Does the Bitcoin Cash Hard Fork Hurt Mainstream Adoption?
Bitcoin Cash (BCH), Cryptocurrency, Hard Forks–While Bitcoin Cash investors have been the undeniable benefactors of the upcoming hard fork for the currency, the long term ramifications may come back to haunt growth and adoption.
Nov. 15 marks a branching point for BCH, an event that will result in the creation of two distinct currencies. While BCH is in itself a fork of the original Bitcoin, first released on the market last August, the currency is drawing renewed concerns over the long-term viability of ongoing contentious hard forks.
On Nov. 10, EWN reported that cryptocurrency payment processor BitPay joined the growing list of companies–including Binance and Coinbase–to announce support for only one-half of the upcoming fork. Called Bitcoin ABC, the main implementation of the currency BCH software is being favored by payment processors and crypto exchanges for its continuation of the blockchain technology, compared to the upcoming newcomer of Bitcoin SV. While investors who keep their coins off-exchange will be able to duplicate their holding following the fork, Bitcoin SV is in danger of falling through the cracks of support post-launch if few exchanges integrate the currency for trade. The end result could be confusion for the investment base and an unnecessary pumping in price for the fourth largest cryptocurrency by market capitalization–factors that hold the potential to harm the image of cryptocurrency to mainstream adopters.
Cryptocurrency Hard Forks represent one of the more interesting, albeit complex, aspects to the industry. On one hand, they offer an undeniable free market solution to the issue of development control in direction. If a group disagrees with the production or methods of a coin’s development, they are free to fork the coin and promote their own agenda. Whether the forked coin gains traction or becomes a viable asset on exchanges is entirely up to the market decide–primarily through support with their investment choices.
However, Forks also present one of the more contentious and damaging aspects of cryptocurrency, particularly to a general public that is already confused enough by the prospect of crypto trading and adoption. For one, the unearned “creation” of new coins following a fork flies in the face of the message of scarcity that is continually promoted through Bitcoin’s twenty-one million coin supply. Being able to craft nearly identical coins out of the ether is a tough sell to new investors who are also being pushed on the message of currencies that cannot be manipulated by third parties.
The common counter to excessive Bitcoin price volatility has also been the long-term scarcity of the coin, in addition to the inability to erode the value through central bank minting as is the case with traditional fiat. Forks throw a wrench in that image, even if the underlying function is more practical. However, in the case of the upcoming Bitcoin Cash fork, the pumping value of BCH is almost entirely tied to greedy investors looking to capitalize on creation of new coins following the fork It also creates a line of dissension in the community, as figures like Roger Ver and Craig Wright wage open and vitriolic debates promoting their particular branch.
For the time being, hard forks are going to continue making up a component of cryptocurrency that will benefit few while disrupting many, largely in the pursuit of short term gains.