Over the summer, Bitcoin experienced its first hard fork. A conflict between Bitcoin's core developers and miners led to the hard fork. The dispute is still ongoing, and it is ultimately an effort by Bitcoin's mining cartel to retain control of all hashpower used in Bitcoin mining.
A conflict between Bitcoin's core developers and miners led to the hard fork. The conflict is still going on, and it's essentially an effort by Bitcoin's mining cartel to keep all of the hashpower for Bitcoin mining, whilst the core developers want to decentralize away from the cartel.
Bitcoin's whole concept is centered on decentralization. Many in the Crypto industry have argued for the elimination of centralized power over the currency's future. Bitcoin may have taken power away from governments and central banks, but as the time has advanced, so have the strengths of miners, followed by a new battle for power over Bitcoin mining.
Things have become a lot more complex because after SegWit2X hard fork that was expected to occur this month was canceled. As a result of the fork cancellation, the Bitcoin community now has three options. The initial Bitcoin and its offshoots, Bitcoin Cash and Bitcoin Gold, which were created as a result of the much-discussed hard forks.
The incentive to break the Bitcoin mining cartel's hashpower monopoly is supported by Bitcoin Gold. However, after Bitcoin gold's recent crash, it's obvious that the cryptoworld, and specifically the Bitcoin world, has determined who will face off against whom. It's now up to Bitcoin Cash to challenge Bitcoin's dominance in the cryptosphere.
It's a mining competition between Bitcoin and Bitcoin Cash.
The Bitcoin civil war has officially begun, and the choppy nature of the pair's prices reflects how the Bitcoin landscape has been shifting in recent days.
Bitcoin Cash soared to a new peak over the weekend, reaching a high of $2,799 before crashing. On the day, Bitcoin Cash not only surpassed Ethereum in terms of market capitalization, but it also saw more hashpower than Bitcoin.
Given that Bitcoin's hashpower was calculated to be more than 5 times that of Bitcoin Cash before the cancellation of SegWit2X, this is a significant change.
So, what's the difference between Bitcoin and Bitcoin Cash, and why is Bitcoin's first offshoot getting so much attention?
To fully comprehend, it's essential to understand why Bitcoin Cash was forked in August of this year.
It was eventually due to capacity problems, with Bitcoin transaction times slowing for up to 10 minutes. The miners and the core developers have been fighting over how to deal with capacity. Miners are hoping for a boost in both blockchain capability and transaction times. The core developers want to make the requisite changes to Bitcoin while also attempting to reduce the concentration of hashpower held by a small number of miners.
Bitcoin Cash was formed as a result of a hard fork because neither side was willing to concede. The increase in hashpower and price of Bitcoin Cash over the weekend occurred as mining for Bitcoin Cash became more lucrative, with faster transaction times being the main. On Saturday, it was announced that mining Bitcoin Cash was 69.4 percent more profitable than mining Bitcoin, and miners are only interested in one thing...
The price spikes in Bitcoin Cash's offshoot caused a change in hashpower and miner preference for the cryptocurrency. In the end, supporters of Bitcoin cash prefer a payment-efficient Bitcoin version of the master cryptocurrency Bitcoin, yet miners do not.
The spike on Sunday was caused by unusually high trading volumes on Bithumb, one of South Korea's largest exchanges. Bitcoin's hashrate dominance has returned after the Sunday anomaly, and as of this writing, Bitcoin's price has recovered to $7435 at the cost of Bitcoin Cash, which has sunk further down to $1,050 from Sunday's $2,799.
Bitcoin's higher hashrate and price recovery indicate that the consumer has chosen to stick with the initial Bitcoin rather than the hard forked alternative. In the cryptoworld, the chicken and egg query is whether hashrate increases are accompanied by price increases, or whether price increases are followed by hashrate increases.
If there is no price drop or more lucrative alternatives, miners are unlikely to quit mining a specific cryptocurrency. Bitcoin's hashrate has recovered as a result of the recent price changes. Bitcoin's hashrate was 9.2459E at the time of publishing, compared to 1.4632E for Bitcoin Cash, making Bitcoin's hashrate more than 6 times that of Bitcoin Cash. This is in stark contrast to November 12th, when Bitcoin Cash's hashrate was 5.825E, compared to 4.8777E for Bitcoin.
The chart below displays the pair's hashrates over the last three months, and it's worth remembering that the November 12th change was Bitcoin Cash's second time seeing higher hashrates since its inception.
We would expect miners to switch between Bitcoin Cash and Bitcoin Gold if Bitcoin Cash does not suffer the same fate as Bitcoin Gold. Bitcoin is unlikely to go anywhere anytime soon, although on the downside, it is likely to find plenty of help. Miners would then return to Bitcoin if prices recovered, hoping Bitcoin Cash had reaped the rewards of Bitcoin's demise.
Bitcoin Cash can have a larger block size, which makes for quicker transaction times, but profitability will still be the deciding factor. After all, it's a money game, and miners that have invested a large amount of money in mining centers are unlikely to be involved in their true beliefs about decentralization and how Bitcoin can develop. The ability to predict price changes between two markets. The model to assess price movements between the two will be critical to miner profitability, and effective miners will likely be more concerned with what to mine and when rather than why.