Every now and then experts talk about the existential crisis of Bitcoin and compare the trade of Bitcoin Cash to the Pump and dump strategy. Which of the cryptocurrencies will be more successful in the future?
As a result of August fork, Bitcoin (Bitcoin) and Bitcoin Cash (Bitcoin.Cash) appeared from one cryptocurrency. The long awaited mid-November hardfork, designed to increase the size of the block, did not take place as there was no consensus in the crypto community, and the initiators abandoned the hardfock called SegWit2x.
Failure to fork raised the price of bitcoins from $7,200 to $7,800, as it became clear that the worst scenario of an undesirable chain split is omitted. Though the relief was short-lived, and today Bitcoin costs about $6,900, making investors and traders worry that the previous update of SegWit will not be sufficient for the needs of the network.
In this situation, the unexpected winner - perhaps temporarily - was Bitcoin Cash. Following the news of hardfork cancellation, the cryptocurrency, which was steadily falling, rose to $2,600. Since then, the price has already fallen by half, but investors are still shocked by the dramatic pump.
Bitcoin in crisis
Without a concrete plan for Bitcoin scaling issues, there’s a strong impact on the price of Bitcoin. As the cryptocurrency opens up for more and more people, and its popularity grows, there is a chance of it suffering from its own success. Charles Hoskinson, CEO of Input Output Hong Kong, formulated the task faced by Bitcoin in a following way:
“Bitcoin is at an existential crisis where it has grown large enough and attracted enough quality people to provide very clear yet different roadmaps for the future backed by passion, money and brilliance. From one perspective this creates friction and has resulted in splits. From another we get to see in parallel both philosophies play out in real time and compete for market share. In the end it's impossible to say who will win, but this is predictable sign of maturity rather than a symptom of chaos. No ecosystem can keep everyone happy nor can it satisfy divergent visions. So they have to find a way to split like so many open source projects before then without destroying the value already accumulated and the underlying communities.”
The high price of Bitcoin attracted the attention of the broad masses, but many of the newcomers are not very versed in cryptocurrencies, and the confusion among such network members aggravates the situation. Many of them, cannot perhaps distinguish between the two Bitcoins. Fran Strajnar, CEO of Bravenewcoin believes that we are going through another cycle of fear-uncertainty-doubt (FUD). He says:
“I think the current FUD is very confusing to the millions of new people pouring into the crypto space for the first time. 'Bitcoin,' 'Bitcoin-Cash' is enough to confuse people as it is.”
Bitcoin Cash: pump and dump?
The altcoins trade often resembles the pump and dump strategy. There are always people who have the opportunity to increase the price of a certain currency, and when they think it’s enough, it is dropped and some big profits are made. Kumar Gaurav, chairman of the board of directors of Cashaa, shared his opinion:
“The quick rise [of BCH] from around 600 to 2400 USD in a few days makes it look like a typical artificial pump which was already being followed by a dump back to $1300 USD within 30 min. As compared to the FX market, the crypto market is still small, it is easy to do that and cannot be used to estimate the future of BTC vs BCC.”
Gaurav believes that Bitcoin has acquired some maturity over time:
“Compared to that, Bitcoin has already overcome many challenges, keeps following its pattern of steady rise and its current downwards push is one of the many only temporary ones such as in July and September this year, so we can expect it to be back on the way to 8000 USD soon, whereas [BCH] is too new to estimate whether it will grow in the long term or whether the current move was one of the typical altcoins’ pump and dumps.”
“However I expect Bitcoin to be 'just fine' if it stays above $4500 as the smart money realizes that BCH has no advantage, support or adoption like BTC has.”
Can the two coexist?
As more and more users join the world of cryptocurrencies, two bitcoins can flourish parallel to each other. Of course, more forks or new Bitcoin versions cannot be ruled out in the future, as it is the nature of any cryptocurrency. Hoskinson says:
“Bitcoin Cash seems to be a productive split with its existence neither threatening Bitcoin's nor requiring support from Bitcoin's remaining adherents. Now Bitcoin is free to provide it's small block vision and cash the large block. My hope is that this will reduce fighting in the long run as both sides realize that the other isn't going away. Just like we did with Ethereum and Ethereum classic.”
So it looks like democracy is the winner after all.