Bitcoin Soars to Record as Buyers Look Beyond Miners' Split
This article by Justina Lee for Bloomberg may be of interest to subscribers. Here is a section:
“The miner-orchestrated hard fork has had limited traction and will not impact the price or future development of bitcoin,” said Aurelien Menant, chief executive officer of Gatecoin Ltd., a cryptocurrency exchange in Hong Kong, referring to the split. “The activation of SegWit is a significant milestone in bitcoin’s technological evolution.”
At the heart of the dispute is an issue that has dogged bitcoin’s development: as its popularity grew, transactions slowed because of a cap on the amount of data processed by the blockchain. Under SegWit2x, some of that data will be moved off the main network while block sizes will be doubled to 2 megabytes in November -- a quarter of that for Bitcoin Cash. While the first step of SegWit2x has been locked in and the technology will probably be adopted at some point in August, infighting could disrupt the transition.
The price of Bitcoin Cash has plummeted 62 percent from a record high reached last week to $274, CoinMarketCap data show, bolstering the appeal of its older cousin. For now, Bitcoin Cash still pales in comparison to the original asset: the former has a capitalization of $4 billion, compared with the latter’s $53 billion, according to CoinMarketCap.
“The scaling debate is not over yet,” Menant added. “The promised 2 MB block size increase due in November in accordance with the SegWit2x agreement may still be rejected by certain stakeholders.”
When Ethereum’s hard fork took place a year ago, it was the original version of the cryptocurrency that garnered the most adherents subsequently. That now also appears to be happening following the bitcoin hard fork.
The value of any asset is based on what someone else is willing to pay for it. With income producing, fundamental analysts discount cash flows to estimate what a fair value is. For non-income producing assets supply and demand tend to be where analysts focus but faith in the sustainability and strength of the market are equally important. After all any asset is only worth what someone else is willing to pay for it.
Regardless of how one feels about cryptocurrencies in general the most compelling argument for their increasing value is the dearth of supply and the belief that an increasingly digital economy should have a digital asset based on the strength of the network.
As I mentioned in the weekend video, Bitcoin held in the region of its previous peak during the hard fork. It broke emphatically higher today and clear move back below $3000 would be required to question medium-term scope for additional upside.