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RE: Bitcoin forks - for dummies

in #bitcoin7 years ago

There's another alternative:
In the near-term the BCH fork creates/created two viable coins.
BTC is used like gold, sparingly, with high transaction costs and low # of transactions mostly of large $ size.
BCH becomes the medium of exchange, especially small sizes.

This can come about bc the miners will be drawn back to BTC anytime the price is high, and then they can collect not only high fees but high payouts for mining. There will be an ebb and flow to both coins, as miners TRY to support BCH when BTC price falls, but keep getting drawn back when BTC rises via outside means.

Longer term:
Our take is that something will change with Coinbase fully accepting BCH in late December 2017. Large institutions will likely continue to favor BTC as the transactions costs are negligible, whereas the minnows will put money into BCH and whatever coin doesn't "mining-fee-to-death" their balance.
So THEN the question becomes, who's bigger? Institutional crypto investors doing $100mm at a time, or leagues of smaller minnows at $1,000 and $5,000 per punt? In the beginning, we think institutional is bigger, and we saw that with the rise from $5,000 to $19,000 at the end of 2017. But eventually the rise of crypto prices will draw in minnows which drown out institutions, and this will favor BCH as well as low-mining-fee altcoin alternatives to BOTH BCH and BTC. In the end, crypto currencies which can climb high without high mining fees, will win. Which ones are those?

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BTC is used like gold, sparingly, with high transaction costs and low # of transactions mostly of large $ size.

I believe that in the long term, it won't work out. If BCH actually gets used for day-to-day purchases and if BCH starts getting a prominent place on the exchanges, the value will increase, and once the value of BCH raises above the BTC value, then we don't really need BTC anymore.

I may of course be wrong. The thing that one actually can validate all transactions using commodity hardware, and even listen to sattellite broadcasts of the blockchain ... it's for sure some value in that.

Anyway, security-wise - the hash power follows the coin value, if BCH would be more valued then it would get the majority of the hashing power. With a falling difficulty on BTC, and with some few actors controlling wast amounts of mining hardware, people may be worried about the security.

This can come about bc the miners will be drawn back to BTC anytime the price is high, and then they can collect not only high fees but high payouts for mining. There will be an ebb and flow to both coins, as miners TRY to support BCH when BTC price falls, but keep getting drawn back when BTC rises via outside means.

Probably a majority of miners are mining wherever the profit is higher - and now that the BCH difficulty adjusts frequently, the mining power will follow the price ratio quite well.. Until the halfings, there won't be any major changes in hashing power.

Most of the time, over the past few weeks, BTC has been most profiltable to mine. Some miners are probably sticking to principles and mining BCH whatever it costs. Others may be minor pool members and realizing that a big amount of their pool rewards will me lost in transaction fees if withdrawing Bitcoin frequently.