‘Genesis Bitcoins’ are the first movers. Irrespective of which fork you are looking at, whether Bitcoin Cash, Segwit2x, or Bitcoin Core – all have one thing in common. They share a common seed from the 3rd of January 2009.
This means that on either chain, the majority of the coins have already been mined, and both have very little left to mine, compared to the majority of altcoins. Scarcity creates value. And this value has a capacity to explode into realisation at any moment.
Right now we have two viable options with two very different visions for what Bitcoin is, and what Bitcoin ‘should’ be. Bitcoin Cash (BCC,BCH), maintains Satoshi’s goal of a global peer to peer currency, while Segwit (either variation), intends to move the Bitcoin blockchain into a settlement layer for which Lightning Network hubs and other second layer solutions will provide subscription services for fast transactions.
When Bitcoin Cash first forked, it relied heavily on an Emergency Difficulty Adjustment algorithm in order to bring the mining difficulty down, in order to make it profitable, and fast. The EDA, was an important step in ensuring the survival of Satoshi’s envisioned coin.
The fluctuating difficulty has meant that miners switch back and forth to the more profitable-to-mine coin. This has resulted in inconsistent oscillations of block times, hashrates, and particularly for BitcoinSegwit, extreme fees. In fact, fees recently reached an all time high, averaging over 10 USD! The oscillation observed is actually not unusual. Similar fluctuations are observed on alt-coins, particularly those based on GFX processor mining. Bitcoin Cash just happens to be the first legitimate competitor to Bitcoin Core, with significant market presence, and is able to cause wild swings in hashpower.
The oscillation, although frustrating for both coins, has in fact brought to fore the inevitable issues surrounding a capped blocksize. Extreme congestion on the Segwit chain is having far reaching ramification for users, and businesses. The price however, hasn’t reacted, yet – but the graph is beginning to look heavy, and some analysts are calling it “time to short”.
There is no need to ‘rush’ into a solution to mitigate issues concerning the EDA, however, and Bitcoin Cash devs are presented with a range of options (and are spoiled for choice) on how to best tackle the hash-dance. For many of the options available, we can look to the alts, and cherry pick the best options. Certainly, a difficulty adjustment algorithm that has a smooth curve would almost surely be a better bet to reduce the sudden shifts in hashpower.
In the interim, how Core chooses to handle these fluctuations remains to be seen. A do-nothing approach may be the easiest avenue, but may not be a popular one with disgruntled users and businesses.
As for Bitcoin Cash, having no permanent blocksize cap means these issues, even though evident, can effectively be mitigated in the next block, even after hours. Any backlog is dealt with, and transaction fees don’t have to rise. It genuinely is refreshing to see the mempool dealt with ever so efficiently. With Bitcoin Cash, a backlog doesn’t build and build.
The market will come to realise this in time.
Now that transactions are cheap again, online businesses and merchant accounts can rebuild an entire eco-system (which actually was up, but was cut down due to the fees). These businesses will be re-engaged, and trust rebuilt. Once again, businesses have an opportunity to transact for a median price of $0.05 per transaction, saving heavily on merchant fees and third party implementations. Bitcoin Cash is an enabler.
Bitcoin ATMs now seek a revival. Although practically killed off due to the fees, they can now operate with Bitcoin Cash without being hindered by mining fees. And these ATMs are coming.
Admittedly, it is indeed frustrating that an entire eco-system now needs to be re-introduced. But it is happening on the express lane this time. The code for all Bitcoin applications is already there – it simply requires minor adjustments in order to fork to the Bitcoin Cash equivalent. Many exchanges and wallets which stated they would not honour a Bitcoin fork have turned back on their words, and now openly support Bitcoin Cash. The Bitcoin Cash economy is catching up – fast.
But I want to finish off on one point which BCC/BCH has over the other Genesis Bitcoins. Bitcoin’s capacity to run smart contracts and other applications as evidently expressed in nChain’s recent papers. Bitcoin as a 2PDA is capable of doing everything that is already thought of in the ‘Smart Contract’ world, and more. As a 2PDA, Bitcoin isn’t restricted in cascading calls which require every single node to run every single function. This is a limitation of Distributed server processing system Ethereum and other equivalents. Nor does Bitcoin have the ‘gas’ problem here.
I am working on a large paper which will highlight some of the potentials here, and the capabilities that are in store – I look forward to publishing this soon. But once a programming language is developed, things can really start to fly. At present, we are restricted to low level language that a 2PDA is capable of processing.
But here’s the kicker. In order for this to work, you cannot have a limited blocksize. Bitcoin Cash can realise Satoshi’s purpose for the ALT-STACK and use it to its advantage. Segwit and Segwit2x cannot. Not with their limited blocks. Choking transactions was never a part of the intended design.
We are witnessing early days of Bitcoin once again, and there is much room to grow indeed.
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