Without a question, finding amusement in the selfish behavior of the BCH influencers and stakeholders is a lot of fun. These hash wars are also fascinating from a purely technical point of view, as “miners should govern” advocates identify more ideological justifications for their division.
However, this big blockers’ purge makes the entire market suffer. On one hand, the combatants waste electricity and burn their resources (mostly BTC) to attain control. On the other hand, this state of conflict deters outsiders from investing and also keeps crypto advocates skeptical. Why invest right now when the self-proclaimed Satoshi promises destructive trade wars? Why trust a technology which claims to be decentralized while four people have too much control?
At this point, it doesn’t really matter if Roger Ver‘s and Jihan Wu’s ABC side wins or loses. It makes no difference whether or not Craig S. Wright is the true bearer of Satoshi’s Vision. In reality, we are all losing due to the bad reputation the entire market is getting from outsiders. If the mainstream media wants to take shots at Bitcoin Cash and the entire market, it has very good reasons to do it.
Furthermore, if the “Bitcoin Cash is Bitcoin” narrative gets rediscovered by professional FUDsters, then we should expect a lot of bad (albeit fake) news. In the middle of the institutional adoption season, we’re witnessing the kind of destructive behavior that can potentially slow us down by a few years.
Maybe that in hindsight, this is good news for developers. The technology is clearly not ready to meet the hype and expectations, and we’ve learned that scaling blockchains is difficult. This extended bear market, that will inevitably slow down adoption and lead to lots of negative media coverage, helps devs work without pressure.
However, these hash wars better end as soon as possible.
According to a BitMex Research tweet from November 19th 2018, hashwars.cash have taken their financial toll. The Bitcoin Cash ABC side has lost $550.334, while Satoshi’s Vision took a hit worth a million bucks. In the grand scheme of things, this is just a small price to pay for the control of a $6 billion market cap.
Hash war estimated costs live update
If one assumes the hashrate is leased, we estimate the protagonists have spent $6.7m in leasing fees since the split, generating combined gross losses of $4.6m. It is only a matter of time until this pointless battle ends. pic.twitter.com/o60s2iAMWn
— BitMEX Research (@BitMEXResearch) November 18, 2018
Yet since the beginning of this adversarial hard fork, the entire market has responded negatively. On the one-week chart, every cryptocurrency that isn’t a stable coin seems to have reached a new seasonal low. The expectations were high for this time of the year and incoming good news from institutions seemed to bring about a new sense of optimism. However, since Bitcoin (BTC, that is) has reached the $5500 threshold, people have been talking about capitulation.
— Barry Silbert (@barrysilbert) November 14, 2018
Tone Vays has been proven right in his decision to begin a short position around the $6500 threshold (which was considered by many to be the bottom at the time), and some commentators already talk about new lows.
Part of the reason is given by Craig S. Wright’s claim that he is Satoshi, he will sell his BTC to finance his war against BCH ABC, and Bitcoin will see price levels from the year 2014. Though lots of community members know that he’s not the real Satoshi Nakamoto and this is a psychological bluff, there is always the question “But how much power and influence does he have on whales to manipulate the market?”. Also, we still don’t know how many BTC coins he owns himself.
If this is a long war… expect 2014 prices in BTC… think what that does…
Have a nice day
— Dr Craig S Wright (@ProfFaustus) November 14, 2018
Cryptocurrency and smart contracts pioneer Nick Szabo has commented on the situation in order to point out to the opportunity cost of the hash wars. He also pointed out that the practice is more common than we think in traditional finance. Yet unlike the government-controlled institutions, a free unregulated market like Bitcoin’s is ruled by sentiments and manipulation tactics. So the more ABC and SV play their war games, the greater impact we see on prices and the more substantial the anti-crypto propaganda becomes.
Motivations are often stronger than incentives. Many will pay big for more expected future control over other peoples' money. Even more wasteful struggles for control exist at much larger scales in digitally centralized (mistakenly called "traditional") financial operations. https://t.co/UAUmfLi0BP
— Nick Szabo (@NickSzabo4) November 18, 2018
A quick conclusion of the hash wars can result in a faster recovery.
Tone Vays may disagree with this, but there are multiple external factors beyond the data revealed by technical analysis. Though we have support zones and resistance points at certain prices, the media and the crypto influencers play a big role in determining the state of the market.
In 2017, the media was praising cryptocurrency projects like Ethereum and we were in the middle of a strange tokenization process. Every big firm in tech was feeling the itch to adopt blockchains for various purposes, in spite of evident limitations of the technology. In the meantime, the money kept on pouring in, people were irrationally investing in ICO tokens, and the market was largely prosperous and definitely more attractive than the Wall Street alternative. All of these advancements were due to marketing and a sense of trust in more or less trustless systems.
Now we find ourselves in the middle of a technology crisis which is beneficial for development (from Lightning to sharding, it’s all getting closer to large-scale adoption) but terrible for the market. In the minds of laymen receiving information from mainstream media outlets, cryptocurrencies are an assembly of broken promises about technological advancements. This isn’t necessarily true, given the incredible advancements we’ve seen and the rapid adoption.
However, it didn’t have to be like this. We could have retained the positive sentiment by pointing out to the emerging developments. If all the institutional money was put into developing Lightning, then we could have achieved the adoption goals a lot sooner.
Ultimately, we can blame events like the BCH hash wars for delegitimizing the image of blockchains in the eyes of the general public. A product which bears the “Bitcoin” name is proven to be centralized and governed by individuals who aren’t any better than the greedy folks running the traditional financial institutions. Furthermore, a self-proclaimed Satoshi Nakamoto is as thunderous and destructive as an Old Testament God who simply wants his creations to die in a terrible flood. This type of behavior is neither economically rational, nor righteous in its intentions.
So you better grab some extra packs of popcorn and watch all the drama unfold. The hard forked version of Rome is burning, and its demise can be felt in our wallets. But isn’t all this humorous in a strange way?