Confusion and Euphoria As Bitcoin Cash Surges Past $30 Billion
UTC by Pete Rizzo via Coindesk
BITCOIN CASH IS BITCOIN NOW.
Issued by Li Ang, head of China-based bitcoin mining outfit Canoe Pool, the proclamation may not be distinguishable from typical cryptocurrency banter. However, the difference this time around is the context.
After hitting a record high above $800 on Friday, the price of bitcoin cash, the alternative cryptocurrency forked from the bitcoin blockchain in August, has doubled within 24 hours, hitting a high of $1,856 according to figures from data provider CoinMarketCap. At that price, bitcoin cash is now valued at more than $30 billion, passing ethereum for second-place standing in the market.
The move follows the sudden decision this week by a group of businesses and mining pools to suspend an effort to change the rules of the bitcoin software. Called Segwit2x, or simply “2x” by some, the effort would have increased bitcoin’s block size – one way by which its transaction capacity can be measured.
But while bitcoin’s developers and technologists lauded the suspension, miners and entrepreneurs lamented what they described to CoinDesk as a decision that would inspire others to migrate to blockchains more accommodating to their ideas and ideals. And if it was unclear at the time which alternatives would win favor, bitcoin cash is already proving the primary beneficiary.
Early and active in migrating support appears to be bitcoin’s miners.
According to data from Fork.lol, at roughly 4:30 UTC on Sunday the total amount of mining power backing the bitcoin cash blockchain surpassed that of the bitcoin blockchain.
When asked about the move Jiang Zhuoer, founder of bitcoin mining pool BTC.Top, said simply that “2x fans” are moving both funds and mining hardware to bitcoin cash.
“BTC is going to die,” Zhuoer said. Hapio Yang, CEO of mining pool operator ViaBTC, responded similarly, indicating he believes that businesses and investors are now migrating funds to bitcoin cash.
“I think more and more bitcoin holders are starting to understand what is the real bitcoin,” he said via WeChat.
Doom sellers
Indeed, spurred by a sudden change in market outlook, bitcoin cash supporters appeared emboldened in their remarks. No doubt part of the equation is the soaring valuation of the protocol, which after debuting at $4 billion in August, hasn’t exactly solve some of its more pressing open questions.
Still, Jake Smith, general manager of cryptocurrency web portal Bitcoin.com, owned by investor and block size increase advocate Roger Ver, doubled down on the idea that the new investment dollars represent more than a speculative migration in the market soon to pass.
Smith noted that with the price boost bitcoin cash’s value proposition can only now be strengthened by what he categorized as its ultimate performance increases over the bitcoin blockchain.
“I think a positive feedback loop has been created. This is waking people up to the shaky foundations BTC is built on,” he said.
Smith went so far as to describe the typical doomsday situation predicted by those supporting larger blocks – that bitcoin’s transaction backlog will continue to grow, its transactions will become more expensive, and that these two factors will decrease user experience and force users to migrate.
Other supporters like bitcoin cash developer Juan Garavaglia chalked up the day’s price movements to “better planning” by those using the protocol.
“Bitcoin Core is unable to execute, has a poor roadmap [and is] disconnected with market needs,” Garavaglia said. “We can execute, we have smooth coordination with key market actors and we address market needs.”
Skeptical voices
If those boasts sound familiar, so too was the rhetoric from those who were more apt to read the bitcoin cash price movements with more incredulity.
Jack Liao, the CEO of Hong Kong-based mining firm LightningASIC, for instance, sought to frame the idea that the bitcoin cash price increase represented any real uptick in interest in the project as “total bullshit.”
One of the leaders behind the bitcoin gold cryptocurrency, set to launch tomorrow, Liao has been a noted critic of bitcoin’s mining operators, in particular, Bitmain – one of the industry’s largest sellers of specialized mining chips and the operator of several mining pools.
For those following the scaling debate, Bitmain’s conduct has been one of the larger contentious narrative points, and Liao (like others) believes the explosion seen in the bitcoin cash market value is nothing more than an orchestrated bid by the firm (and its supporters) to prop up the market
“Many, many investors just see the change in hash rate,” he said. “But they cannot support such a big bitcoin cash price.”
Beijing-based over-the-counter Zhao Dong reported a similar sentiment in some circles, crediting the price to manipulation by miners and investors who have supported Segwit2x and bitcoin cash in the past. Bitmain and Ver were both signatories of the agreement that sparked the 2x software.
“They have money, they have hash power, they have everything need to pump the bitcoin cash price,” he said.
Indeed, one of the more interesting theories at the moment revolves around an unconfirmed PasteBin conversation that seems to foretell yesterday’s market move. (Though this may say more about current paranoia in the industry at large).
Swing states
Still, that’s not to say the reaction was broken along partisan lines.
Willy Woo, recently named one of CoinDesk’s Top 5 Token Analysts of 2017, sees the price move as perhaps one to watch. In contrast to other alternative cryptocurrencies that he said may lack value propositions, he went so far as to color bitcoin cash as a more nuanced option.
“It’s backed by a lot of money from China controlling its price and supporting its network. If you buy bitcoin cash, you are betting that China wants it to dominate. That’s a strategic and geopolitical bet,” he told CoinDesk.
Bobby Lee, CEO of mining pool and exchange operator BTCC, had a similar reaction. Long a business that supported the Segwit2x proposal to upgrade the blockchain, he reads the price boost in bitcoin cash as an obvious side effect of the decision to block the upgrade.
While he acknowledged that it’s yet to be seen whether this weekend’s movements amount to anything more than a quick speculative fervor, he still hinted the situation remains one he’ll be watching and observing.
Of particular concern for Lee, and others, is the decline in bitcoin’s total mining power.
Lee went so far as to suggest that any continuing decline in this metric could cut into an attribute that has traditionally been one of the cryptocurrency’s defining characteristics.
Lee concluded:
“If BTC’s hash power continues to fall, then I do think BTC has long-term trouble.”
Global credit card giant Visa has rolled out the first, pilot phase of its blockchain-based business-to-business payments service, B2B Connect.
First announced last year, Visa plans to use the platform to ease cross-border payments by facilitating direct payments between institutions, cutting out the middleman the industry currently relies on. The platform – developed with the assistance of blockchain startup Chain – is also designed to ensure secure, yet transparent payments between enterprises.
Already working with Visa on the project are U.S.-based Commerce Bank, South Korea’s Shinhan Bank, the Union Bank of Philippines and the United Overseas Bank, based in Singapore.
Visa’s global head of solutions, Kevin Phalen, told CoinDesk that the banks are trialing live bank-to-bank transactions over the platform.
Following this first phase of the project, phase two will see the project move to a commercial launch, slated to occur in the middle of 2018, he added.
Phalen explained:
This week’s announcement is just the first step as we work towards a commercial launch of Visa B2B Connect. We are beginning to process bank-to-bank test transactions with select clients. Additional banks, including corporates, will follow soon.
Visa’s existing partners, as well as future ones, can utilize the company’s application programming interface (API) to create their own platforms, according to a press release.
