An Experts Take on Price Fluctuations due to BCH Hard Fork
How has the BCH hard fork story developed over the past week?
The implication has been serious. We strongly believe that the hash rate power has destabilized Bitcoin difficulty and its hash rate and could be part of the many reasons why the total crypto market valuation is dropping. Though we cannot substantiate if there is a direct link between drop of BTC prices and the drop is hash and mining difficulty and whether the 90,000 S9 miners Jihan Wu had mobilized in NE China where deployed or not, he had mentioned that any form of “dirty” play from SV and CoinGeek would force Bitmain to defend BCH hard fork even if BTC prices could dip.
But as it is the hard fork war is not yet over though most exchanges and services providers running BCH clients are backing the ABC version, the civil war is definitely costly for both camps. At one point, the Bitcoin.com mining pool which is run by ABC proponents had more hash power than the BCH network. This comes hours after it seemed like the SV and CoinGeek mining pools were going to stage a successful 51 percent attack and “destroy” ABC.
But since then the tables have been turned and with both camps renting firepower to stay ahead of the pack in terms of network strength, they are burning cash–upwards of $8.1 million according to recent BitMex research confirming that this war is nothing more about egos while all along forgetting that the success or failure of any network mostly depends on users, brand and lastly hash rate—though this is necessary to bolster and protect users.
As we can see, Craig Wright is determined to see SV succeed and so is Roger Ver and his supporters. At the end of the day, users who were supposed to execute and even build smart contracts over the network are coping with huge losses—and staying away from the network. For the market to recover then we need an urgent consensus or the network dies–users migrate to BTC or DASH and other platforms which have been superior in scalability and speed.
What effect has the fork had on the price of BCH? On the cryptocurrency markets at large?
Market participants are clearly apprehensive and cautious. As the hash war continues unabated, BTC and altcoin prices are printing double-digit losses exacerbated mostly by dipping BTC prices which has a magnifier effect on altcoins as BCH and other emerging coins as ADA or IOTA. Thing is, BCH prices will continue trending on a thin line and could further capitulate if in any way CSW continues to fight to the “death”, renting more hash and ABC nodes and hash power drop.
It shall have a cascading effect on BTC and altcoins which we expect to drop even further in response to this paradigm shift. Even though this event is unlikely to happen because most investors speculate the current ABC is powered by rented hash and Bitmain are yet to channel their miners, the cost of safeguarding the network is swelling and we anticipate one faction would be forced to liquidate BCH. Because of the illiquid market, this would trigger a BCH meltdown.
What are the long-term implications of the hard fork for BCH and for the crypto markets as a whole? (both in terms of price and of investor sentiments)
Going forward, every fork would be treated with caution especially if the software upgrade is mired by lack of consensus and unnecessary chest thumping. We expect days before a high value but a contentious hard fork is scheduled to execute, investors would shift their stash to cold wallets or liquidate them for other coins—BTC or stable coins.
In that case—assuming it isn’t an SHA-256 related hard fork, BTC shall benefit from the capital flight so will stable as USDT. But if we have similar forks and Bitmain or a major mining pool is forced to intervene then many will even question their reason for participation and use of a rather politically unstable platform. No doubt, this shall affect adoption levels and liquidity.
What does the way that the hard fork was handled say about the crypto community–the BCH community in particular?
Everything else constant, the hard fork was poorly handled. How consensus was not found is still boggling but still, it is now clear that “decentralization” is but a myth. Bitcoin and BCH networks are not decentralized and we are not clear on how to stand.
As long as we have Bitmain, CSW and other “figureheads” the price of that digital asset would also sway according to the sentiments of these players. Hard forks blunt the community’s confidence and are always about ego if not the self-interest of few individuals.
Users and the community are relegated to the back seat as “market watchers”. This is not what blockchain embodies and as a community-driven technology, there should be more calls for decentralization—not some few people/mega companies calling shots on the general trajectory of the network. The platform’s roadmap should always be defined by the community—Always!