Is the early stage of the hard fork potentially driving this price rally of Bitcoin? It’s definitely possible, but it could also be a variety of other factors as well. Over the past week the price per Bitcoin has shot up almost $40.00 USD and there has been some speculation about whether that spike has had anything to do with the news about the hard fork to Bitcoin Classic.
There have been some concerns about the hard fork due to some issues with scaling, adoption, regulation, legality and liability. Yet there have been vocal supporters of the hard fork in the space that have championed the move as something that can have success and should and are actively taking steps to make that happen. So, is this show of support driving the rally or is it possibly something else like a correction?
There are many levels of people who use Bitcoin. From the bottom up, there are the developers and masterminds who understand the in’s and out’s of Bitcoin and blockchain technology and more granular details of things like cryptocurrency and cryptography and markets and so on. There are also people who just know how to sign up for a Bitcoin-wallet and might buy some of the cryptocurrency for a purchase or exchange of this or that. The people at the shallower end of the knowledge pool who aren’t familiar with the hard fork and it’s details will hardly know why a 2MB increase of block size is important or needed. In reality, they just need the system to work well and reliably.
The debate around the hard fork from a technical perspective and a cultural perspective can be convoluted and murky, although it’s without a doubt that a bigger block size is going to improve the usage of Bitcoin and its blockchain for everyone. However the detractors have raised arguments that doing a hard fork is like throwing the baby out with the bathwater and could cause division in the Bitcoin-community, bad press for the cryptocurrency because the developers can’t agree on what direction to take or even worse, a mass exodus of users.
On the flip-side, there are some very high-profile people and businesses getting fully behind the hard fork and Bitcoin Classic. The most notable supporter as of late has been Brian Armstrong, CEO and Co-Founder of Coinbase, a widely used and popular Bitcoin wallet. Armstrong has put his money where his mouth and ideas are by offering a $5,000 bet that Bitcoin Classic will be a success and drive up the price of the cryptocurrency. It seems he was right. What’s more, he’s putting his money and much more behind his assumptions, including his business, as Coinbase is now running Bitcoin Classic nodes.
However, the cost of mining will likely go up if the block size is increased through this hard fork or a change in the original Bitcoin code. This has caused Bitcoin mining pools which control about 70% of the hashing power to reject the hard fork. Even though the growth of Bitcoin Classic nodes has increased over 700% in the span of a week, it’s uncertain whether the confidence and good will of the people supporting the hard fork of Bitcoin Classic are what’s behind the price surge or not. If the optimism is in fact driving the price up, there may be an adjustment in the near future when reality sets in when the political fighting in the Bitcoin community and decisions among large players in the mining space have their showdown. As for now, let it ride past $500.00!
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Last modified: March 4, 2021 4:46 PM