When you hear folks talk about the "old days of Bitcoin", lots of thoughts and feelings tend to emerge; the first awe-stricken realization of the technology; the flow of adrenaline from sending your first transaction and hearing the "ka-ching" on your friend's phone; so many original experiences there have been with Bitcoin.
Bitcoin hit the world by storm in its very early days, and in turn fostered a community of people dedicated to bringing about a vibrant future with Bitcoin. In fostering this community, Bitcoin established a network effect.
Fast-forward to today, and we can see that this network effect has grown tremendously, and has primarily resided with BTC. There are many reasons why this is the case. One major reason, in my opinion, is that the ecosystem was unable to come to a consensus on how to scale the blocks, and the big block community split from the Bitcoin chain and created "Bitcoin Cash".
Thus the entire point of this article: Bitcoin Cash needs its own network effect.
Misguided Energy
It needs to be said, so I'm gonna say it: in nearly 3 years, BCH has not been able to convince the BTC ecosystem to use BCH, nor has it managed to build a robust application layer and secure a sizeable chunk of the total crypto market cap.
BCH certainly has a robust trading environment and decent payment integration (as far as crypto payment integration goes), but the application (user) layer is lacking immensely in substance.
To be fair, from an adoption standpoint, on a worldwide scale, BCH has garnered some adoption from users and businesses alike, thanks to the hard work of many individuals, however there has been very little overall market adoption of BCH.
It's my opinion that this is largely due to energy within the BCH ecosystem being spent to venture down avenues that have yielded little fruit (e.g merchant adoption) and building platforms in highly competitive markets (e.g. Memo, Haven, etc.).
Didn't Get The Memo?
Taking Memo as the example; while I agree it is a great experiment for uncensorable social media, what is Memo in the wider market other than a BCH circle-jerk? What incentive does the Twitter or Facebook user have to use Memo if Twitter and Facebook look better, work better, and already have all of their friends using it? In my opinion, the true power of Memo won't be realized UNLESS:
Twitter/Facebook incentivizes their users to leave for other platforms
Memo has a breakthrough and is able to incentivize users to join
Either way, there still exists plenty of healthy competition for Memo, particularly Minds and Gab. Many users from Twitter and Facebook have already set up presences on these platforms, and these platforms already have much more functionality than Memo. As it stands, despite the centralization of these platforms, users favor features and ease of use all day long, and the numbers show.
Cutting Losses
What good is all this energy that has been spent building platforms for the world to use, if the world doesn't use them, and has no incentive to use them? If we are going to solve BCH's problems, we need people using BCH on a much wider scale. TODAY.
Solving The Problems
BCH faces a couple difficult problems:
Since hash follows price, BCH/BTC hash ratio is ~3% (BCH hashrate is actually less than ~2% because of the recent halving, but the upcoming BTC halving should help balance that out)
Due to the enormous price disparity between BCH and BTC combined with BCH's per-block DAA, BCH experiences harsh swings in block times caused by miners difficulty/profit gaming the BCH chain, resulting in unreliable user experience
Both of these issues threaten the long-term health of the BCH chain as a viable Bitcoin branch, but the overall solution is simple: increase BCH market share. The trick, however, is to solve the minor problems first in order to obtain the overall solution. While I agree this is not easy, it's what needs to be done; this is how we build network effect. :)
Here are my solutions to the two biggest problems I see for BCH number go up.
Problem #1: Negative Value Return on Merchant Adoption
Merchant adoption has been the focal point of efforts made by the BCH community to foster value growth for BCH; however, the returns not just in BCH price, but also in on-chain usage, have been negative when compared to the effort expended. The solution is to redirect energy from merchant adoption to building more apps/platforms.
My rationale is that if enough of a business's customer base is using a currency and show a desire to spend it for goods/services, then that business will begin to have a NATURAL INCENTIVE to accept the currency as payment for their goods/services. Since BCH is already free to start accepting, all the business would need to do is spin up a fresh wallet and post their BCH address.
Any missing functionality based on the business's experience will likely be built afterwards, because by that point there will be demand from businesses for more robust BCH Point-of-Sale systems.
Problem #2: Lacking BCH-based Apps/Platforms
Shifting away from merchant adoption, we can begin to direct focus towards building apps/platforms in small niches. We focus on small niches precisely because BCH is also a niche. Therefore, with the right application, in the right market, BCH could make a big splash. Hence, the solution is to build apps/platforms in small niches, with minimal competition, where BCH is the linchpin.
A big example I have used repeatedly is customer rewards points. Even Satoshi stated an early Bitcoin use-case being customer rewards points. From pg. 335 of The Book of Satoshi, where Satoshi says in his emails with Dustin Trammell:
[...] Even if [Bitcoin] doesn’t take off straight away, it’s now available for use by the next guy who comes up with a plan that needs some kind of token or electronic currency. It could get started in a closed system or narrow niche like reward points, donation tokens, currency for a game or micropayments for adult sites. Once it gets bootstrapped, there are so many applications if you could effortlessly pay a few cents to a website as easily as dropping coins in a vending machine.[...]
Focusing energy in this direction will also carry the secondary effect of improving existing BCH apps/platforms. Specifically, I anticipate that this would cause a dramatic surge in SLP development, along with wallet development, since wallets are integral to any BCH app/platform.
The Way Forward
BCH has come a long way since its inception. It has gone through rigorous forking and even a split of its own. But due to its inability to construct a healthy application layer atop itself, BCH has not gained resounding network effect after nearly 3 years.
We are at a precipice because there are many opportunities available in small niches and markets for BCH to shine, but if we don't build that application layer, then we will lose a major chance to establish a new network effect and propel BCH into the future. The way we can capitalize on these opportunities is by asking: how can BCH solve problems with existing apps/platforms?
Once we have the answer, we'll know the way forward.
Thanks for reading. :)
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