Eth has been partying recently. The currency has increased daily, reaching a new all-time high of almost $60, before seemingly stabilizing at around $40. Its market cap is now around $4 billion and its trading volumes are nearing bitcoin’s.
Bitcoin’s dominance, on the other hand, has reached a new all-time low, nearing 70%. Its price has fallen by around $200 in the past two days, with the in-fighting regarding capacity seemingly reaching a culmination point.
The contrast couldn’t be greater. On the one hand, one community is torn apart, fully consumed with discussions of just one parameter. On the other hand, a united, happy and peaceful community talks of a flippening – a point when eth’s market cap overtakes bitcoin’s.
There appears to be two catalysts with a seemingly third added yesterday. SEC’s rejection of the bitcoin ETF initiated a slow increase in eth. After a Bitcoin Core developer tweeted a security vulnerability in Bitcoin Unlimited while it was being fixed, sending BU nodes down crashing temporarily, eth’s increase accelerated considerably.
A third factor, which seems to have affected bitcoin’s price, but seemingly not eth’s, is the announcement of some bitcoin exchanges yesterday that they will not follow the longest chain, but will list Bitcoin Core as BTC regardless of the hashrate or, presumably, regardless of the price.
They further stated that if Bitcoin Unlimited is listed, it will be listed as BTU. Some exchanges came out to say they had signed a different version or there had been some misunderstanding, but price dived.
Bitcoin’s price lost around $100 yesterday as further in-fighting ensued, with both of bitcoin’s public spaces talking of little else but BU v BC. Investors, however, are seemingly indicating they want nothing to do with it while the price reaction suggests they strongly disapprove.
This constant back and forth appears to have incentivized many towards alternatives with eth the preferred destination because of smart contracts as well as its strong and capable development team.
Their trading sub now has almost as many users online as bitcoin’s main sub. A very surprising statistic that may indicate a shift could be happening. Their daily price discussions now expand thousands of comments, including bitcoiners who say they have flipped.
The reasons appear numerous, but for flipped bitcoiners it seems to be mainly due to bitcoin’s current difficulties. The currency is consumed by this never-ending scalability debate, while eth’s communities are a completely different atmosphere.
They appear united, overall happy, generally welcoming and very friendly. In eth’s main sub, they talk about new projects, new developments and news such as the recent announcement Jeff Garzik’s start-up has joined Enterprise Ethereum.
The former Bitcoin Core developer, who was one of the first to join bitcoin development and has some 20 years experience of working in open source projects, had his commit rights removed from Bitcoin Core without any public discussion. He has not coded for Bitcoin Unlimited. The joining of Enterprise Ethereum by his start-up may indicate he has flipped.
Another reason why some bitcoiners have left may be the ever increasing transaction fees and constant delays. Eth’s transactions are as good as free with confirmation times in around 17 seconds and further plans to reduce it to 2-3 seconds. In effect, very much instant. A promise long made by bitcoiners who kept taunting Western Union, but now no longer holds true.
Once bitcoiners visit eth’s community, they learn about smart contracts and all the eth projects, with some who left in March last year never returning, instead becoming loud advocates of ethereum. Bitcoin, on the other hand, has brand awareness, but that can quickly change if it begins losing its network effects while eth gains hodlers.
Bitcoin has a limited coin number, but it appears eth coins won’t go much above 100 million either. Eth, however, has a philosophy of political neutrality while some bitcoiners’ attitudes seem to be more confrontational with strict moderation. An attitude which may have led to SEC’s rejection while eth has gained corporate interest which may lead to a more friendly regulatory environment.
Bitcoin is more stable while eth has a very ambitious roadmap which means they are moving fast and they do break things. This is a currency that rose to new heights last March, had some $200 million stolen, with its public forums descending into chaos. They held a holders and miners vote, devs coded the code, nodes upgraded, the community saved its own people, taking the money from the thief and giving it back to eth holder.
Then, they forked again to address a DDos vulnerability, and again, even unintentionally forked. Price reached a bottom of $5 in December, to then start rising slowly. And then start rising quickly.
All of this within months. While it took bitcoin two years to recover after its first set-back, and the community has spent two years discussing one parameter, eth addressed the matter in weeks and went on to rise 10x from the bottom in just months.
Moving fast and breaking things means the investment is very high risk and should be expected to be lost. The currency is to transition to proof of stake, a considerable upgrade, and then to sharding, an even more considerable upgrade.
It probably won’t do so very smoothly, things will probably break and be fixed. After sharding, however, the currency can be set in stone and may be ready for mom and daddy.
Some bitcoiners probably won’t leave. The scalability debate has long shifted from being technical to turning into two parties and there are many comparisons that can be made with the Trump v Hillary election.
R/politics, for example, turned from a neutral sub to a censored sub in support of Hillary. R/bitcoin, likewise, turned from a neutral sub into a censored sub in support of Bitcoin Core.
Trump spoke of an out of touch establishment and elites. Bitcoin Unlimited is a grassroots client, taken off the ground by ordinary bitcoiners, for bitcoiners, without any “famous” developers or corporate backing. Once it was all running and operational, it then attracted donations and funds from bitcoin businesses.
The election, however, took less than two years and bitcoin is different from a nation state, although there was talk of California seceding. Moreover, it isn’t clear how exactly it can be decided who should have the brand name in bitcoin.
The most objective course would be to hold a holders vote through tokens in a neutral manner, and then a miners vote, but the other side can dispute both depending on the results just as some countries dispute the outcome of elections, leading to chaos.
That makes the current situation in bitcoin regarding scalability very much an outright mess. Both sides accuse the other of attacking, both sides believe the other is trying to hijack bitcoin, “leaders” on both sides are smeared by the other.
Some, therefore, have become entrenched. It’s no more about scalability, it’s no more about science, it’s no more about technical matters. It’s about a strong belief by both sides that their vision must win or bitcoin is done.
It should have never gotten to this point, but there are many clear lessons here. Objectivity matters. Such issues as who gets the brand shouldn’t be up for dispute if we are to avoid chaos. Undisputable means to gauge support need to be designed. The three branches – miners, exchanges, developers, must respect each other’s jurisdiction.
Yesterday’s news by exchanges is in effect a constitutional crisis, no different than if the executive refused to uphold a judicial ruling. The executive can, of course, and so can exchanges, but chaos necessarily follows.
Some will stand and perhaps even take part in that chaos, some will leave for happier pastures. In a decentralized currency that lacks conventions with a decision in such situation having never been made before by any currency, whether based on a blockchain or otherwise, no one can really tell anyone else what to do.
As some leave, other advocates rise and as they leave others rise too. Some have stood the ground throughout. They don’t want eth, they want bitcoin, but the pie is growing outside this space.
Those just learning about the currency might very much be put off by the never-ending debate. Many don’t even care anymore, but as price moves shift, the drip, drip, might become a stampede.
That would be one way of resolving the matter, but at what cost to bitcoin?
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Last modified: May 21, 2020 10:00 AM UTC