Bitcoin has recovered from its recent price slump, mirroring an annual trend that sees the cryptocurrency surge in value following a major conference in May.
The price of bitcoin has risen by 5 per cent in the 24 hours since the Consensus conference kicked off in New York, as the fourth annual blockchain technology summit once again provided a boost to the volatile cryptocurrency.
Analysts predicted the price rally earlier this week, after bitcoin had fallen to a three-week low.
“We expect the Consensus rally to be even larger than past years,” Tom Lee, head of research at Fundstrat Global Advisors, said in a note to clients ahead of the conference.
Bitcoin has already hit its lowest price point of the year, according to Mr Lee, having fallen to around $6,500 in early February.
“In general, we see 2018 being a strong year, but we see the larger and more established blockchains growing in dominance in 2018,” the research note said, highlighting ethereum as one of the other cryptocurrencies set to benefit.
“Bottom line: We expect bitcoin and cryptocurrencies to behave similarly to prior years and rally during Consensus.”
The turn-around in fortunes has been reflected across cryptocurrency markets, with ethereum, bitcoin cash and ripple all seeing significant gains since early April.
The latest price is still only just over half of the highs bitcoin reached in late 2017, when it peaked close to $20,000.
Since then, bitcoin has suffered from its worst ever start to a year — fitting with some analyst theories that the world's most valuable cryptocurrency was experiencing a bubble.
The rapid decline was followed by a relative period of stability that many cryptocurrency experts predicted would precede more gains.Cryptocurrency analysts vary dramatically in their predictions for bitcoin's price.
Ethereum founder Vitalik Buterin said in February that cryptocurrencies "could drop to near-zero at any time," telling his Twitter followers to not put in more money than they can afford to lose. Since then, ethereum's price has fluctuated between $950 and $350 and currently hovers around $800.That was the opening line from nChain CEO Jimmy Nguyen -- whose company wants to make bitcoin spin-off bitcoin cash (BCH) the cryptocurrency of the future -- on a panel (or more precisely, a man-el) last week at Exeter University. He was referencing Sir Mix-A-Lot's early 90s classic Baby Got Back (NSFW music video here).
Thing is though, unlike Sir Mix-A-Lot and his pals, Nguyen and the rest of the BCH army aren't doing so well on getting their hands on the big stuff they so lust after.
Bitcoin cash's blocks -- the bundles of transactions that are processed, hashed and then stored on the blockchain -- aren't actually very big at all. Although their maximum size is 8MB, they are currently on average only using one 160th of that capacity: around 50 kilobytes, according to industry data provider BitInfoCharts.
Thats because people aren't really using bitcoin cash. It therefore seems a little odd that its developers have said they will implement a fourfold increase in the maximum block size later today to 32MB, or around 640 times its current average.
Samson Mow, chief strategy officer at Blockstream -- a company that's funding bitcoin cash arch-enemy bitcoin core -- summed up the strategy rather nicely with this tweet last week:Bitcoin cash's insistence on block-size expansion despite the lack of demand necessitating one is just the latest example of the sheer absence of reason in the crypto space, and also highlights the ideological and politicised nature of much of the decisionmaking. As financial blogger Frances Coppola pointed out in a post on Friday, the debate between the two bitcoin factions has become something more akin to a religious war than any kind of serious conversation over how best to develop the technology.
Bitcoin cash split away from the original bitcoin -- which the BCH army calls “bitcoin core” so as to distinguish itself as the true “bitcoin” -- in August last year, after a bitter row over how best to scale up the bitcoin blockchain so as to allow for more transactions. Both sides believe their version is the true fulfilment of pseudonymous bitcoin creator Satoshi Nakamoto's original vision.
Although bitcoin cash was not adopted by the majority of the bitcoin network -- and is therefore effectively an “altcoin” like dogecoin or litecoin -- it does have some heavy-hitting backers, who believe in BCH with a zealous fervour. Those backers include the man once dubbed “Bitcoin Jesus”, Roger Ver, and Craig Wright, the man who said in 2016 he was able to prove he was Satoshi and then said he wasn't, who also happens to be chief scientist at nChain.
But bitcoin cash's main problem is the opposite of the one it is providing a solution to. It's not suffering from too many transactions, which might necessitate a block size increase; it's suffering from too few. There are more daily transactons in Dogecoin, a cryptocurrency based on a dog meme that was created as a joke, than bitcoin cash.
Here's how the daily transaction numbers stack up for bitcoin cash versus dogecoin and bitcoin core, from data provider BitInfoCharts. (That's bitcoin cash in red at the bottom, with about ten times fewer transactions than bitcoin, which has a maximum block size of 1MB, and which as we have written many times before, is itself also very rarely used as anything more than a means of speculation because of its multiple deficiencies as a means of payment.)!So little is bitcoin cash transacted, that one major exchange called OKEX decided to close trading in it last month, citing “inadequate liquidity”.
So why are bitcoin cash's developers expanding its size?
Tim Swanson, founder of tech consultancy Post Oak Labs, told us the following:
Many within the bitcoin cash tribe have publicly promised its stakeholders they’d do it, so it’s part of their narrative. But at this stage ... it’s just a marketing effort - they’re not changing the user experience. So it seems like a way of being able to thumb their noses at the tribe across the other side of the river valley.
The only people who really cares about this specific issue - “censorship resistant” payments -- is a small, clique of vocal tribal warriors that you see on social media. I don’t think the average consumer really cares, otherwise we'd see more demand for transactional usage and by most measures, that still doesn't appear to be happening.
By convincing us that bitcoin cash is the internet currency of the future, its backers hope that its price will rise. As we have pointed out before, this is one of crypto's most problematic contradictions -- if you want it to be used as a currency to buy goods and services online with (totally legitimate ones of course), you can't simultaneously treat is as an asset to HODL.
The crypto world still doesn't seem to have grasped this. Shortly after making his Sir Mix-A-Lot reference, Mr Nguyen sought to reassure the attendees of the Exeter panel that the price of bitcoin cash would “stabilise” over time as it became more “usable”:
Right now people freak out because of the volatility, because the price isn’t really based on anything other than people wanting to get in knowing there’s only 21 million coins ... not because [they're] actually using it. So the the price right now is just speculative and we’re fighting for the long-term value of it that we think will stabilise the price. At a much higher number!
Confused? Us too.
Related links:
Sell all crypto and abandon all blockchain - FT Alphaville
What's up with @bitcoin? - FT Alphaville
When altcoin life imitates art - FT Alphaville
Busting the myth that bitcoin is actually an efficient payment mechanism - FT Alphaville
The Bitcoin collapses, charted - FT AlphavilleIt seems Bitcoin Cash was forked from Bitcoin to regroup all the technologically less perceptive.
The fork was pushed by miners who had an interest in having a coin they could control. The Bitcoin community was getting vocal about the monopoly a few miners had gained, especially after the first ASICS were developed by Bitmain (coincidentally the main supporter of Bcash) who saw an opportunity to make sure the hardware they developed would still be usable.
The basic tennet for Bitcoin Cashers is that bigger blocks are better, the modern equivalent of having bigger wheels on cars in order to go faster.
Off course nothing could be further from the truth but that's enough to convince the gullible. Bitcoin on the other hand, chose the route of layer 2 with lightning, a very fast payment layer on top of Bitcoin (the equivalent of using geared engines on cars).
The Bcash thought leaders also convinced them that only mining nodes are relevant in not only creating new blocks (which is true) but also for verifying transactions which is crucial to maintain a level of decentralisation. This was proven by the UASF (user activated soft fork) initiative that successfully rejected the SW2X implementation on Bitcoin right after the Bcash fork.
Bitcoin Cash is now a centralized Coin around 1 ASIC manufacturer that also controls the majority of hashing power by miners. In other words, not any better than Ripple or PayPal despite sharing most of its code with Bitcoin.Truth is the first casualty of war. Nobody is yet using Lightning. Bitcoin core miners use the same hardware as Bitcoin Cash. Under Blockstream's control Bitcoin lost market share. Ethereum was originally to be built upon Bitcoin but the Bitcoin Core developers were uncooperative. The rest is history.I've used lightning (ok, just to buy a sticker as a proof of concept so far). It has already more nodes than Bcash and it's still in its early infancy. Now that we also have an open source solution with BTCpay, adoption is a breath for any coffee shop that wants to accept Bitcoin or LiteCoin as payment. The fees are so low, that it's ridiculously cheap. In possible for Bcash or visa to compete.
With regards to Bitcoin history, even Vitalik disagree with your version. His first choice was Mastercoin.Power of Bitmain: essential they have a special backdoor in their mining hardware to use a functionality (a registered patent stolen from US called ASIC Boost) that allows for ~20% more efficient mining on the same equipment - first and second stage implementation of Segregate Witness (which would substantially fix BTC scale-ability issue, in conjunction with lighting network) have the side effects of disabling overt and covert usage of ASIC Boost (revealing breach of patent and then laterally disabling the Bitmain in-house mining advantage) - hence Bitmain (through Antpool) have (i) consistently voted against the second stage of Segretated Witness implementation and (ii) actively supported Bitcoin Cash (which has neither first nor second stage Seg Wit implimentation) BCH is moving to enable smart contracts on their blockchain with a hard fork due to be activated today - smart contracts require block chain to hold more data, hence the block size change in anticipation
#3 Don't forget Bitmain is one of the largest holders or BTC and BCH , as well as largest seller of equipment, so hypothetically has its long term interests (increase in price of BTC and BCH) aligned with others, albeit they have a far wider array of ways of making money (own underlying currency, mine underlying, sell equipment, operate mining pools, etc)
A lot of complex game theory in play here on multiple different levels with different actors and vested interested - things may not be as they seem at first sight. What is the purpose of this article? I hold some of the top 10 cryptos, BCH has it's merits otherwise it wouldn't be where it is now. If BCH wants to compete with mainstream payment companies it needs to get close to 300tps of Ebay or 600tps of Amazon or alike. Increasing blocksize will move in that direction.
Bashing without clues at BCH won't do any good to the crypto community and just confuse readersWhen deploying a system that is dependent on throughput, it is essential to build in enough capacity for use. Thats why the limit has been raised to 32MB. Imagine the user experience if a phone company started selling phones but as soon as people started using them it overwhelmed the network. This is effectively what happens with BTC, as you can see from the performance over the last weeks and months. Bitcoin Cash is building a payment system with the capacity for global use. More capacity is expected in the coming months.The increase in maximum blocksize is a statement that the miners and the developers are in agreement so Bitcoin Cash is not going to be waylaid by a banking cartel as happened with Blockstream.
You neglected I think to mention the other changes to reinstate opcodes and thereby enable the processing of smart contracts.
Finally, you can now use Bitcoin Cash on Openbazaar and hopefully this will increase transaction volume. Bitcoin Cash is a currency for use, not speculation - and there is plenty of it around as all Bitcoin holders as at August 1'st 2017 have an equal amount of Bitcoin Cash - unless they were stupid enough to sell it.
I recently attended a Bitcoin Cash conference in London - which was organised in part by Cryptartica. If there were any FT journalists there then they did not announce themselves.But the number one use case for Ethereum smart contracts appears to be ICO tokens - I don't know the technical details of bcash, can it be used ot implement tokens running on top? And can they be unique ones like CryptoKitties? If so, then we have our reasoning for the 32MB limit.What the author misses here is that cryptos all rely on incremental growth and confidence to steadily improve in terms of transactions and stability, and with such increases in confidence and transactions the price will also rise. This is a long game, not a fly by night kind of thing. Ok, this is madness, but it's not stopping so I'll chime in (I implemented a Blockchain solution for regulatory reporting in 2015).
BCH, even with the larger block size is still an iteration on the original bitcoin. If it were actually used, they'd have to increase the block size again and again, at which point, the whole Blockchain would be so large that only a few participants would be able to store it locally, defeating the whole decentralised idea.
I don't know if we're going to adopt Blockchain based currency for mainstream stuff, I hope not, but if we do, BCH would be one of the worst choices, there's already better alt coins out there.