Bitcoin Cash officially launched tonight, a controversial fork inspiring hordes of bitcoin users to swap traditional bitcoins for this new cryptocurrency. Some reddit users even deemed Tuesday “Bitcoin Independence Day.”
The build up has been dizzying. One of the world’s leading bitcoin exchange markets, Coinbase, had outages throughout the weekend “due to a large number of bitcoin withdrawals.” Some of these people were probably just securing their stash on hardware wallets, while others became early BCH users.
A BCH airdrop is already underway, giving away BCH for free to core Bitcoin holders. Stellar previously made the same move with its cryptocurrency, Lumens, so this type of giveaway isn’t surprising. Blockchain startups were hard at work Monday, gearing up for the network shift. Many cryptocurrency experts wished BCH separatists well on social media, despite a lack of confidence in BCH’s prospects.
“It seems like a pointless, political gesture,” Monero co-founder Riccardo Spagni told International Business Times. “I don’t think it will serve its intended purpose.” Although he respects many of the people involved with Bitcoin Cash, he considers the project unwise.
Spagni’s advice for bitcoin newbies is to “calm down and wait it out.” Bitcoin and BHC prices are both expected to oscillate for a while after the fork. “It could be months before the dust settles,” Spagni said. As for the political debate underlying BCH, wanting bitcoin to be used by as many people doing as many transactions as possible, bitcoin veterans have diverse perspectives on what the real future holds.
Many of bitcoin’s most passionate advocates believe cryptocurrency markets aren’t just about getting rich: It’s about “ allowing people to be free.” Blockchain tokens let people to transact without banks or governments verifying their identities and holdings. This gives users more financial autonomy than ever before. However, as the business-centric BCH split underlines, cryptocurrency enthusiasts adhere to a wide range of philosophies. Is the future of bitcoin really universal adoption? It depends on who you ask.
Many innovators want cryptocurrency to someday become a widespread conduit for daily transactions, such as buying coffee. People like Ethereum co-founder Joe Lubin even believe blockchain technology could reshape the global economy by giving people power over their own digital sovereignty in all kinds of online platforms.
The blockchain industry is full of cypherpunks and libertarians, white hat hackers and humanitarian activists. Regardless, many bitcoin veterans still think it’s naive to suggest cryptocurrency will fundamentally transform the concept of money. "The technology doesn't seem to support that vision," Patrick Murck, co-founder of the Bitcoin Foundation and a renowned cryptocurrency legal expert, told IBT. “Blockchains don’t scale well.”
At least for the near future, Murck said decentralized networks won’t be able to handle all the transactions that Visa and Mastercard can. Business-oriented networks like Ripple have a much higher capacity, but XRP is not as decentralized as bitcoin or the democratically run Tezos.
Even if a decentralized network does eventually scale for the kind of capacity a commonplace, international currency would need, local governments still define monetary policy. Politics will define the future of bitcoin, regardless of scalability.
Lawmakers can make it easier, or much harder, for citizens to use decentralized networks. Crypto Lotus hedge fund co-founder Joshua Goldbard told IBT the value of currency is still largely tied to a nation-state’s monopoly on violence. Russia and China are already developing their own national cryptocurrencies. Goldbard said the United States could follow suit and gain more value than decentralized tokens.
“That will obviously become a dominate cryptocurrency because the US has all the guns,” he said. “I don’t necessarily see cryptocurrency over the long term as democratizing the world...there will be different concentrations of wealth and different governance.”
Spagni agreed with this assessment. Just because a technology could make money free from politics, doesn’t mean it will happen. “Governments are tenacious and they’re not going to just give up because there’s something else people want to use,” he said. Spagni would like to see larger adoption, yet believes cryptocurrency will likely remain niche even as it spreads and matures.
Along those lines, Murck sees the future of cryptocurrency as a property revolution, not a new type of money. "Bitcoin and blockchain tokens are unique because they create unique forms property, that have never existed before," Murck said. "It's a little piece of data that is scarce and unique. Usually, data in digital systems is not scarce because you can just copy it infinitely.”
For example, once a band digitizes a song, people can make endless copies for almost no cost. Now blockchain allows property owners, including artists who own their work, to keep control of those digital assets. The future of cryptocurrency could be less about mobile shopping and more about business standards. "If you rebuilt the New York Stock Exchange today, you could build it at a fraction of the cost, compared to the way it runs right now," Murck said.
Meanwhile, projects like Filecoin are working to bridge the gap between traditional categories, like securities regulated by the Securities and Exchange Commission, and the Wild West of initial coin offerings. "I think the SEC ruling is a part of it and I think there are some projects that are really embracing that. They want to professionalize the space," Murck said.
Bitcoin Cash was born out of a debate about how to scale bitcoin so more people can use it for more things. While cryptocurrency seems like it will become more popular, decentralized networks may never be able to replace national currencies altogether because people are harder to work with than algorithms. “The [blockchain] network could break if you try to scale it prematurely," Murck said. "Money is just a creature of the state, a social phenomena. You can't really divorce the two."