Bitcoin Futures Race: Will Bitcoin Cash Lure the Crowd?

 

Bitcoin is making quite a name for itself. Once understood as a niche financial product intended to facilitate peer to peer (P2P) transactions, Bitcoin has skyrocketed more than 1,000% to become one of the most valuable and coveted commodities on earth. As a result, Bitcoin is attracting attention from mainstream financial institutions including Goldman Sachs, CMO Group Inc., and Cboe Inc. Last week, Cboe announced that it would begin trading Bitcoin futures on December 10th, which prompted CNBC to declare a Bitcoin futures race. All of this attention is excellent news for Bitcoin investors, but it does little to proliferate Bitcoin’s original vision of facilitating P2P transactions. After all, nobody wants to spend Bitcoin when it could be worth exponentially more in a very short time.


I’m sure that the unfortunate developer who spent 10,000 Bitcoins on two pizzas in 2010 would much prefer the $100 million that those tokens are worth today. Moreover, with so much attention clogging the Bitcoin blockchain and critical technological adjustments necessary for the currency to thrive, Bitcoin had to make a change. When Bitcoin developers failed to achieve consensus on practical next steps, a hard fork became necessary. To help Bitcoin maintain an iteration of itself that prioritizes its original vision of facilitating P2P transactions, Bitcoin Cash emerged this fall from a hard fork of the Bitcoin blockchain.

 

Bitcoin Cash: A Necessary Change  

Bitcoin Cash launched in August 2017 or, in Bitcoin parlance, as of block 478558. The most noticeable change is a radical upgrade in the size of the blockchain nodes. Bitcoin founder, Satoshi Nakamoto, envisioned Bitcoin as a decentralized P2P transaction facilitator that is equipped with unprecedented security. As a result, Bitcoin’s blockchain nodes are restricted to 1MB. However, given Bitcoin’s popularity, that safety feature became more of a hindrance than an asset. This year, transaction confirmation times slowed considerably, and the increasing price of mining Bitcoin meant that it was becoming impossible for Bitcoin to fulfill its vision.

Bitcoin Cash extends node capacity to 8MB with the ability to further expand in the future. Low fees and faster confirmation times are trademarks of the new currency. By increasing the speed and capability of the blockchain, Bitcoin Cash is attempting to compete with financial juggernauts like Visa and PayPal. In addition to increasing the blockchain node size, Bitcoin Cash strips some of the technology from the original Bitcoin protocol. Segregated Witness (SegWit), which is a protocol for verifying Bitcoin purchases, is removed to help improve transaction speed. In short, Bitcoin cash is all about speed and efficiency.

 

 It’s an Improvement. Mostly.

Of course, not everyone sees Bitcoin Cash as the savior of the Bitcoin brand. Bitcoin Cash has undoubtedly made significant adjustments to the blockchain technology, but there are some tradeoffs. The larger blockchain nodes require more energy and computing capability than the smaller, 1MB Bitcoin blocks. This leaves Bitcoin Cash vulnerable to large companies who can afford the technology to mine the currency. As Investopedia remarks, “critics worry that adopting Bitcoin Cash’s approach will lead to power being concentrated in the hands of companies that can afford more and better equipment.” This is antithetical to Bitcoin’s decentralized ethos, and it could compromise its independent nature. More immediately, Bitcoin Cash just doesn’t have the usability of Bitcoin. As a relatively new cryptocurrency, As an unproven hard fork, Bitcoin Cash lacks the status of its predecessor, and that’s something that can only be developed with time.

 

 What Happens Now?

A lot of energy is being expelled trying to answer this question. Some, including Maksim Balashevich, CEO of Santiment, believe that Bitcoin will ultimately lose value because of other P2P currencies including Bitcoin Cash. “The Bitcoin Core [developers] should feel the real pressure and pain for what they’ve been denying,” Balashevich tells CoinTelegraph.

However, there seems to be more extensive support for the idea that multiple cryptocurrencies can coexist and even thrive together. Digital tokens can serve different purposes, so a diverse ecosystem is more of an advantage than a threat. CapLinked CEO notes that “The very notion that Wall Street is developing derivatives of Bitcoin also suggests that it is on its way to becoming the world’s first digital commodity.” During last week, Bitcoin Cash was trading between $1,300 and $1,600, and now appears to be finding its identity after the intense price fluctuations that accompany a hard fork. Now it will be interesting to see if Bitcoin Cash captures Nakamoto’s original P2P vision or if it will follow Bitcoin and become a functional commodity.

Comments

gunzeon Mon, 12/11/2017 - 06:56 Permalink

Core will take over once everyone starts using lightning channels; increasing the block size following lightning adoption ok, heck, if scientists from Princeton couldn't recommend the increase then what do the BCash owners eat for breakfast ?addendum: It is doubtful that Nakamoto's vision included a transaction rate matching that of VISA et al, all the block size you like will not match that

blentus spag Mon, 12/11/2017 - 07:40 Permalink

No it didn't.

Bcash cult is interpreting the 'white paper' as they see fit, and it changes on a daily basis.

For example, there is no mention of anything related to 'low fees' or 'cheap', in whole white paper. I can interpret it any way I want. You can as well.

On a really bad cult day, cult members will only want to debate the title of the white paper, and not discuss anything else.

They will re-enable disabled opcodes, on a whim. Even though original plan (which Gavin backed) was to re-enable them through 'academic process', serious reviews and lots of testing, because even he himself wasn't sure about implications of enabling some of disabled opcodes. Yet, BCH will do that easily, because they obviously know better than dozen of other developers who spent years on the project.

When it suits them, Bcash cult members will refer to Satoshi's forum posts.

When it doesn't suit them, cult members will say how forum posts don't matter and 'original vision' from white paper is all that matters.

Rinse and repeat. I don't think anyone is taking them seriously anymore. I wanted to, and even though I dislike Craig a lot, I think it would be beneficial to have some competition.

But Bcash is not competition, they are just angry and insane.

edit: not to mention how noone wanted to talk about transaction times when BCH was left with 2.5% of hashpower recently, and it took an average of hour for block to get mined before DAA (which was supposed to fix this quickly) managed to recover. I think it was 7 or 8 hours of complete fuckery. But hey, 8MB block size will fix all problems and cure cancer.

In reply to by spag

Bro of the Sor… Mon, 12/11/2017 - 06:48 Permalink

bcash is a miner driven scam to centralize power and is pimped by sociopaths like roger ver and jihan wu. it does nothing to benefit the user and as soon as the LN is activated bcash will plummet as its one and only competitive advantage over bitcoin evaporates.

spag Mon, 12/11/2017 - 06:54 Permalink

bitcoin is retarded, people are now paying $1000 fees just to ensure transaction gets in the next block. it deserves just just die.

erk Mon, 12/11/2017 - 07:19 Permalink

BCH with it's 8MB blocks barley handles 1,000 transactions per hour and hardly goes over .25MB per block. Meanwhile BTC is doing 15,000 transactions per hour.So exacly what is the point of the BCH 8MB block if nobody is using it despite all the hype? 

mijev erk Mon, 12/11/2017 - 10:03 Permalink

Compared to BTC, BCH doesn't have anywhere near the number of users. But BTC could triple it's throughput if they just increased the block size. The argument that that would create a security threat due to centralization is so fucking retarded it beggars description. 

In reply to by erk

financedude85 sudzee Tue, 12/12/2017 - 09:20 Permalink

Hi There Sudzee,I am not a "shill" of any sort, I am simply presenting the facts as I see them and my opinion.If you have any more information or sources you would like to share with me I would appreciate that very much.I like to consider things from angles I previously haven't thought and appreciate people who shed a new light on the topic at hand. I would like to hear your thoughts on this.Best,Financedude85

In reply to by sudzee

LawsofPhysics Mon, 12/11/2017 - 08:43 Permalink

Should it come to pass that your government demands tax payment in bitcoin, then you will know the truth.In the meantime..."Full Faith and Credit"same as it ever was!

mijev Mon, 12/11/2017 - 10:09 Permalink

"The larger blockchain nodes require more energy and computing capability than the smaller, 1MB Bitcoin blocks. This leaves Bitcoin Cash vulnerable to large companies who can afford the technology to mine the currency. " This is such a bullshit argument that it must have come direct from the corrupt core devs and parroted by the author. My $240 phone has 128gb built in, if I paid $180 more and it would be 256gb built in.

Mango327 Mon, 12/11/2017 - 10:18 Permalink

Answer: No. Bitcoin Cash is garbage. Zero future, or futures. Let them persist in their delusion as long as they want to keep  mining a misfire pump n dump pseudo-currency at a net loss. 

ultraticum Mon, 12/11/2017 - 11:03 Permalink

BCASH is an attempt to co-opt the Bitcoin brand name by government partnering money-changer interests like Coinbase, Bitpay, Xapo, and a few megalomaniacs like Roger Ver, Jihan Wu, and fake satoshi Craig Wright.  Or perhaps even worse:  a Chinese government attempt to centralize mining under its control.