I haven't posted in a while because I've been nervously watching what has been happening to Bitcoin, and gathering up as much information as possible trying to make sense of it all. Finally, I think I am ready to make a post and share my thoughts with all of you. Let me summarize the main points of my opinion:
- Bitcoin Segwit (The Main Bitcoin) will remain the top market cap cryptocurrency and will exceed 100 billion in market cap by end of 2017 or early 2018.
- Bitcoin Cash will remain as an altcoin but will decline in market cap by 1/2 to 2/3. It will fall underneath Litecoin, Monero, and Dash.
- Bitcoin Segwit 2x hardfork is unclear at this point, but for investment purposes whether or not it happens is currently irrelevant.
- With Lightning Network and Atomic Swaps, Litecoin will be the low fee high frequency protocol payment solution and Bitcoin Segwit will be the store of value and main settlement layer.
Bitcoin Segwit (the main bitcoin) will retain its spot as the top cryptocurrency by market cap. This is due to its network effects, which include merchant acceptance, international user brand awareness, decentralized hashing power, government adoption via regulatory approvals, and major exchange USD pairings. No other crypto can overcome these barriers without significant time and investment, and it will be a constant uphill climb to Bitcoins already established infrastructure.
Bitcoin Cash will become relegated to altcoin status and will decline in market value by 1/2 to 2/3. This is because although it is technically built for low fees and intermittently more profitable mining, it does not have the other network effects of Bitcoin Segwit (the main Bitcoin). The current value as of this writing of $620 USD/BCH is artificially high because most coinholders are unaware of its existence and/or are unable to access them as of yet in order to sell them. When large exchanges like Coinbase and Gemini make BCH available for sale, there will be a mass exodus. Bitcoin holders will consider BCH to be a free "cash dividend" and will either convert to BTC or another of their favored altcoins (most likely Litcoin.) BCH is supposed to be for lower fees and faster transactions, but this role is already played by Litecoin. Litecoin already has vast network effects and is technologically more advanced than BCH for these purposes. Other beneficiaries could be Dash and Monero, for their unique attributes as well.
The Bitcoin Segwit 2x hardfork of the Bitcoin Segwit chain is unclear at this point as to whether or not it will happen. For investment purposes, however, it doesn't matter at this time. This is because it will happen on the main Bitcoin chain so holders of BTC will benefit from whatever initiative happens. The main idea here is to remain on the main chain that has the greatest network effects and infrastructure.
With the activation of segwit, both the lightning network and atomic swaps with Litecoin become possible. This appears to be the future infrastructure that all users will enjoy. They will use BTC in order to store and grow their wealth, and they will swap to Litecoin for ultrafast transactions and low fees. Major transactions, wealth storage, logistics management, value clearinghouses and settlements will occur with BTC due to its more robust security, while Litecoin will be the more nimble cryptocurrency for everyday forms of economic activity.
These are my current thoughts on the near to mid term future. Please let me know if you agree, disagree, or have a question!
Thanks for the analysis. Your comments on BCH seems to make sense in that most of the owners of bitcoin are on the exchanges like coinbase (me included) and unable to pull anything off of it. I will probably just leave it there and see what happens and for speculative reasons.
What do you think of NEO and how it might measure up to the others you mentioned? I enjoyed a nice rise as of late.
Hey John, thanks for the reply. As far as NEO, I think it is a real ETH-type contender especially with its multiple coding language platform and Chinese government support. I'm personally taking a wait-and-see approach to investing in it though. I think ETH has a commanding head start in the network effects it has going for it. Additionally, BTC and LTC will soon have coding layers built on top of them (look at Stratis) so the value proposition of NEO is not a sure thing.
@kalienx777, I think you missed this point...
Bitcoin cash, the cryptocurrency born earlier this month, enjoyed a drastic surge in price over the weekend, pushed by strong demand in Korea.
The massive trade volume has made Korea the top cryptocurrency market in the world.
“The bitcoin cash offshoot, bitcoin cash, jumped to a record high near $1,000 Saturday in high trade volume, primarily from South Korea,” CNBC reported Saturday, when the price of bitcoin cash reached as high as $1,091.97 in session before closing at $754.56.
The 24-hour trade volume on Saturday for bitcoin cash was around $3.2 billion, and its market cap stood at $11.5 billion.
After bitcoin cash separated from bitcoin on Aug. 1 in an event known as the SegWit activation, the price of bitcoin cash reached over $700 the next day before falling in subsequent weeks. Up until Aug. 17, the value remained stable at around $300.
Then, the price began to climb. At Bithumb, Korea’s largest cryptocurrency exchange, bitcoin cash was valued at around 330,000 won ($290) on Aug. 17. Two days later, it was at 1.36 million won.
What initially triggered the rapid rise of bitcoin cash was a Twitter post from Wu Jihan, the Chinese co-founder of Bitmain, the largest bitcoin mining company in the world. The mining pool led by Wu’s Bitmain takes up about 20 percent of global bitcoin mining.
“Antpool will start to provide BCC mining option after at least one of SegWit supporters/fan pools start to mining BCC,” Wu tweeted Friday. Antpool refers to a mining operator under Bitmain. Larger mining volume leads to increases in the price of digital currencies.
While Wu’s comment gave the initial push, it was Korean traders who provided the momentum. The amount of general trading on Bithumb Saturday reached a record-high 2.6 trillion won. By comparison, the trade volume on the Kosdaq, Korea’s tech-heavy stock index, was 2.4 trillion won on Friday.
As of press time Wednesday, the 24-hour trade volume of bitcoin cash on Bithumb stood at $502 million, according to Coin Market Cap, a cryptocurrency data provider. The top three trading platforms for bitcoin cash were all Korean platforms - Bithumb, Coinone and Korbit. Together, they took up about 55 percent of all bitcoin cash trade globally.
Korea tops bitcoin cash market
http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3037499
Thanks Akifemir, but I the article you referenced is old and also has some incorrect info in it. As of today, the trade volume of BCH has fallen to around 25% of BTC. The price is around $600 USD. Additionally, the August 1st fork was not the Segwit fork. It was the Bitcoin Cash hard fork. The Segwit activation occurred on the main Bitcoin chain and there was no hard fork.
Hope this helps clarify. Cheers