Bitcoin Cash and Bitcoin SV are on the verge of extinction: how is 2020 going for Bitcoin forks
The most popular forks of the Bitcoin network - Bitcoin Cash (BCH) and Bitcoin SV (BSV) - are getting cheaper most of 2020, while their parent has grown by a third since the beginning of the year. At the same time, the halving in the networks of both altcoins, which took place in early April, did not have a positive impact on the dynamics of the BCH and BSV quotes, and the miners switched their equipment to mining more profitable coins. But is it time to put an end to these projects?
On April 8, the first Halving in the history of the project happened for Bitcoin Cash, as a result of which the remuneration of miners was halved. On this day, the cost of altcoin increased to $247.3, but by the end of June it dropped to $230.5, losing 6.79%. As a result, a lot of analysts prophesy "soon extinction" to this fork of Bitcoin.
As for Bitcoin Satoshi Vision, which follows capitalization after BCH, it also survived its first halving on April 10 of this year, and since that time it has fallen in price from $184 to $168.38, i.e. by 8.48%.
It is worth comparing these indicators with the first cryptocurrency, the network of which went through the third in its history halving on May 11. Since then, bitcoin has risen in price from $8450 to $9136, i.e. by 7.51%. If we consider the yield from the beginning of the year (YTD), then BCH has +0.8%, BSV -3%, and BTC shows an increase of +26.85%.
But can it be assumed that in the cases of BCH and BSV, "everything is lost"? Of course, for the time period indicated above, a downward trend for both coins is obvious, but if you look at a longer timeframe, for example, from the beginning of 2019 to the end of June of the current year, then a completely different dynamics is read.
So, during this time:
⁃ BCH went up from $164.85 to $230.5 (+139.82%)
⁃ BSV rose from $92.14 to $168.38 (+182.7%)
⁃ BTC jumped from $3900.4 to $8945 (+229.3%)
This suggests that over the long term, these assets comply with the key principles of the hodl strategy, which is so popular in the cryptosphere. According to her, long-term investments in cryptocurrency, for example, for a year and a half or more, show significant growth. It is important that the altcoins BCH and BSV were able to get a decent plus compared to bitcoin. And this is despite the fact that in June there was a clear slowdown in bitcoin volatility. After all, usually altcoins show a noticeable growth, and in some cases even faster, for example, when the market "goes" after the strong rise of bitcoin.
The latter, although it has grown significantly compared with the March low of the year at $3300, this month not only could not gain a foothold above the psychologically important mark of $10,000, but also barely kept at $9,000, trying not to fall below. In this situation, the altcoin market could have been trading in the red zone for a long time, however, on the contrary, investors in these digital assets believe in their prospects.
BCH and BSV as engines of innovation
Analyzing the future of Bitcoin Cash and Bitcoin SV, it is worth recalling the reasons why these projects were originally launched. The main goal pursued by the founders of BCH and BSV is to solve the problems of the Bitcoin network by providing the market with an improved cryptocurrency model. Of course, this does not mean that Bitcoin has been written off, but rather indicates that the development of the cryptosphere largely depends on the projects of altcoins.
Consider what BTC and BSV solutions offer BTC problems:
• Commissions for transactions on Bitcoin Cash and Bitcoin SV networks do not exceed a few cents, while on the peak Bitcoin network they reached $55.16. At the same time, holders of BCH and BSV can conduct micropayments, which in the case of bitcoin (especially at times of high commissions), becomes economically meaningless.
• Confirmation of BCH and BSV transactions takes several minutes, while on the Bitcoin network this takes about 10 minutes.
• Block size. On the Bitcoin network, they cannot exceed 1MB, while Bitcoin Cash this figure is 32MB. As for Bitcon SV, in February of this year the block size of this network was increased to 2GB.
Bitcoin fork discussion and criticism
Of course, supporters of various crypto assets in their desire to convince the crypto community of their exclusivity often “go too far”.
There are many critics who claim Craig Wright, who is behind the Bitcoin SV project and for several years (unsuccessfully) has been trying to convince the community that he is Satoshi Nakamoto, the creator of Bitcoin. Also a lot of questions are raised by the decision of Roger Ver, who promotes Bitcoin Cash, to use the word Bitcoin in relation to his project. In addition, Ver claims that in the past he faced a commission of a thousand dollars when transferring bitcoins, and also waited more than two days for confirmation of transactions in the network of the first cryptocurrency.
However, many cryptocurrency market players are no less critical of both Wright and Ver projects. So, the founder of the analytical resource Messari, Ryan Selkis, believes that in the future, these altcoins will leave the top 10, as they are "overrated and stupid." A similar opinion is shared by Moonrock Capital analyst Simon Dedic.
“I will get some serious hate for that, but I stand by my opinion: $XRP, $BCH, $BSV, $LTC and $EOS absolutely do NOT deserve belonging to the TOP 10 cryptocurrencies. Actually can't wait until they vanish and clear the way for solid candidates like $VET, $LINK, $XTZ or $ATOM.”
Dedic is right that the cryptosphere is developing every day, and new projects have the right not only to “supplement” Bitcoin, but also become an engine for the development of the entire industry. In this regard, the position of bitcoin maximalists, who support only the first cryptocurrency and nothing else, is not only counterproductive, but also does not correspond to the spirit of the development of the cryptocurrency ecosystem.
Prospects for the development of BCH and BSV
But even despite criticism from prominent players in the crypto community, it is worthwhile to soberly assess the prospects for the development of BCH and BSV before “passing a sentence on them”.
So, one of the key indicators of the viability of a particular cryptocurrency is the level of stability of its blockchain. And first of all, this is evidenced by the cost of the “51% attack”:
“Bitcoin Cash is not looking healthy:
-Hashrate down 30% since halving (& only accounts for ~2% of SHA256 hash)
-Economic throughput at all time lows
-Fees are .05% of miner rev (<$100/day)
-Theoretical 51% attack costs <$10k/hr
Surprised we haven't seen a large scale attack yet”
However, such attack attempts are in most cases never carried out and are largely theoretical in nature. The fact is that almost all altcoins “grow” with an ecosystem, most of whose participants are interested in ensuring their stable operation.
The BCH and BSV are also reproached with a low share of the income of the miners of these networks, so transactions with altcoins are not burdened with high commissions. But the level of interest of miners in the extraction of these coins is also not a direct indicator of the viability of these projects. After all, with an increase in the price of assets, they will return to their extraction. Therefore, the basic point is the demand for altcoins, which means that you should pay attention to the dynamics of the movement of quotations of these assets, which over long time periods does not disappoint.
BCH and BSV may go, but their innovations will remain
Strange as it may seem at first glance, their possible wilting may become positive aspects of BCH and BSV projects. The fact that this is possible in the case of BCH, in May, Roger Ver himself hinted.
Why is it good? The fact is that those innovations that BCH brought to the world, even if this project is closed, will not disappear anywhere, but will be implemented at a new level in another project. The phenomenon of the cryptosphere is that absolutely all the projects that appear in it, by their existence, bring lessons for future startups.
In the case of BCH, Ver faced a reluctance by a significant number of ecosystem developers of this altcoin to increase the block size above 32MB. Therefore, he is ready to go further and develop some other project. Note that initially BCH also emerged as a fork of bitcoin with one of the main technical ideas - increasing the block size, which the project team successfully managed to do. But the time has come, and Ver believes that the next step should be taken: either to reach consensus within the BCH community regarding further increase in the block size, or to work already in the framework of another project.
At the same time, Ver’s departure from BCH will not mean that this project will “collapse”: after all, even the corporate scandal in Bitmain did not lead to the fact that BCH began to get cheaper.
“It's time to think about selling BCH, because Cihan Wu can go to jail. Mikri Zhang made a statement about the violations of the law that were committed by Cihan Wu, ”said Mo Lee, head of the Hashkey Hub platform.
Recall, the current head of Bitmain Cihan Wu has been a well-known supporter of Bitcoin Cash since 2018.
A similar debate over the block size is being held with respect to Bitcoin SV: the smaller the block, the less centralization risks, opponents of increasing the block size say. But, as Roger Ver noted, not all participants in the cryptosphere are concerned about the decentralization aspect: for many, comfort when using digital assets is important.
The logical conclusion is that for those who need decentralization, there is bitcoin, as well as other digital assets similar in this parameter. It is curious that although Bitcoin SV arose due to the desire of the crypto community to launch a blockchain with 128MB blocks, now the real block sizes of this network are smaller than the Bitcoin blockchain.
And even if Bitcoin Cash and Bitcoin SV are destined to leave the crypto arena, then this is unlikely to happen in the next few years. The networks of both projects are supported by a fairly large number of miners who are interested in the further viability of these blockchains.