Is Bitcoin Dead?
I ask this not to spread FUD (Fear, Uncertainty and Doubt), but in order to really examine Bitcoin as a product in a competitive market place. Its pro's and con's vs those of its primary competitor.
With the debut of Bitcoin Cash on Coinbase it has instantly become accessible to hundreds of millions of people throughout the globe. This jump onto the premier US based exchange also served to legitimize its status as a true Rival to Bitcoin Core. What is it that makes Bitcoin Core so far superior to Bitcoin Cash that it cannot be killed off? They both strive to achieve the same purpose as a store of value and payment system, yet one (BTC) has brand recognition and the other (BCH) has technological innovation.
Bitcoin |
Bitcoin cash |
|---|---|
Maximum block size of 1MB |
Maximum block size of 8MB |
Allows for 250,000 daily transactions |
Allows for two million daily transactions |
Uses a scaling tool called SegWit2x |
Bigger blocks eliminate the need for a scaling tool |
Average block processing time of ten minutes |
Block processing time adjusts automatically in response to network conditions |
I have no loyalty to either coin, nor do I care which one ends up reigning supreme. For the purposes of this article I am simply looking at them from the standpoint of and investor weighing their respective performance, cost effectiveness, ease of use and ability to be a profitable investment. In the first two categories, and essentially every category related to technology Bitcoin Cash has a significant advantage. It's faster, cheaper, and for all intents and purposes a better product.
In terms of ease of use Bitcoin Core has the overwhelming advantage as an established product. It is accepted more places, has many more applications built around it, and probably of the greatest importance, has established itself as the medium of payment for purchasing Alt Coins. However, it is considerably slower, more cumbersome and the fees associated with its use are several hundred times higher than those of Bitcoin Cash.
Perhaps the only drawback to Bitcoin Cash revolves around the concept of loyalty, decentralization and the threat of a 51% attack. Wherein a single miner, able to generate more than 51% of the blocks, could perform a double spend attack. While this could theoretically be possible; what long term benefit does the miner gain by slaughtering his golden goose? Essentially inciting panic in the network and crashing the price? A quick payday? With the level of sophistication required to mine coins like BTC and BCH and the tens of millions that have been spent on infrastructure to accomplish this task it would be highly unlikely for a miner or group of miners to collude in order to sabotage the very product that makes them profitable.
Maybe it is a matter of priorities between the two competing camps. While they both have the same goals they are polar opposites in terms of priority.
Bitcoin core is about privacy and decentralization first, fast and speedy payments come second. Bitcoin Cash puts the business side of the equation first and the people side of the equation second. Bitcoin cash also has extremely high aspirations of going head to head with the likes of paypal. To me this is an absolutely foolish move and one in which the block chain just cannot compete successfully against database driven payment processors.
For example when when John makes a payment to Jane, PayPal can simply update its database to reflect the change in ownership of the money being sent. In contrast to this, to accomplish the same task Bitcoin cash would need to notify tens of thousands of nodes throughout the globe that the transaction occurred, wait for the transaction to be verified and then request that all of these thousands of nodes store record of the transaction forever.
When looking at it from the standpoint of architecture, Bitcoin Cash has little chance of pushing paypal out of the market utilizing the block chain. It will always be simpler to modify a single database (Paypal) as opposed to mass updating thousands of scattered databases around the world (Bitcoin Cash) and requiring that each one store the transaction forever.
So from that standpoint Bitcoin cash is likely chasing an achievable dream and will likely fail. Even then, it would still have technological superiority over Bitcoin Core for the tasks it is performing now.
As I have stated many times before, there is no loyalty in the crypto world and infidelity runs rampant. If one coin is saving money or making money at a faster rate than another, people switch to that coin and leave the other behind.
Ask yourself, if BTC continues dropping 3-5% per day, and BCH gains 4-8% how loyal are you? Are you loyal enough to ride it into the ground? I believe that if BTC fails to make significant improvements in a big way and fast, it is going to watch its market share continually erode. Depending upon how you look at it, in just 4 months, BCH has already captured 20% market share on a the decade old and well established BTC.
Again I am not advocating for either coin, I am loyal to neither, trade them like Pokemon cards, and only care about the end game in terms of investment profitability.
What are your thoughts?
