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Earlier today, on November 12, the market cap of Bitcoin Cash broke the $30 billion mark, officially surpassing that of Ethereum.
Vitalik Buterin, the co-founder of Ethereum, congratulated Bitmain founder Jihan Wu and bitcoin angel investor Roger Ver on the recent success of Bitcoin Cash, particularly in the South Korean market.
Congrats on this. Seriously. @rogerkver @JihanWu @deadalnix pic.twitter.com/UXYdEcRn4y
— Vitalik Buterin (@VitalikButerin) November 12, 2017
The main beneficiary party of the cancellation of the SegWit2x hard fork has been Bitcoin Cash for the most part, because it encouraged businesses, miners, and investors that signed the original NYA or SegWit2x agreement to focus on the development of Bitcoin Cash and its market.
But, SegWit2x supporting businesses and their executives including Xapo President Ted Rogers emphasized that the short-term price trend of Bitcoin Cash has been inorganic and unsustainable, given its 100 percent increase in value within a single day, and the concentration of the trading volumes in the South Korean cryptocurrency exchange market.
“This Bitcoin Cash price move is far too fast to be real or sustainable. if was built on fundamentals, earned over period of time, ok. But there is no weight yet behind Bitcoin Cash: virtually no users or businesses, nothing outside of hash power & pumped price. Bitcoin Cash will correct very painfully soon,” said Rogers.
The South Korean cryptocurrency community seemed to have invested heavily in Bitcoin Cash due to the sudden movement of miners from the original bitcoin blockchain to Bitcoin Cash. However, it is important to acknowledge that miners always follow the more profitable blockchain, as they are rewarded with higher returns for producing blocks of transactions.
At the moment, Bitcoin Cash is more profitable to mine. But, after the next difficulty adjustment when Bitcoin Cash becomes more difficult and expensive to mine than bitcoin, miners will inevitably switch back. Hence, if the basis of the vast majority of South Korea investors in allocating their funds from bitcoin to Bitcoin Cash is the movement of hash power, the short-term surge in the price of Bitcoin Cash will be unsustainable.
There is Room For Bitcoin and Bitcoin Cash to Co-Exist
Clearly, bitcoin and Bitcoin Cash have two contrasting visions; one envisions to evolve as a robust store of value, while the other aims to become a flexible settlement network or a digital cash system.
As highly respected bitcoin and security expert Andreas Antonopoulos explained, the two cryptocurrencies can co-exist and serve different markets and user bases. Bitcoin, Ethereum, Bitcoin Cash, Ripple, and Litecoin, five of the largest cryptocurrencies in the market, all have contrasting philosophies, structures, and infrastructures.
Bitcoin and Bitcoin Cash will coexist and serve different use cases, just like Bitcoin and Ethereum. Its not a zero sum game. Work on building your project, not on destroying the other
— Andreas (@aantonop) November 12, 2017
At the time of reporting, it seems as if the analysis of Xapo President Rogers is accurate in that the price trend of Bitcoin Cash is simply not sustainable, in consideration of its lack of user base, infrastructure, industry, and strong market.
The price of Bitcoin Cash has dropped from $2,900 to $1,620 since achieving a new all-time high earlier today, allowing Ethereum to obtain its position as the second largest cryptocurrency again.
Featured image from Shutterstock.