BCH 11/4 Morning. Coinmarketcap.com Screenshot
Up 15.88% in the past 24 hours, BCH is trading at $533.67 and holding the 4 th highest position in market cap, according to coinmarketcap.com. The steep increase comes ahead of a scheduled hard fork on November 15.
There is no doubt that this will draw a lot of investors into the space as hard forks leave the owner with both the original coin and the forked coin. Opportunists will capitalize on this fact and pick up what they can before the fire sale begins after the fork. The money has already started to enter the space as we have seen price jump almost 30% in just three days. This volatile activity is likely to continue with some pullbacks and pumps likely taking us in to a short-term market reversal.
BCH and the crypto space as a whole have been in a painful bear market since countless coins and tokens hit all-time highs December 2017. BCH shot as high as $4,104 on Bitfinex 12-20-2017 and has taken a serious tumble since. It is likely that the volatility is back and we will be seeing a change from this current sideways action that seems unfamiliar to a lot of traders. After hitting a reversal candle three days ago, breaking the descending triangle, and approaching a bullish crossover on the 12, 26 EMA, it is likely that this breakout will continue past resistances at $630 and possibly even $810 if the FOMO starts a fire.
BCH originally hard forked off of the Bitcoin Protocol in August 2017. Proponents of the August 2017 fork wanted an immediate and easy solution to the scaling issues presented by Bitcoin by increasing the block size from 1MB to 32MB. Opponents argued that the block size increase would lead to mining centralization because of the increased difficulty of the proof of work algorithm, ultimately squeezing independent miners and small mining pools out of the competition. However, according to Roger Ver, an outspoken member of the BCH community, relatively centralized mining control was acceptable. At the time, Ver stated in an interview with Jimmy Song that he believed a small number of miners scattered throughout a few countries provided sufficient decentralization.
BCH’s hard fork to increase the block size resulted in both faster confirmation times and cheaper transaction costs compared to Bitcoin, which held the 1MB block size. However, this 1MB block size allowed Bitcoin to maintain its decentralized nature and still implement its scaling solution Segwit.
But this rift in both technology and ideology spurred an ongoing battle between the two cryptocurrencies. The Bitcoin Cash community aimed to replace Bitcoin as the dominant currency in the crypto space but fell short, largely due to its diminishing value against Bitcoin. Standing below a tenth of the value of Bitcoin has been a huge psychological blow to prospective investors wondering why a market driven by supply and demand has chosen not to support a product with such a fiercely loyal following.
Despite its ongoing war against Bitcoin and other cryptocurrencies for market dominance, there is now a civil war within Bitcoin Cash, again related to the proper solution for scaling issues.
Dominant miners CoinGeek and Bitmain are the two major influencers in the dispute. CoinGeek and nChain have backed Bitcoin SV, with “SV” standing for Satoshi’s Vision. Bitcoin SV has a four-fold increase of the current BCH block size to 128 MB, and also falls back to a few elements from Satoshi’s original protocol. Notably, some critics have complained that Craig Wright, who claims to be Satoshi Nakamoto, was supporting Bitcoin SV’s roll-back to Satoshi’s original protocol in order to protect his patent interests. nChain released the Bitcoin SV client on October 15, 2018.
Bitmain stands in the other corner of the ring, backing “Bitcoin ABC, which stands for “Adjustable Block size Cap.” Bitcoin ABC would allow a node operator to adjust their block size. Other new features of Bitcoin ABC include a minimum transaction size and a path toward creating a blockchain that would have a similar structure to Ethereum in that multiple projects could exist on the chain. In addition, Bitcoin ABC implements a pre-consensus that would give structure to how transactions are arranged as they are posted to the blockchain.
Critics of both Bitcoin SV and Bitcoin ABC have noted that the proposed increase in block size will further centralize coin mining, granting control of the technology to the few miners large enough to remain in business.
As a result of the division between CoinGeek and Bitmain, the BCH community stands to lose even more ground to Bitcoin. The hard fork on November 15, 2018 will likely bring volatility back to a relatively calm market. Leading up to the fork we are likely to see a few pumps from opportunistic traders entering the space to catch the forked coins but then a swift exit causing a plummet in price. The price of both is likely to stay low and see further downside action until the dust from the fork war settles and until the crypto market ends its bear cycle.