment network before you are an established asset.

More liquidity can only help settle down things like cryptocurrencies, as even the volatility of Bitcoin has eased as more money has entered the market.

 

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Tijuana Donkey Show's picture

Stupid. Uses way too much energy.

nope-1004's picture

The asset grab hasn't started yet because credit is still flowing.  Once the financial engineers face reality in banking and .gov that the system is a fraud, the asset grab starts.  Only then will we see how much value some assets really have.

 

BaBaBouy's picture

Theres that pesky GOLD again ...

tmosley's picture

Hahaha, these idiots are doing nothing but speculating against each other now. If the coin doesn't have an actual USE, it's worth ZERO.

It is being held up 100% by psychology. When that breaks, it's all over.

Could happen any time, including some time quite far in the future. But I don't think it will last that long.

lickspitler's picture

No Cred. You're sounding sad. Have holiday

tmosley's picture

I guess forming a valid argument is against the law of the Talmud, like failing to kill non-jews by indirect action, or punishing child rapists.

E-Knight's picture

The fact is 'suddenly' canceled really shows how rigged the whole thing is.  Someone somewhere knew and made millions.

 

Insider trading, try to deny it.

tmosley's picture

Probably true.

BTC is neoliberal serf money.

BCH is anarchocapitalist money.

Altcoins vary. Choose wisely.

Joe Davola's picture

I don't know enough about monetary theory to comment one way or an other, and am trying to grasp the difference between electronic transactions and virtual currency - so indulge my ignorance.

So, what is the difference between a software developer pushing a change that halves the value and the FED hitting a 2x $ button on their computers?

tmosley's picture

Nothing, but that can't even happen on the co-opted BTC network. Each of these cryptocurrencies is a protocol, not a piece of software. That would be like saying "why can't an html developer push a change that changes the text on X website". The answer is, the change in incompatible with the current network, and would create a new coin that was actually worthless (because it' not on any exchange). The miners would have to accpet the update for it to be implimented, and something that is so obviously against the user would not be accepted by the users, who would then dump the coins, voting with their feet.

This is what is happening now with BCH. Time will tell if the ancaps who are leaving the BTC network will be enough to break BTC.

malek's picture

You're bullshitting your way out with your "answer."

General rule is if there is a discrepancy in BTC, such as a fork due to two miners finding different hashes for a possible next block at almost the same time, then we are told "the majority decides which branch survives" (=becomes accepted reality.)
Unfortunately that is *NOT* the majority of BTC owners, but only the majority of miners. And if you really think this through, it's not even the majority of miners, but only the group with the fastest hashing power (because if two branches of a fork have different length, the longer wins.)

If that "fastest hashing power" group decides to accept protocol changes (while creating and continuing to create the longest branch from that point onwards), then what?

Joe:
While I don't see how a protocol change could *directly* halve the value of existing tulipcoins, it for sure could renounce the 21 mio. limit, therefore indirectly devaluing them.

tmosley's picture

>If that "fastest hashing power" group decides to accept protocol changes

Then they are mining a new coin. Like BCH ;)

blentus's picture

Considering that hashrate is 90% (BTC) vs 10% (BCH), I don't think they are mining a new coin just yet.

According to you, miners have abandoned BTC days ago.

Yet, they are still here.

So, are you full of shit, or miners are full of shit?

malek's picture

Ahem, no.

Then the BTC holders are holding a different coin than they held just a day before.

But surely they will recognize that, either themselves or with the honest advice given by the pumpers (like you), and therefore switch away to something else right away. /sarc

Joe Davola's picture

Malek & Tmosley - thanks, still trying to wrap my head around the various aspects.

 

Nature_Boy_Wooooo's picture

Like that mining company who had a patent on mining technology that gave them a 30% increase in mining efficiency vs. everyone else. Bitcoin introduced Sewit which made it so they could no longer have an unfair advantage over other miners (asic boost) so they forked off and started their own version (bcash) which conveniently does not have Segwit and allows them to continue having an advantage against all other miners via asic boost.

I wonder why Jihan Wu and Bitmain are so in favor of bcash over Bitcoin?

tmosley's picture

Segwit does not address the more efficient method of ASIC boosting according to what I have read, but that is highly technical and I don't care. But that has no impact on my argument, which is that Bitcoin's fees are too high and transaction times are too slow, and that is not likely to change any time soon. Pick another coin if you don't like BCH. There are better ones, at least in some domains.

blentus's picture

At least leave a pointer to what you read, so we can all read the same thing.

Thanks.

blentus's picture

Nothing, but that can't even happen on the co-opted BTC network. Each of these cryptocurrencies is a protocol, not a piece of software. That would be like saying "why can't an html developer push a change that changes the text on X website".

What you said does not make any technical sense.

You are obviously not a technical person. Stop talking about technical things if you don't understand them.

Exponere Mendaces's picture

Time will tell if the ancaps who are leaving the BTC network will be enough to break BTC.

 

And here I thought you were talking about competing based on merit. But its just the usual by-line of "must break/kill/destroy BTC".

Makes me wonder why so absolutist, is the existence of BTC a threat to BCH? You make it sound like it is.

You know who else wants BTC to die? Roger Ver, who has explicitly stated as much in his sub-reddit to the same effect - using nearly the same words.

If that's what you are basing your decision on, I think you're going to be disappointed.

 

MANvsMACHINE's picture

BTC is going to be propped up but ultimately, the market will decide.  My money, literally, is on BCH.

 

 

yardsale's picture

Many of these coins are positiong to be sidechains via atomic swaps that will quickly pull Savings (BTC) into Checkings (BCH, DASH, ZCash, KMD, etc).  This model is actually decent since you can disclose your BTC on an open ledger, and then as you chose obsfucate personal transactions that have no business being viewed. 

Nature_Boy_Wooooo's picture

That sucks.

You should have just bought stock in Bitmain.

 

rygar's picture

Seems you have become serious BCH bagholder ;DDDD

You cannot pep-talk this crapcoin to 400% again, too many people will sell earlier. You can only hope Ver still has some juice left and will try to pump it again.

Bitcoin's extremely deflationary, as article points out, so it will never ever be 'everyday curency' for economic reasons, no matter how much fee you pay. And it does not have to be. We already have curencies, they work pretty well. They simply don't have 'store of value' property, which Bitcoin fixes and thats enough for me.

If I want currency for everyday use, I can sell my BTC for USD or PLN or EUR and it works well.

And BCH is not cryptoanarchist's currency. It a scam designed by Ver and Jihan. Look for bigger fools somewhere else.

tmosley's picture

>You cannot pep-talk this crapcoin to 400% again

I'm not trying to. I'm trying to prevent people by making a huge mistake by buying BTC. BCH just happens to be in the best position to replace BTC. If another coin replaces it, so be it.

>too many people will sell earlier

I think everyone who was going to sell has sold, honestly. The volume has fallen back to normal, and the price is hardly moving at all.

>You can only hope Ver still has some juice left and will try to pump it again.

If he (or anyone else) pumps hard while BTC is dumping, it could kill BTC permanently. That is a major part of the bull thesis for BCH.

>so it will never ever be 'everyday curency'

That is completely wrong though. Plenty of people have been using it as currency, myself included, for years, despite its "deflation". But they won't use it now, because it costs damn near as much as a bank transfer to move it, and much, much more when the miners get distracted elsewhere, which you can be will be an ongoing attack vector until Core find a way to stop it, which they probably can't.

>We already have curencies, they work pretty well.

You can't seperate the functions of money. If you use one currency for saving and the other for spending, you create a purposeless class of middlemen (IE you support and perpetuate the banks) AND you cause hyperinflation in the transactional currency. This is quite literally my exact argument against freegold.

>And BCH is not cryptoanarchist's currency. It a scam designed by Ver and Jihan. Look for bigger fools somewhere else.

That's not an argument.

rygar's picture

>I'm trying to prevent people by making a huge mistake by buying BTC.

looking at current state of affairs at exchange, if someone listened to you, he would lost plenty of money.

>That is completely wrong though.

What, Gresham's Law is wrong? It has been used as currency because it was not worth much in the eyes of users (as they say value is in the eyes be-hodlers:). It is now. Which means no sane person would use it to buy a cup of coffee. Because it would be stupid.

>If he (or anyone else) pumps hard while BTC is dumping, it could kill BTC permanently. That is a major part of the bull thesis for BCH.

that is actually something I can agree on with you. It's much more serious attack than people think. Here is how it works:

Hashpower controlled by Ver and Jihan allows them to spam the network and NOT LOOSE A SATOSHI. because they drive up fees and mining them back with additional profit! Positive feedback-loop! Awesome! You say this is great news for BCH, teporarily yes. But if they proove that coin can be destroyed like this, it means any other can be destroyed as well. As goes BTC so goes the whole market. They also have ability to corner BCH market - machines produced by Jihan have 30% advantage over competition on non-segwit blockchains, which will create a monopoly sooner or later.

And by the way it also shows how full of shit they are when talking about fees and blocksize. They are mining only non-segwit blocks, when mining segwit blockks would increase block capacity 2x and decrease fees. But they are not interested in that. What they want is control of the brand, everything else is a lie.

Do you know estimations, how much network nodes would go off after increase from 1 to 2mb? Because I have seen serious estimations. It's not that rosy. Most of the world does not have fiber to the home. Hell, even 20mbit is a luxury for most people. It is not easy to undestand for someone living in glass palace in Tokyo.

>You can't seperate the functions of money

I cannot. But others can. It worked for last 40 years. If it breaks, they wil restart it, it might be hard to imagine, but I lived trough event like that, and seriously, life just went on, almost noone remembers that. People in my country have even good memories of the reset, because after that things started working again. And there was less paper in wallets, also good.

"Dollar is not good store of value" - said J.Yellen on one of hers conferences. So, it is not accident, it's by design. Even name 'currency' implies something temporary, to settle current obligations. It does not matter if someone someday made a definition of money, and reality does not conform to it. Definition is wrong, reality is right. Definition was created in times, when you could not turned one form of money into another with a click of a button. Want store of value, buy this bond/gold/btc, want everyday money, click here. Easy.

>That's not an argument.

it is not. I simply noticed that you have become asfroturfer for scammers. And they bought you WITH YOUR OWN MONEY. Its fucking brilliant, I must admit. Now you are forced to peddle their shit. Can you tell who made last decision about forking? How does that happen in supposedly anarchist-coin? One day somene says 'we fork' and it just happens. Thats very-fucking-quick consensus right there. Geez, BCH really is garbage.

 

tmosley's picture

>looking at current state of affairs at exchange, if someone listened to you, he would lost plenty of money.

What the fuck are you talking about? Fiat gateway exchanges are regulated AND FDIC insured!

>What, Gresham's Law is wrong

No, you just use it wrong. Gresham's law is about comparing the same denominations of PM currency vs debased currency. IE comparing a silver dime with a copper/nickel dime. The government says they are both worth ten cents, so of course the more valuable silver coins aren't going to be used. But people use Bitcoin for transacting all the time. Or they used to, before the fees went full retard. That's why all the merchants are going to BCH.

>But if they proove that coin can be destroyed like this, it means any other can be destroyed as well

BCH has not slowed down, nor have its fees risen when confronted with lower hash power. This vulnerability is unique to BTC because the devs refused to use scaling like they were supposed to from the start.

>They are mining only non-segwit blocks

That sounds like a problem with their protocol. They allow attackers to destroy the network. That is bad.

>everything else is a lie

Doesn't matter. Bitcoin is a dodo at this point. Can't blame pirates for eating them all.

> It worked for last 40 years.

Nope. People both save and transact in dollars. The reason the dollar is fucked is because it is continuously diluted, stealing savings. But imagine if they charged ten dollars for every dollar based transaction! That wouldn't make it a savings currency, it would just kill it. People would just start saving in whatever currency they used to spend. If the value of it was diluted, as is the case with fiat money, they would be forced into speculating.

>Geez, BCH really is garbage.

It is fine if you have that opinion, but BTC is doomed until those fees come down. If you don't like BCH, there are plenty of other coins out there. My IOTA sure has been doing well lately.

rygar's picture

>BCH has not slowed down,

thats probably because noone uses it. They have 4-12 transactions per block, which is background noise (and mostly it's just mining reward being distributed to miners).

I'm really sorry.

But keep peddling, you've bought your right for that ;) But hurry, I heard Roger Ver has another fork on launchpad, this time it will be BitCoin MAXXX, and blocks will be 16MB, can you imagine that? That is so much TX troughput it could even serve a metro in mid-sized city! Forget Ver's Bitcoin Unlimited and Ver's Bitcoin Cash! It's all about Bitcoin MAXXX this time!

(i will not even mention Ver's Bitcoin Turbo+, what will have 32 MB and 5 min blocktime!)

 

blentus's picture

> I'm not trying to. I'm trying to prevent people by making a huge mistake by buying BTC. BCH just happens to be in the best position to replace BTC. If another coin replaces it, so be it.

That is not an argument.

> I think everyone who was going to sell has sold, honestly. The volume has fallen back to normal, and the price is hardly moving at all.

That is not an argument.

> If he (or anyone else) pumps hard while BTC is dumping, it could kill BTC permanently. That is a major part of the bull thesis for BCH.

That is not an argument.

> That is completely wrong though. Plenty of people have been using it as currency, myself included, for years, despite its "deflation". But they won't use it now, because it costs damn near as much as a bank transfer to move it, and much, much more when the miners get distracted elsewhere, which you can be will be an ongoing attack vector until Core find a way to stop it, which they probably can't.

That is not an argument. Also, please tell me what exactly have you been using it for. I have been using it for hosting and payment for various Internet service providers. What did/do you use it for?

> You can't seperate the functions of money. If you use one currency for saving and the other for spending, you create a purposeless class of middlemen (IE you support and perpetuate the banks) AND you cause hyperinflation in the transactional currency. This is quite literally my exact argument against freegold.

And that is not an argument either, that is merely an opinion.

tmosley's picture

You don't know what an argument is.

What have I used BTC for? Buying silver, mainly. Bought some Amazon gift cards at a discount. Also used it to gamble on Trump winning the election. That was a good day for me.

blentus's picture

Apparently, only you on the whole fucking planet knows what an argument is. Put your hands over your ears and yell 'lalalalala' again, it helps.

And when was the last time you have used BTC for payments? Last week? A month ago? 6 months ago?

edit: Made a BTC transfer 20 minutes ago. Chose a 'moderate' fee of 0.00025772 BTC (1.5 EUR). 3 confirmations already. Get fucked.

edit 2: my transaction is one of these: https://blockchain.info/tx/6e84c568d8f17ae6ef38677c953d4c4510248facabf15... - so you can see how tmosley is full of shit and only takes into account fees when panic buying/selling occurs, which has nothing to do with regular 'use' of BTCs. Ah, his 'arguments' are really something. 22 minutes, 4 confirmations now. And network is still overloaded.

And, in little less than 40 minutes, 6 confirmations, transaction is completed.

I mean, how is that for an argument, you dumb fuck? Or you are still going to spread lies about $10 transaction fees and how you don't hold BTCs anymore?

BeholdTheGodofTitsandWine's picture

Tmosley speaking the truth.  I always look forward to reading your comments because I have similar views on what bitcoin is becoming, which is basically worthless.  I have taken steps to divest bitcoin also, but didnt pull out 100% yet.  I hold 3.5 times more BCH than BTC, and the BTC I have is bascially just riding the wave of idiots but I realize its a house of cards and could fall over at anytime.  Your advice earlier about why to move your BTC to the exchange now is soooo key to pull out quick when it all goes to shit.  Your insights and advice are great to anyone who decides to listen. thanks

tmosley's picture

Thank you for the support. It is always good to know that people are seeing things and either agreeing, or are only able to screech autistically against them. That usually means that you are correct.

I also REALLY appreciate the actual arguments that go against my position, as they help me to learn and refind my position. Trial by fire and all that.

blentus's picture

Ok, this is really funny.

blentus's picture

BTC involves long-term planning.

BCH involves short-term gains.

Choose wisely.

Bush Baby's picture

So why would the whole world adopt Bitcoin when it is the hands of so few?

 

rygar's picture

why do you want whole world to use it?

As someone said, gold is money of the kings, and BTC may become even more valuable. It is not for everyone. Noone stopped you from buying it cheap.

 

There will be another pump above 8000, then serious crash below 5000 and it will be last time in your life to buy it this cheap.

E-Knight's picture

I made money in crypto, but when you only make money chasing pumps the end is near.

IH8OBAMA's picture

I'm glad to see you have come around to honest thinking, mosley.

It has no currency facilitation and has an intrensic value of exactly ZERO.

I don't know when the crash is coming but it is coming and I'm glad to see that you are on board with that analysis.

tmosley's picture

Only with regards to BTC. I remain bullish other cryptos.

IH8OBAMA's picture

Given enough time even your simple mind will realize the correlation.

 

Nature_Boy_Wooooo's picture

This guy thinks he can reproduce the price rise of Bitcoin with bullshit alt currency.

This is the bubble.......the morons who think they can get rich if only they can just find the next big thing.................... and then turn around and invest in a clone of the original big thing.

 

marysimmons's picture

Total cryptocurrency market cap at ATH - approaching $220Bil

https://coinmarketcap.com/charts/

 

Altcoin total market cap elipsed ATH yesterday:

https://mobile.twitter.com/CryptoYoda1338/status/930407591485861889/photo/1

 

 

Juliette's picture

I made 3,000 USD today with BTC, with a trade that lasted only two days. As long as that is possible, I will stick to it.