[sponsored] BitPico, a group of strong SegWit 2x and Bitcoin’s Lighting Network supporters, announced that they have launched their 51 percent attack against Bitcoin Cash to prove that BCH network is centralized and to “show the world how easy it is to take it down.”
In the event of success, the attack will hardfork BCH and create, so-called, bitPicoCash, as the ultimate proof of success.
Considering the background of the core members of the organization behind the attack, it is reasonable to believe that the BCH developers will have a hard time defending the network. BitPico successfully executed a stress test on Bitcoin’s Lightning Network some time ago receiving a public acclamation from people like Andreas Antonopoulos.
However, the attack on Bitcoin Cash has another agenda.
BitPico aims to prove the usefulness of the BCH network once and for all after repeatedly stressing how the BCH network is controlled and centralized with some serious security flaws.
It’s basically the culmination of the ongoing war between supporters of the two blockchains that, even though share the similar name, has little in common.
The difference between Bitcoin and Bitcoin Cash
Quickly after being globally adopted, it became clear that Bitcoin has scalability issues. It took 10 minutes to process the single transaction compared to 24,000 tx/sec that Visa credit card processor is capable of.
So in mid-July, approx. 90% of Bitcoin’s network nodes (mining pools, companies…) voted to implement the segregated witness technology or SegWit2x. The new technology that was supposed to speed up the process and cut the fees that were skyrocketing by removing the signature data from the Bitcoin transactions. And it ultimately did.
However, a part of the community disagreed with the implementation and on August 1, some miners and developers initiated the hard fork, effectively creating the new cryptocurrency, Bitcoin Cash.
BCH came with the block size of 8MB compared to Bitcoin’s1MB and quickly became the second most traded/used cryptocurrency. It still is to this day.
How to observe Bitcoin and Bitcoin Cash today?
The general perception of Bitcoin, now, after the introduction of thousands of different crypto coins over the past few years, is that it became some sort of a virtual commodity.
The best analogy would be gold in our traditional monetary system while the rest of the crypto coins -- including BCH -- would be different currencies such as the dollar, yen or euro.
Should you go short on/sell your BCH (Bitcoin Cash) or exchange for BTC (Bitcoins)?
Hedging might be a smart option right now if you are holding any significant amount of Bitcoin Cash because it’s hard to accurately predict how this attack, whether or not it turns out to be successful, will affect the BCH price on the exchanges in the short-term future.
Some analysts are even predicting BCH to plunge under the current $600 resistance and hit the $300 bear target.
In any case, it would be smart to hedge against this risk and exchange at least some of the BCH holdings for BTC at, of course, the most favorable rates like the one currently offered by Huobi Pro.
Alternatively, you might consider opening a short position on Bitcoin Cash.
The main support has been breached and everyone’s eyes are on the $600 resistance. If it busts through, we are likely to see the BCH dropping below $300, moreover if BitPico’s attack turns into a success.
(Disclaimer: The author does own Bitcoin. Please do your own research before investing in cryptocurrencies.)