Bitcoin Cash will Become the #1 Crypto

Bitcoin Cash has been on a tear (+100%) since Segwit2x was officially cancelled and I encouraged everyone to get into Altcoins to include Bitcoin Cash. The looming Segwit2x fork was a barrier to Bitcoin Cash adoption. It meant a blocksize increase from 1 to 2 MB which would give the Bitcoin network capacity to process more transactions and keep the mempool down in the near future. Now that Segwit2x is no more, the community has had a realization that Bitcoin will not scale on-chain and until Lightning Networks are implemented transaction fees will only increase and further cripple the network. This isn't a post meant to say I was right, instead I would like to detail the fundamentals that are driving the Bitcoin Cash adoption and why it's obvious and inevitable that miners and users will move to Bitcoin Cash and cause it to supplant Bitcoin.

Bitcoin Fees Over Time

One of the most glaring arguments against miners and users using Bitcoin right now is the average transaction fee is right around 8 USD. That's incredible considering the cost of a transaction in 2014 was 0.01 to 0.04 USD!! The promise of frictionless transactions between users is now false, paying 8 USD to transfer money isn't frictionless if you only want to send $10. There's an incredible amount of fees the miners cannot claim because the protocol has an artificial resource constraint. Bitcoin's blocksize is capped at an arbitrary number and the developers of Bitcoin are dictating that this is the truth and discount the decision power of those who actually process and confirm transactions. If a miner knows they can transact more than a 1MB per block and stay competitive in the block reward, why wouldn't they increase the blocksize they accept to 1.1MB or higher in an effort to claim the extra fees that are being de-prioritized by the network? This artificial blocksize cap does not align with the idea of a trustless, decentralized currency. As outlined in my article, Decentralized vs Centralized Systems, decentralization empowers the individuals and small groups to make decisions that will benefit them and the people they serve. In the case of Bitcoin there's a desire for miners to process more transactions, which will increase their profits, enabling more transactions per block, increasing network reliability, and lowering the cost of transactions for the most users.

Bitcoin also gained adoption because transactions were reliable. In 2014, if you sent a transaction with any miners fee there was nearly a 100% chance that the transactions would confirm. Today, you need to double check that your fee is high enough or there's a chance that the transaction will sit in limbo for days or drop out of the mempool. Now imagine how confusing this is to new users who are promised low transaction fees and fast peer-to-peer transactions on the Bitcoin.org website. These "features" of Bitcoin are now patently false now and will only deter future adoption as most average people will not "get it".

Bitcoin.org's Bitcoin Features

Another point that should not be overlooked is Bitcoin's scaling solution now exclusively relies on the implementation of Lightning Networks or other 2nd layer solutions. Lightning networks are a middle man which install gatekeepers who can decide which transactions get processed. It isn't difficult to see the trend that without a blocksize increase transactions fees will soon need to be over $100. This means to send bitcoins you will need to use a Lightning Network channel, as to send anything less than $4000 will not be economically rational (less than a 3% fee).

Lightning Network Relationship with Bitcoin Network

The Lightning Network's channels or "bridges" provide single points that can be controlled as most users will not have enough money to open up their own payment channel. What eventually would develop are payment processors that are able leverage large centralized processes to provide cheaper transaction costs to users. The inevitable result are several services like Banks and PayPal that provide Bitcoin access to the common folk; imagine being forced to use Bitpay to use Bitcoin. So why would folks adopt a currency that functioned the same way as the existing financial system? There's no incentive and humans don't change their behavior unless it improves their lives.

The last point I would like to make, is that from a developer perspective it's trivial to move from Bitcoin to Bitcoin Cash. This allows platforms like Bitpay, Yours.org, Coinbase or other wallets and payment processors to easily switch blockchains if their users demand it. Yours.org already did this fairly quickly within a couple weeks of the formation of Bitcoin Cash. Right now, there's a demand in countries like Venezuela and Zimbabwe, where people make $12 to $100 a month, to tap into an international payment network to get out of their crumbling financial systems. In addition, in developed nations most people will eventually want to "spend" their Bitcoin and in the short term future, the only way to do to pay large fees. What will encourage the users to stay with Bitcoin and not move to something cheaper and more reliable to use?? Businesses will naturally see this demand and ensure their services meet this demand. If the cost is cheap to switch blockchains, businesses will do so quickly because it's a win for both them and their customers.

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