Segwit2x’s unexpected and sudden cancellation has transformed the crypto landscape. Certainty is now finally here. Bitcoin will not scale in a peer-to-peer manner. Its developers no longer even pretend it might, with Peter Todd, a vocal small blocker, stating fees will only go up.
As such, it can no longer be called a currency because it is awful as a means of exchange. Its fees are far too high even as it stands, but if demand keeps increasing they will become prohibitive, rising to $1,000 or more for one on-chain transaction.
Which means no one will be able to use it except for banks, with bitcoin’s peer to peer payment network basically gone. With it, its blockchain, which many are heiling as a great invention.
Without a usable chain of blocks secured by proof of work, can what is now called bitcoin really deserve that name?
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending.
We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work.” The Bitcoin Whitepaper
Fees of $10 or $100 per transaction would not “allow online payments to be sent directly from one party to another without going through a financial institution.”
Since what is called bitcoin contravenes the very first sentence of the whitepaper, as well as its title, many are arguing that it isn’t actually bitcoin.
The asset has become unusable for commerce. Without that commerce, its utility is unclear as it isn’t obvious where demand would keep coming from, or why it would have a floor at all.
Moreover, its difficulty of transport makes intermediaries necessary as you wouldn’t be able to spend it in a peer-to-peer manner, instead having to convert it for fiat first.
All of which means that what is currently called bitcoin is in fact a very different system. Instead of peer-to-peer, it is hub-to-hub. Instead of proof-of-work to prevent double spending, it will become proof of hub as the vast majority of transactions by far will not be hashed into “an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work.”
Intermediary hub transactions will be changeable in complex circumstances, including unforeseen or otherwise time delays. That’s to say nothing of all the problems with intermediary financial institutions.
The real bitcoin, therefore, is Bitcoin Cash, which as the name says, aims to continue implementing a peer to peer electronic cash system allowing “online payments to be sent directly from one party to another without going through a financial institution.”
And while it is the case that currently some financial institutions, such as exchanges, are necessary, the aim is for that to be temporary.
Bitcoin Cash plans to continue bitcoin’s roadmap of firstly wide merchant adoption, secondly, the creation of a virtues circle, and thirdly, its use as codable internet money.
On the merchants aspect, its almost non existent fees and its instant transactions through zero confirmed systems allows for the spending of actual money through the internet. Giving you freedom to pay a merchant anywhere in the world without requiring any permission from anyone.
That global means of value exchange will be complemented by a virtuous circle, whereby merchants pay their employees and suppliers in BCH, who in turn pay other merchants in BCH, thus creating an economy where BCH is the unit of account.
At that stage, you would no longer need to convert it to fiat, thus you would need no exchanges, because you get paid in it and you pay in it, making it effectively like dollars, with the added quality of non-inflatable away as the banks please.
All two of the above are complemented by the fact that Bitcoin Cash is basically just code. Therefore, the currency can be coded to behave in certain ways and under certain conditions, something now called smart contracts.
Rootstock is planning to bring that to bitcoin, but they are finding opposition, so they might instead implement it in Bitcoin Cash.
The same applies to the many bitcoin merchants that are considerably struggling due to the very high and ever increasing fees. As it has now become clear bitcoin will no longer be a peer to peer electronic cash system, they may have to adopt Bitcoin Cash for commerce.
That includes BitPay, which currently serves 100,000 or more merchants. And if they don’t add Bitcoin Cash, then Coinify, which is a competitor and already has added Bitcoin Cash, might rise in popularity.
It may also include Coinbase, which likewise offers merchant services, although they may prefer ethereum. OpenBazzar, an eBay like market place, is already working on adding Bitcoin Cash. Others will probably follow, unless they abandon their project completely.
Because for years what Bitcoin Cash now promises bitcoin has promised. An entire ecosystem was built around electronic peer-to-peer payments. That has now changed in bitcoin, but not in digital currencies, with Bitcoin Cash continuing that promise.
As such, all those businesses and that entire ecosystem that was built around digital payments may have to move to the one digital currency that provides it, Bitcoin Cash. The real bitcoin.