Tomorrow there is scheduled to be a hard fork of the Bitcoin blockchain and network. There’s a fair amount of uncertainty over what will happen. The hashrate is unknowable until the fork occurs. The price seems to be around 10% of the price of Bitcoin. However, there aren’t too many exchanges that will be accepting this currency, and there are even fewer places you can actually spend it.
I’m going to make some predictions about it to put on record what I think is going to occur and to see how correct or incorrect I end up being.
- There will be a Bitcoin Cash block mined before 12 AM August 2, US Eastern time: 80%
- The price of Bitcoin Cash at 12 AM August 2, US Eastern time will be <10% of Bitcoin’s price: 70%
- The price of Bitcoin Cash on August 5 will be < 10% of Bitcoin’s price: 90%
- The price of Bitcoin Cash on September 1 will be < 10% of Bitcoin’s price: 90%
- The value of all transactions of Bitcoin Cash around September 1 (maybe averaged over a week?) will be < 10% of the value of all transactions in Bitcoin: 95%
I have mixed hopes for the success of Bitcoin Cash. On the one hand, I wrote previously that if the two factions in Bitcoin split, we could have a competitive market showing which rules were better. However, due to network effects, I still don’t think it could happen and be very successful. Supposing it did succeed though (had a pretty high market price), what would that mean? I suppose it would mean forks would become more common. That might be better for competition, but not for stability of the currency.
Ultimately, the idea that it would be fairly easy to make a successful hard fork of Bitcoin would be pretty devastating to Bitcoin’s health. It would mean consensus doesn’t mean much, it would mean the Bitcoin community could splinter pretty easily, which would therefore mean Bitcoin’s usefulness as a currency decreases as each part of the community would be using their own forked blockchain and coin. Something like sidechains seems like a much better implementation of this idea.
I should probably also disclose that I do not have much faith in the current governance model of Bitcoin Cash, and that does concern me a bit as well. I hope that hasn’t clouded my judgment of the actual technological and economic implications, but only time will tell if my predictions are true.