The Great Bitcoins’ War Explained: It is War Without Bullets, it is a War of Bits
Meanwhile, the chaos is spilling over into altcoins (making the top alts a little less predictable than normal).
Exactly what is happening is complicated and wrought with conspiracy theory and plot (you can read about it in this article, or in this article, or this article, or this article, or in this one; or this one… you should really read that one), but let me try to offer the gist of the war and the coordinated strategies and shadowy plots that surround it.
UPDATES AND OPINIONS FROM DECEMBER AND IN RETROSPECT: Bitcoin Cash (BCH) lost the war to such a degree that I’m not sure “war” was really the right term to use in retrospect. It was more like a quick mutiny followed by a quick, decisive, and crushing defeat of Bitcoin Cash. On the plus side for Bitcoin Cash investors, Bitcoin Cash rose in value from its $300 low and steadied out around $1,500 as a result of the events (thus early adopters and holders were rewarded). On that same plus side, Bitcoin (BTC) only quickly shed 20% of its value to shoot up form its $5.5k low (at the height of Bitcoin Cash’s rise) all the way up to nearly $12k (as of December 3, 2017). That means anyone in Bitcoin or Bitcoin Cash who made favorable trades or had been long and didn’t over-react was rewarded. On the frustrating negative side, anyone who panicked or believed the hype and sold their BTC for BCH when BTC was at its low lost out on major gains (potentially losing a thousand per BCH and missing out on $6.5k in gains on BTC; that really hurts). Anyone with empathy who parroted the Bitcoin Cash talking points after Bitcoin started to decline should rightly feel ashamed of themselves. These Pied Pipers led their followers astray and it cost those late to the party dearly. Blockstream didn’t do that, they did that. Next time a coin comes along and claims to be a “dragonslayer,” think about many normal people comprise the now nearly $200 billion Bitcoin market cap and how they will be hurt by this sort of thing (what is that a central bank and its fiat or a major stock exchange could do that would hurt worse than that? A few things clearly, but still, you get the point). A rising tide is supposed to life all ships, but when a battleship readies its cannons against Bitcoin prematurely, it is bound to get sunk at the expense of normal people who start listening to strong men instead of stargazers. In retrospect, one could argue that the Bitcoin Cash pump was, for all the plebs who got slaughtered in the Whales’ war, a shameful thing to be part of, arguments for block size aside (which are valid and could have been made in a much more democratic and much less drastic way). NOTE: Nothing says the war is over. Clearly though the outcomes so far, first weekend aside, have been in Bitcoin’s favor. Many who started the war sill logically are some of Bitcoin’s biggest holders and miners. So they could “strike back.” Hopefully though they will instead work a little harder to “lift all ships.”
TIP: Litecoin has lower fees and faster transactions than both Bitcoin and Bitcoin Cash. Meanwhile, Bitcoin Gold is more profitable to mine. Meanwhile, Ethereum for example has a ton more features than any of those. Learn more about Bitcoin Vs. Bitcoin Cash and which one is “better” (hint, the answer is each coin has its own pros and cons).
UPDATE NOVEMEBER: 1. For the moment (here on Nov. 24) the meme above was sort of right. That is, buy ether was a better call than buying Bitcoin or Bitcoin Cash at their highs (even if the meme was only meant as a joke, and even noting that if you bought BTC or BCH on a dip you did well), and 2. after I wrote this article someone at Medium wrote an arguably better one, check it out: Politics, Religion, and Bitcoin (Cash).
NOTES: This is an opinion article about some news, facts, and theories. So its a mash-up of news and opinion, of fact and theory. Additionally, I really don’t feel comfortable telling anyone what investments to make on a good day, so that is doubly true in times like these. The thing I would note however is that general investing advice always applies, so “buy low, sell high” (don’t get spooked and sell low, market has been moving up and down like crazy).
The Bitcoins’ War: The Ongoing War Over Scalability
The war noted above is over “Bitcoin scalability” in every sense. Essentially Bitcoin is having speed troubles as it grows and the Core team who works on it has been resistant to the changes that a faction of miners and users want.
The group of miners want more profitable mining and the users want more speed (faster transaction times). Meanwhile, what is known as the Bitcoin Core team (including Blockstream) essentially doesn’t agree with that group.
This has caused tension, and it has led the anti-Core team to create a number of forks over the years that address scalability (all of them have initially been pumped, but have ultimately failed… but this time might be different).
The reason this time might be different is because the problems being addressed have become more pronounced over the years, and the players backing the forks have become more powerful. With that in mind, to understand where we are at, you have to understand the latest round of events, the first shots fired, and how both factions have fared so far.
The latest round of events started officially after the Segwit2x cancellation. Despite that being a catalyst, a plan had actually been in the works for years unofficially with odd forks noted above like Bitcoin Classic, Bitcoin Ultimate, and Bitcoin XT (each of these is essentially a version of Bitcoin Cash championed by the same aforementioned anti-Core group).
Meanwhile, if we believe the rumors, the events we are all now just witnessing have been in effect for a few months in secret in a plot that involves Bitcoin Cash, Bitcoin Segwit2x, and a small handful of players (where this whole thing so far was simply the first stages of a plan to destroy Bitcoin and then replace it with Bitcoin Cash).
The worst part of this, in ways (for the holders of Bitcoin at least), is that the war officially started when Bitcoin was at an all time high and due for correction (which one has to suspect was no accident).
Consider, starting this war at an all-time high meant coins were in weak hands when the panic started. This would have made phase one of the Bitcoin crash easy for “whales” (investors with a lot of funds) to spur on (either purposefully or simply to take profits).
Why spur on a crash? Well, if you know you are doing it, you can sell high and buy low and short the market. So, countless $$$ is why. Then of course, the other aspect is “to have the funds needed to crush Bitcoin on the exchanges” (as that is going to take countless millions and some smart trades to pull off; plus efforts on social media and efforts to sway miners). Back to the story.
The first wave of the war involved a simple dump of Bitcoin from a high of $7.9k to the $6ks. From there, Bitcoin Cash started being pumped and Bitcoin started being further dragged down as the pro-Cash factions paired their pumping and dumping in the markets with a social media blitz that exclaimed that “Bitcoin was dead and Bitcoin Cash is the real Bitcoin” (a very questionable claim, and a very confusing one for many).
Meanwhile exchanges started adding BCH (sometimes under the symbol BCC) and some miners started moving to BCC (lured by profitable mining; remember, you need miners to confirm transactions, so luring miners away from Bitcoin is very destabilizing).
Meanwhile there is rumors of DDoS style attacks on Bitcoin (slowing down transactions and upping transaction fees; which was then used in tandem with the talking point that Bitcoin Cash has lower fees… which Bitcoin Cash itself touted so loudly one has to wonder what exactly is up). So the war bleeds out in that direction too (it involves exchanges, miners, and social media blitzes).
I’m not saying they are malicious actors (that is somewhat a matter of perspective), but I am saying they are central and key players who have been somewhat vocal about their intentions recently and have every reason to pump Bitcoin Cash (TIP: These people all have Twitter accounts you can look up, they all also have somewhat murky backstories save maybe McAfee… which you can and should look up).
If you don’t understand who these titans of Bitcoin are, do yourself a favor and read up on them. These are figures big enough to move crypto markets and big enough to influence social media. These are also people who have gone all in on Bitcoin Cash (on social media, on the exchanges, and in terms of mining). These are the people who have been mining Bitcoin Cash, these are the people who dominate the Bitcoin Cash market, these are people who make millions every time Bitcoin Cash goes up a dollar.
I’m not saying they did anything criminal (or at least not recently that we know of), I’m saying they backed a horse and went to war against Bitcoin Core and the Bitcoin Community with a coordinated strategy in place.
Now here one should note, that faction feels fully justified in their part in the war and they aren’t really hiding what they are doing.
Its a coordinated attack on all fronts, and many (even knowing the grey-hat tactics) think all is fair in war and Bitcoin Cash is a legitimate contender to the throne.
After-all, the Cash faction and their backers have long felt that Core was going to war against them, betraying ideals and agreements. If you follow blog’s like deadalnix’s… there has been very little effort to hide the disdain (they did however hide their true intentions until the, potentially orchestrated, cancellation of Segwit2x however; so they are playing dirty a bit here).
Of course, what some consider shady tactics aren’t thought of that way by all. In the crypto space (not so different from the open source information of Assange or open source content of Kim Dot Com space), many take a very libertarian approach (for example the very nice, but rather open-source-y guru of Ethereum Vitalik Buterin).
That libertarian approach says:
- If Bitcoin is destroyed at the expense of those holding, then so be it.
- Likewise, if Bitcoin Cash is destroyed, so be that as well.
Sure, a perfect world for some sees both coins augment each other and co-exist, creating an ecosystem where you move between Bitcoin Cash and Bitcoin (one the value store, one the currency… all adopters winners), but a perfect world for others sees only one Bitcoin left standing (and that one gets the name Bitcoin).
The all-or-nothing approach means mass casualties, but it also means victory for those who put their weight behind a given coin. And a portion of these players want victory at all costs, victory makes them some of the richest people on the planet, sharing the pie means sharing the future with the very people they war with.
Thus, given the all-or-nothing nature of the game, a mentality embraced by lead Cash whale Ver and others, the outcome could really be anything at this point.
How to See the Bitcoin Vs. BitCoin Cash War As an Investor
All the human interest drama aside, the effects of the war have been big ups and downs for Bitcoin and Bitcoin Cash as investors shift between pumping one and dumping another.
Meanwhile, alts are getting a lot of the transitory investments, as people fleeing both coins (even if only temporarily) have tended to go into alts.
The problem with all this is that it is very hard to tell where to buy and sell. Bitcoin has swung between $6.9k and $5k in 24 hours and Bitcoin Cash from like $800 to $2400 in about the same time. Then the reverse was nearly true at times as well. In other words, what looks like recovery isn’t necessarily, and what looks like the end isn’t necessarily either.
Ideally one would clean up on this buy buying low and selling high, but exactly where lows are has been very unclear. Backing a horse in an all-out war might end up looking easy in retrospect, but in the moment there is a lot of gambling (even more than normal).
And, its not like its just the average investor gambling here, the major players are all gambling right now too.
If you back the wrong horse, your battleship is toast. If you split your funds between Cash and Bitcoin, you could very well miss out on the winner and be dragged down by the loser.
Sure, both coins could win, but then you are placing bets on that and taking risks based on that.
Both Britain and France could have tied Waterloo, but like, they didn’t. Sure, today they are friends, but that didn’t help anyone placing bets at the time.
If this was all just the market reacting normally, it would be easy… but with plots and plans and giants moving chess pieces, its hard for the little guys to know which direction to swim.
NOTE: As I wrote this article I saw Bitcoin recover from about $6,250 to $6,750… then I saw hundreds of thousands in Bitcoin dumped and it pushed the market down to
$6,500 $6,450. People are not messing around here. It is literal war, and both sides brought lots of ammo.
TIP: If you are going to pump and dump on this level, it only makes sense to back off and allow recovery. That forces your opponents to buy the market back up, then when you come in for the big sell, you make more and they take bigger hits. See how that works? Its a war of attrition and Bitcoin Cash backers are some of the world’s major miners, they have almost infinitely deep pockets. I don’t see how this ends up being pretty.
All of that said, the bottom line here is that the current market is rather chaotic no matter what way you look at it (which makes sense as the top #1 and #3 coins are arguably trying to destroy each other).
Chaos can be good if you can time your low buys and high sells right, but for those going long or those not confident in buying in a market where we are seeing $1k up and down swings in a day with Bitcoin and Bitcoin Cash, there isn’t much good to do.
- One could go to USD (or Tether) until the dust settles. But they risk losing out on big recoveries.
- One can split funds between Bitcoin and Bitcoin Cash, but they risk going down with a given ship, but if both coins survive this could end up being the best move (plus if one does very well, but the other dies, this could stave off the epic losses associated with backing the wrong horse).
- One can pick Bitcoin or Bitcoin Cash, but God help you if you are wrong! Plus, if even half the rumors of Cash are true, the environment it was born in is somewhat toxic (which, along with factors like its lack of a Github, its centralization, and the wacky backstory of its major players calls into question the logic in that).
- GO into alternatives like Litecoin (which essentially is already a mix between Bitcoin and Bitcoin Cash, a longstanding value store / currency that isn’t imploding) or Ether (the top #2 coin by market cap, and also a very interesting technology). Or, any other top alt that you like (just don’t pick one with Bit in the title and you’ll avoid the bulk of the chaos).
- One could try trading between Bitcoin and other cryptos a bit, for example when Bitcoin goes up trade to Ether, and when Bitcoin goes down trade back (you can do this with Bitcoin Cash too). However, the future is so unclear at this point that missing a bull run or mistiming the bottom is very likely with this strategy too (and thus it is very likely you’ll end up holding one of those two coins accidentally with that method or taking a loss).
- One could trade alts to alts… but the problem there is that alts aren’t moving that much, so there will be a lot of washes.
99 Problems and a Few of them are Named Bitcoin; Plus Waterloo Metaphors
The problem with the market right now is as eluded to above. That is, we can’t just look at fundamentals (speed, code, developers, backers, history, etc), we have to also think about major players in the crypto market pumping and dumping Bitcoin and Bitcoin Cash.
Metaphorically, we can’t just look and see if we like France or Britain better based on their qualities (on one hand France probably makes a better meal, but on the other its much easier to pass tax cuts in Britain… its a toss up really; sorry, quick joke), we have to look at their formations on the battlefield and note what their spies are doing. Problem there is that the average person doesn’t have Rothschild’s pigeon to carry as word of the winner (side note: that story is almost certainly myth by the way).
We have to watch the battle from the sidelines and see if we can make out what is happening…. that isn’t easy.
We have to watch as markets swing wildly at some times and then see major downward or upward pressure at other times (in a way that one could argue is essentially designed to create confusion).
Now, do I think that this article or this one has more truth to it than the idea that Bitcoin Cash is naturally going to be embraced by the market?Well, I mean, if you can’t understand the subtext of this article, than I have a beach house in Idaho to sell you (its not a scam, its THE real beach house). But like, I don’t care to back a horse (I’m not @cryptogoat), I just care to keep you informed.
I’m just a guy online who likes cryptography, decentralization, investing, technology, and writing about facts… so I made a cryptocurrency site back in the day (with the help of an amazing small team).
I’m not a guru, and I can’t tell you what the right investment for you is. Likewise, I don’t have many millions in Bitcoins, so I can’t pick a fight with Ver and Wu. Plus I’m a lover, not a fighter, so why would I want to jump in the middle of war where shots are being fired. At best I’m just hanging out at the exchange trying to overhear Rothschild’s pigeon.
After-all, even if the current chaos is the result of a plot, it doesn’t mean the good guys have to win (and sometimes its hard to even tell who the good guys are anyway, after-all, the core team has been a little absurd with years of inability to please the faction who has now felt driven to wage war on them… it really wouldn’t hurt to have a faster Bitcoin, to remove the Achilles heel it is currently being stabbed in).
Anyway, whoever wins, I’m gonna be here writing about their coin. And, I’ll likely be investing in their coin as well. Sure, I’ll be salty about going through all this. And, I’ll be extra salty about all my readers who get hurt but like, I’m not that much of a libertarian myself, I’m personally a humanist.
Still, Ether won its battle, so today we talk about Ether and not Ethereum Classic (generally). It isn’t impossible that Bitcoin Cash could win this battle and become “the Bitcoin” (with old orange becoming Bitcoin Legacy).
The Bottomline Over the Battle Lines Drawn
The reality is, there is only so much feelings (anger, denial, sadness, etc) are gonna do here. I could well be pushing Bitcoin Cash when the dust settles if that is where the market goes (willingly or not). Plebs like me just pay our taxes and do the best we can, I’m not part of the aristocracy or the Bitcoin army. I don’t have thousands of Bitcoins to pump or dump with, I’m looking for spaces to swap between coins and avoid fallout.
In other words, all the creative writing aside, the bottom line is this: ANYTHING COULD HAPPEN HERE. So, if you are new to the market, be very cautious. And, if you know what you are doing, be aware that both sides of the war have very different stories to tell and very different accusations to make. If you have only heard the Bitcoin Cash side, where they manically claim “Bitcoin is dead” you are at best only working with half the story. You also need to take the idea that this could be an epic pump and dump seriously. Meanwhile, if you think Bitcoin has to win, realize that a group of powerful miners have drawn a line in the sand and seem to be willing to fight to the death (even if it means driving the world’s holders into the ground).
We can’t forget that Bitcoin Cash is being promoted by some people with dark track records and otherwise a small group of miners who control most of the mining power for Bitcoin Cash (and therefore also control the voting power; meaning they centrally control the coin at the moment). yet, we can’t forget that their dark track records are pretty vanilla compared to a sort of deep web mentality, and these aren’t people who really consider what some consider darkness to be all that dark (its like, you know, “the internet” with all its libertarian-ness).
And, as McAfee says “people don’t care about decentralization, they care about block size.” Which of course we all know to be true, which is why the community keeps rejecting the forks and the pro-fork faction had to gather a small group to go to war. Right? Again, half-joking. There are valid pros and cons behind each coin, and each side has its own sometimes annoying and polarizing attitudes to own.
All this to say,
- Those who are holding the top alts without Bit in their title (like ETH, XRP, or DASH), are likely in a good place. They can almost certainly get away with holding and not looking at the market.
- Those holding Bitcoin or Bitcoin Cash needs read up on both sides of the story. If you just follow @cryptogoat on Twitter and internalize his mania, or if you just follow the Cash backers like Ver (who has an excellent beach house in Idaho next to mine by the way), you could be getting a very slanted view of what is happening. However, equally true, if you just follow the anti-Cash factions, you’ll get only the other side. Clearly I have a horse in my heart I want to win, but like, I voted for Bernie so don’t go thinking I can read the tea leaves (half joking; I can read tea leaves, they say “drink me.”)
At the end of the day, Bitcoin Cash is a carbon copy of Bitcoin with a few tweaks (I think, its hard to find the code), so all drama aside, either one, both, or neither could come out on top here. This race is too early to call. Thus caution and some strong hands is both required and advised.
If you do make a choice, have a strategy in place. If you start reacting in a panic in this market you could lose your shirt.
The Bitcoin Core faction or Bitcoin Cash faction will have many shirts after this, please don’t panic and give them your shirt, they have more than enough shirts already (which is like, why we are in this mess, as those shirts allowed them the power to create the forks and cause the panic). Shirts = Bitcoins (and more technically mining power; where free shirts come from, which results in a crazy amount of central control).
I guess what I’m saying is, this is all a bit shirty. If I was King I would find a way for Bitcoin and Bitcoin Cash to work together, I would have my eye on getting crypto adopted on a mass scale. To me a war to the death might hurt so many it draws the ire of governments… but like, I’m sure that was considered a necessary risk by those moving into battle. These people may not share my morals and values, but I have no doubt in their intelligence.
NOTE: Some rumors claim that any recovery in BTC now amounts to little more than a clam before the next phase of Bitcoin dumping (on social media, on the exchanges, and by the miners). With futures trading coming up for Bitcoin, and everything else, these are uncertain times. Of course, uncertain times can present good buying/selling opportunities. So don’t let a little Fear, Uncertainty, and Doubt throw you too far off a given buying/sell strategy (especially if the strategy involves coins without Bit in the title). If and when the time comes when it looks like one of the two coins won’t win, we will let you know. Until then, be very cautious of hearing only one side of the story or panic selling / buying. If theories are right we will see large scale attacks on Bitcoin over the coming weeks and potentially even months. Transactions could slow, value could drop and rise rapidly, Cash could go back to $300, Bitcoin could go to $10,000 or $1,000, alts could fluctuate wildly, many friends could be lost…. and with all this, the community will be lucky to avoid the ire of governments. There is nothing simple happening, so try not to fall for false senses of security. There is a ton of money to be made, but also, Tether / USD isn’t a bad bet in times like this either.