The price of bitcoin cash has fallen below eth for the first time since the former came into existence on August the 1st 2017.
Except for a brief period during highly volatile trading last year, BCH’s price has never been below eth due to its significantly lower supply of just 17.5 million as compared to eth’s 104 million.
That’s until today. One BCH currently stands at $81 on Coinbase while one eth is at circa $85, sending BCH’s market cap down to 7th at just $1.5 billion, while eth is third with $9 billion.
Arguably the “real” BCH price is a combination of BCH and BSV. That would give it a price of $160, double that of eth. However, BSV is now BSV and BCH is BCH and BCH’s price stands at $80.
It clearly appears the coin which aims to create a used currency unbacked by any government or entity is losing some confidence.
They now have to contend themselves with not just BTC, but also BSV, and following this fall in ranking, also LTC and other cryptos.
It is perhaps appropriate to ask, far more than for eth or btc, whether this is the end of BCH as it continues to fall far more than any top coin.
It has some big backers, who may well prop it up, but many have turned away. Yet its fall hasn’t been good for any crypto. It has and it seemingly continues to drag down the entire space.
Bitcoin cash was forged in fire, with its idea being quite radical. A deflationary currency that can handle all the world’s coffee purchases.
Their first mistake, however, was to see themselves as only able to exist if they continued to position themselves against bitcoin.
We declared the war over in a short, succinct and very subtle article in March of this year, but BCH actors did not listen, although they did slowly start to turn their focus towards their aim of a peer to peer currency through merchant adoption.
Still, their public spaces were difficult to read and became impossibly so following a social attack by Craig Steven Wright. If this is the end for BCH, then that was perhaps the beginning of it.
Two other related factors may have contributed to its current position. BCH was simply not being used. It had considerable capacity, but it was handling only circa 20,000 transactions a day, 1/10th of bitcoin’s in a bad day.
It wasn’t being used because they were not focusing on increasing its usage instead of arguing a debate that had long ended. Plus, they had to build the infrastructure from scratch, although they were integrated in BitPay, Coinbase, so they quickly did so to a great extent.
The other factor is that debate itself. BCH was based on the premise that the benefits of a blockchain currency with world level capacity outweigh any costs to run a node.
That’s a fairly reasonable position considering the limited experience-based information that we have at this stage.
One can argue that if this does become global money, at least as many banks as there are in the world would run a node, then some universities will too, there would be block explorers as a service, and so on.
We would thus probably know if there has been any misbehavior, but it isn’t very clear whether we would be able to do much about it. While if say an ordinary professional can run a node, they actually have a say by effectively discarding the misbehavior. Making it not just a matter of knowing, but also a matter of having the capacity to act.
That tradeoff can make sense if one takes the view that a currency outside of the state or central banks is so radical that the peaceful means don’t matter as long as the end result is achieved.
It is illegal, technically, for a currency outside of the state to exist. However, if there is significant usage, at the end of the day the people are the state and make the law so that would change.
Under this view it wouldn’t matter if it condensed to 100 nodes because it would still serve to keep in check central banks from misbehaving as they have done many times even in the past five years from Zimbabwe to Venezuela.
Others however might, quite rightly, take the view the the loss of the people’s autonomy is too great and the exercise would be pointless if we end up with merely 2 or 3 central banks rather than just one.
They thus take the view that a people’s money, even if it is used only by the few, is better than free market money where people are limited to choosing between currencies, rather than having a say on the rules of a currency.
This simplified positioning has two nuances. First, they actually take the view that one can have both. This chain for the few, and then the second layer for the many.
The end result being pretty much the same conceptually except that they maintain the ability to validate the rules and have a say over them, but to a limited extent only in regards to the blockchain itself, i.e. for the few. For the many, arguably bitcoins can be inflated on second layers and so on, so it wouldn’t be much different than a few nodes.
The second nuance is that scaling on-chain to world level doesn’t necessarily mean node condensation if techniques like sharding and so on are utilized.
So in simple terms one can describe the crypto space as a trinity forged in fire. You have BTC with its focus on being SWIFT to serve the payment layer on top. You have BCH with its focus of being both a payment layer and the currency layer.
Then you have eth as the world computer with programmable money and a focus on upgrading finance as well as many other sectors. You can add tokens, but they’re sort of part of eth.
Then there’s ripple which is second position so it can’t be ignored, but they go further in their tradeoffs than the other three while focusing somewhat on the same aims as BTC or BCH although their story is facilitating international payments for banks.
More succinctly, you have digital gold, digital money and digital oil or gas. All three have their uses and all three complement each other. So if this is the end for BCH, then this space would probably need a replacement. A somewhat technically sound crypto that focuses on peer to peer currency by attracting merchant adoption and so on.
BCH has served that role and can probably continue to do so if they re-focus. Perhaps they should also consider rebranding so that they can get off this focus on bitcoin or now BSV.
They could perhaps call themselves digit, or whatever. Maybe even keep the bitcoin cash name, but then they’d always be defined by bitcoin, rather than standing on their own feet.
What is clear, however, is that BCH is in a crisis of confidence and they shouldn’t take their relevance for granted. They do need to think about what’s gone wrong, what lessons have been learned, and how they can now move forward.