Bitcoin’s scaling fight has led to a record low in its percentage of cryptocurrency’s total market cap as investors hedge with top altcoins.
As its user base expands, Bitcoin’s transactions have also grown, leading to blocks, capped at 1mb, to be filled to capacity. As a result, transactions have slowed and fees have spiked. An effort to solve Bitcoin’s scaling issues has led to a civil war of sorts between the Core development team and its supporters backing the Segregated Witness (SegWit) soft fork, and the Bitcoin Unlimited miner-directed block size hard fork and its supporters.
In contrast to previous hard fork attempts (XT, Classic), Unlimited has gained speed, occasionally passing SegWit in adoption by miners. Recently, Unlimited has secured a solid lead, due in part to a major mining pool, Antpool, switching to Unlimited.
“Bitcoin Jesus” Roger Ver, who has led the opposition to the current state of Bitcoin and its hard cap of 1mb blocks, has stated that he believes that the current inability to find a resolution to the issue has cost Bitcoin billions of dollars already:
The damage caused by Core's intentional fee market via full blocks has already likely damaged Bitcoin's market cap by billions of dollars.— Roger Ver (@rogerkver) March 19, 2017
Other coins rise as investors hedge their bets
As a result of increasing uncertainty, lack of usability and conflict surrounding Bitcoin, its growth has stagnated- even receded, while other coins have seen exceptional gains. Ethereum, cryptocurrency’s number two contender, has seen a massive increase, more than doubling in market cap and price in the last 10 days alone. It currently sits at about $4 bln total and $45 per coin, with a current trading volume of over $200 mln.
Dash has seen even more impressive relative gains, multiplying its value and market cap five times over since one month ago. It has broken the three-digit barrier and appears to have settled above $100, having also broken 10 percent the price of Bitcoin per coin. As a result of this growth, Dash’s treasury, 10 percent of its block reward set aside for development and other projects, has passed $500,000 monthly, closing in on a million dollar monthly budget for the newly number three ranked coin. Monero has also picked up on the Bitcoin exodus, doubling in value over the last 10 days, maintaining a solid fourth place and passing $300 mln in market cap.
This growth and reshuffling of the cryptocurrency field has led to a slipping in Bitcoin’s dominance. Bitcoin’s share of the total cryptocurrency market cap has sunk to 70 percent, a new all-time low since the previous low of 74 percent during Ethereum’s initial boom last year. Total cryptocurrency market cap remains slightly lower than its all-time high, while combined altcoin value has grown from approximately $2.2 bln at the year’s start to over $7 bln now, nearly $4 bln of that growth over the last month alone.
The scaling debate gets ugly
In spite of this growing shift, the Bitcoin scaling conflict continues to become more heated. Ver alleges that many Unlimited nodes identify as Core in order to avoid DDoS attacks, which have plagued Bitcoin.com all last week. Unlimited supporters have documented a pattern of alleged censorship on the Bitcoin subreddit, filtering out comments in support of an alternative implementation of Bitcoin than the one stewarded by the Core developers.
Meanwhile, faced by increasing resistance from large mining pools, such as Antpool, Core member Peter Todd publicly mused about a proof-of-work algorithm change in order to reshuffle mining power as a “backup plan”:
With some miners threatening 51% attacks against Bitcoin, researching a PoW change is a good backup plan: https://t.co/SEZ1qlxhAH— Peter Todd (@petertoddbtc) March 19, 2017
Meanwhile, Bitcoin’s network congestion remains an issue. Low-end fees remain above 50 cents and the median confirmation time continues to rise. The mempool of backlogged transactions has filtered out slightly, though it still remains in excess of 20mb over a seven-day average.