With Bitcoin's Adolescence Comes Real Competition by zer0hedge

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· @zer0hedge ·
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With Bitcoin's Adolescence Comes Real Competition
Content adapted from this Zerohedge.com article :[Source](http://www.zerohedge.com/news/2017-11-12/bitcoins-adolescence-comes-real-competition "Permalink to With Bitcoin's Adolescence Comes Real Competition")

[_Authored by Tom Luongo,_][1]

With the calling off of the New York Agreement to force the implementation of Segwit2x **Bitcoin is now at a fascinating fork in the road** (all puns intended).  **Bitcoin prices are falling as people leave the network and Bitcoin Cash prices are spiking.**

_I advised my subscribers ][2]to hedge 15-25% of their Bitcoin position with Bitcoin Cash at $400 on October 28th.  That trade has a current return of over 300% with Bitcoin Cash now trading solidly above $1200._

_Even with what now looks like a blow-off, near-term top in Bitcoin prices, Bitcoin investors are still up around $600 per Bitcoin (around 12%) since that day.  So, no one should be crying in their beer just yet._

## _Where Winning Looks Like Losing_

But, as Rhett Creighton points out in a [very good article at Cointelegraph,com][3], **Bitcoin's newfound weakness may be structural for more than just a few days worth of healthy, technical correction.**

In short, **the Bitcoin Core Developer team which won the battle over Segwit2x may have lost the war.**  Bitcoin needs a transaction-scaling solution.  And it needs one quick.

**Bitcoin Cash is a real competitor to Bitcoin** because it combines big 8MB block and quick settlement times without any of the off-chain or side-chain complications associated with _segregated witness (Segwit).  _

But it does have the drawback of a single core developer. But, I'm a hard-core free-market guy.  Competition is what keeps everyone honest.

This is not to say that I'm not a fan of Segwit.  I am.  But, am I a fan of Segwit on Bitcoin?  I don't know. 

**In the world of cryptocurrencies I want a reserve asset that sits at the bottom of Exter's Monetary Pyramid that can be 1) incorruptible and 2) a standard against which all other monetary-like assets, including utility tokens like Ethereum, can be measured.**

![exter's pyramid][4]

_The Current Monetary System – Exter's Pyramid with Gold as the Foundational Asset_

**It's the function that gold still functions within the global monetary system,** despite protestations to the contrary by everyone from central bankers like Ben Bernanke ("I don't know?  Tradition?") to students of history like Martin Armstrong (a hedge against government incompetence).

**Bitcoin has to continue to be that asset for the cryptocurrency and crypto-token community or the community will go adrift, **unmoored from the anchor of sequentially-verified transactions from previous blocks.

## _The Real Battle for Bitcoin_

And that's where I have a bone to pick with Rhett over the following:

> I fully expect the market cap of all crypto tokens to increase exponentially over the next few years, but this is not a winner-take-all scenario. Today, mainstream media financial advisors are touting Bitcoin as "[the new gold][5]," but it can't ever be that. **To get a sense of how it's different, imagine a universe where anyone could create a new kind of metal with essentially the same properties of gold.**
> 
>  
> 
> Expecting Bitcoin to have the majority market share of Blockchains in the future is about as ridiculous as expecting the East India Company to be more valuable than all other corporations combined today.

Nonsense. **The cryptocurrency market languished for four years because there was no compelling reason to back any other coin than Bitcoin in any substantive way.** The past is littered with technologically superior coins to Bitcoin and yet Bitcoin is $6000+ and many of them are $0.001.

The market craves those _unit of account _and _store of wealth_ attributes that real monies have.  Just because something has the potential to be that doesn't mean the market has to pay it any attention.  Otherwise Feathercoin or Litecoin would have out-competed Bitcoin three years ago.

Litecoin would have never had to incorporate the Lightning Network to differentiate itself from Bitcoin.

Rhett's own project, Zcash, wouldn't have been looking for its niche in the privacy space.  But, the use of these coins doesn't mean that Bitcoin can't act like digital gold.  In fact, with the collapse of Segwit2x and maintaining its high fees and low transaction density Bitcoin has more in common with physical gold than it has ever had previously now that the cryptocurrency market is maturing into one that settles actual trade.

## _Crypto-Gold Mine_

It's become a bad medium of exchange, just like gold.

**If you want to move money around the net Litecoin is far superior as are dozens of other coins.  But, if you want the security of the oldest blockchain with the most trust built up over time, then Bitcoin is absolutely where you store your wealth.**

Just like Gold.

_Bitcoin's Flaws Become Strengths when viewed as a Foundational Monetary Asset_

![Crypto Exters Pyramid][6]

**Do you see the similarities here?  Gold is hard to do real business in.** Who wants to weigh out 0.1 grams of gold to buy a hamburger (around $4.50)?  There's a real cost to doing transactions using gold as a medium of exchange.  It's a time cost.

**Bitcoin now looks exactly like Gold. ** It's expensive to own and or move Gold when compared against the dollar just like it is expensive and slow to move Bitcoins when compared with Litecoin or something else.

**That makes its flaws strengths as a means by which to interface the 'real' world with the 'crypto' world.** Bitcoin doesn't need to maintain transaction market share to maintain its relevance.  In fact, it losing market share is an expression that it is becoming that foundational asset we need it to be.

What we need is the volatility of the cryptocurrency exchange rates to stabilize.  For Litecoin to trade consistently within a 10% band relative to Bitcoin.  If we begin to see that volatility of the LTC/BTC pair die down over the next 18 months or so, then remember then you'll know what is happening.

**It will prove the whole cryptocurrency thesis that lack of central control over the issuance of monetary assets will be driven by end-users not central planners.**

The dollar price of these coins will continue to rise, but they will do so in concert, in relation to the foundational asset, most likely Bitcoin.  Over time, we should see one currency emerge as the standard by which all others are measured.

## _Bitcoin's Competition_

But, Rhett is right that Bitcoin Cash has the real potential to be the real winner here.  Why? Because it is a soft fork of that original Bitcoin blockchain with the added advantages of a it being, for now, an excellent medium of exchange — low fees, short settlement times, no side-chains.

What this means is that Bitcoin Cash can, if its backers and developers stay on mission and are honest, compete with Bitcoin for the role of foundational asset.  Litecoin can't.  It made it's choice by going with side-chain payment processing.

**_The dark horse in this race is Bitcoin Gold. But, it too has the potential to become the new crypto-gold._**

## _What Does this Look Like?_

**What we don't know at this point is what the market wants in terms of cost structure for its reserve asset.**

Do we want a very liquid one or a relatively-speaking illiquid one like Gold?  It's a good question that I don't have an answer to today.  My guess is an illiquid one that can reflect the value of the crypto-markets versus the value of the fiat-markets better by resisting hot money flows because of the high barrier to exchange.

Either Bitcoin or Bitcoin Gold.

**_But what I do know is that the entire cryptocurrency market just grew up a little and real world growing pains are on the horizon._**

I would be hedged accordingly amongst all of the top market-cap coins that the market is right now separating off as serving real market needs.  I believe in the division of labor.  Each will serve different niches and work to keep the foundational coin developers honest.

**There is no one blockchain can rule them all.**

We tried that in the 'real world,' it was called the _petrodollar _and it gave rise to a level of wealth inequality and systemic corruption orders of magnitude larger than the world has ever seen.

Why would we want to recreate that in the crypto-world?  That's what, ideologically, the Bitcoin Core developers were fighting for against Segwit2x.

__**If we want to make the crypto-dollar then we've learned absolutely nothing.**__

__**And we're the ones that need to grow up, not Bitcoin.**__

[1]: https://tomluongo.me/2017/11/11/with-bitcoins-adolescence-comes-real-competition/
[2]: https://www.patreon.com/posts/what-annegables-15094342
[3]: https://cointelegraph.com/news/bitcoin-reaches-end-of-an-era-expert-blog
[4]: https://tomluongo.files.wordpress.com/2017/09/exters-pyramid.jpg?w=510&h=510
[5]: https://cointelegraph.com/news/why-cant-gold-keep-up-with-bitcoin
[6]: https://tomluongo.files.wordpress.com/2017/11/crypto-exters-pyramid1.png?w=565&h=416

---
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vote details (62)
@ismailsteem ·
$0.18
A highly experienced post and an inspiration to many people and a very valuable guide thanks my brother
👍  
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@ullaslepakshi95 ·
good material , but many peps just happy with the Bitcoin and even in all this it's dominance is 52% bitcoincash price hike is just a pump to make money king Bitcoin will take it back
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@rana420 ·
good job.
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@vimukthi ·
Actually the real winner will be Dash. The only value a Cryptocurrency has is it's use. To elaborate more, I'd say it's about 

1.Utility
2.Usability
3.Scalability

Usability is pretty OK-ish for BTC. It's accepted around the world though it had negative merchant adoption in 2017. There are several multi-currency wallets that support BTC. But there are no mobile friendly wallets like Dash, NEM, PIVX that also support usernames and other __protocol level__ support for mainstream adoption.

Everything else about Bitcoin is a Joke that has been taken too seriously.
https://www.youtube.com/watch?v=jYDJkDS8FbU

Dash and PIVX are not only cheap but also __Private and Instant.__:https://steemit.com/cryptocurrency/@vimukthi/bitcoin-fees-triple-under-a-week-while-dash-makes-itself-10-times-cheaper-my-discovery-of-a-secret-device-to-store-the-entire

I also believe Dash may come to a position where other crypto projects recycle the Hash power of Dash further increasing the value of Dash: https://steemit.com/@vimukthi/the-case-for-pow-as-a-service-komodo-dash-and-mining-algorithms-discussion
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@taskmaster4450 ·
An excellent article.

Bitcoin will be relevant simply because Wall Street Will deem it so.   There will be a ton of money entering the space from this arena and bitcoin will be the biggest winner.

That said, I am a huge Charlie Lee fan and believe he was smart to go the sidechain route.  The challenge BCH has is that it takes the power supply of a small nation to create a coin.  Also, the 8MB blocks will create such huge volumes of data that the computational power will fight to keep up.  According to one I read, we are talking Petabytes of data created...that is a ton.

It will be interesting to see which blockchains win out.  Overall, there is room for many since blockchain will take over the world's economy.  There is going to be so much put on these blockchains that it will end up being the foundation for commerce going forward.
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