Counting Costs of Bitcoin’s Big Three Drops of 2017
The most recent dip in Bitcoin price saw $38 bln wiped off the currency’s value.
A lot has happened in a week for Bitcoin. The on-again-off-again plans for SegWit2x were officially put on ice and the effervescent Bitcoin celebrated by reaching yet another all-time high of $7,888. However, what comes up, must come down.
Bitcoin then went into a spiral as a number of factors influenced its latest drop of 29 percent, which saw $38 bln wiped clean off the market cap. Bitcoin Cash managed to profit as it hit new highs, but things are already returning to normal.
Not even the biggest dip
Since Friday, Bitcoin crashed as much as 29 percent as the market reacted to the news that blocks would no longer be getting bigger for Bitcoin. And as such, the alternative was to look into Bitcoin Cash.
It was a busy weekend for Bitcoin Cash, which rose as much as 40 percent and even overtook Ethereum as the second biggest cryptocurrency for a brief time.
Bitcoin Classic, which also shut down at the end of last week, gave its parting shot at Bitcoin, stating that rival Bitcoin Cash would overtake the original within six months.
However, despite this drop, which cost Bitcoin $38 bln, the currency has seen bigger falls this year alone.
In September, after surviving the fork of Bitcoin Cash, Bitcoin slumped as much as 40 percent as the Chinese government took their stance against the digital currency while Jamie Dimon also timed his vitriolic attack.
Prior to that, and leading to the hard fork on Aug. 1, there was a lot of fear and uncertainty around the digital currency's future which saw it dip expectedly by about 38 percent.
Forced to make a choice
Because of the cancellation of SegWit2x, people have had their hands forced earlier than expected. Those searching for a coin that can handle higher data and faster transactions were drawn to Bitcoin Cash with its already larger blocks.
However, those sticking true to the original currency were made to settle with SegWit which has removed unessential information from the blocks but has not helped the scaling as much as many hoped.
Proponents of Bitcoin Cash believe their approach is simpler and closer to the original goal of Bitcoin, which was described primarily as a payment system in its white paper. This has been a stocking point of Bitcoin’s for a while. It has succeeded almost too well as a store of value, but at the cost of its function as a currency.
As with many altcoins created, Bitcoin Cash we made to solve a problem, and it was the result of a civil war that brewed over how the original should scale.
Supporters of the original Bitcoin say that vision is too limited and that by improving the Blockchain with SegWit technology Bitcoin can become a new digital asset class that not only supports payments but countless other functions.
Bitcoin Cash is still finding its feet and even its role. It currently is designed to be better at handling more transactions, due to the size of its blocks alone, however, whether this is the scaling method that can work going ahead is yet to be seen.
Pump and dump
However, Bitcoin Cash does come with its own issues and problems, and it seems that some are already recognizing that as Bitcoin Cash’s rise to over $2,500 has come crashing down to about $1,200.
There is a pattern emerging though, as those who need a digital coin that can be more used as a currency could be favoring Bitcoin Cash, while the asset store properties of Bitcoin are still strong.