If you follow the news, then you are most likely aware that Bitcoin price has risen tremendously in the last few weeks. At the start of the year, Bitcoin was valued on many exchanges at about $960 but in the last few days of December, its price continues to hover between $18,000 and $19,000. While some folks are silently mulling over their regret at not investing in Bitcoin all those years ago, there is one man who has decided to jump ship. His name is Emil Oldenburg.
Co-founder and chief technology officer at Bitcoin.com, Emil Oldenburg has dumped Bitcoin, selling his cryptocoins and switching to Bitcoin Cash. According to a Swedish website called Breakit, Emil admits that he has grave concerns over the future of Bitcoin and is highly skeptical of the longevity of the system.
What is Bitcoin Cash?
Bitcoin Cash is the result of a hard fork that occurred to the inability of the participants of the Bitcoin network to come to a consensus on the adoption of the BIP (Bitcoin Improvement Protocol) 91. The BIP 91 had to do with adopting Segregated Witness (SegWit) protocols. The main bone of contention was the dispute brought about by the block-size limit considerations that came with adopting SegWit. The Bitcoin scalability problem is one that had been identified as a major issue within the network and some participants felt that adopting SegWit without increasing the block-size limit would spell doom for the network. To them, not taking such a step was tantamount to delaying the inevitable that was the scalability issue.
You might ask that why were some participants against the block-size limit increase? The answer is simple; there are some members of the Bitcoin community that prefer to see Bitcoin as a store of value rather than as a medium of exchange. By nor increasing the block-size limits, transactions would take a longer time to process thus increasing the value of Bitcoins. However, this meant that Bitcoin became an inefficient payment processing platform.
Unable to reach a consensus, there was a hard fork and Bitcoin Cash (BCH) was born. It shares all prior blockchain transactions of the Bitcoin blockchain ledger prior to the fork. It was launched in August 2017 and in a matter of weeks, it was already in the top 10 cryptocurrency list in terms of market capitalization and market value.
The Issues with Bitcoin
Oldenburg described Bitcoin as being the riskiest investment of the present day. While such assertions are not new, they are surprising coming from a crypto insider. Usually, such negative comments about Bitcoin would come from Bank Executives, Mainstream Financial Experts, and Government Officials. Oldenburg went to highlight some of the fundamental issues with Bitcoin and these are:
Rising Cost of Bitcoin Transactions.
Just as the market price of Bitcoin is on the rise, so has the cost of transactions on the Bitcoin blockchain. However, where the market price is sure to fluctuate due to incredibly high volatility, the cost of Bitcoin transactions continues on an upward trajectory that shows no sign of slowing down. Oldenburg said that lead times, lag times, and the cost of transactions are seriously doing damage to Bitcoin as a valuable investment option.
A careful inspection of the Bitcoin blockchain network shows that transaction fees increase by as much as 200 percent every quarter. Furthermore, the average block transaction time is now almost four and a half (4.5) hours with fees in the region of about $26 per trade.
Emergence of Cartels in the Bitcoin Management.
Bitcoin is supposed to be a decentralized, democratic setup that allows every participant to have direct involvement in the governance of the network. However, a lot of things have happened over time to expose glaring flaws which have introduced a great deal of centralization in the network. Take mining for instance, due to the considerable hardware requirements needed to successfully mine Bitcoins, the mining of Bitcoins has become monopolized by mining cartels. These organizations contribute a large chunk of the collective network hashing power thus making mining to become out of the reach of the average user on a laptop.
Oldenburg is of the opinion that management of Bitcoin is in the hands of misguided people who he labeled as “fanatical Talibans.” He also went further to assert that because these people tend to see Bitcoin as something that exists only in the virtual world, they miss the finer points of real-life economics.
Problems with Liquidity.
Oldenburg also re-echoes some of the sentiments that have been shared by mainstream financial analysts over the years and that is the problem of Bitcoin’s liquidity. The bulk of the Bitcoin commerce involves people speculatively investing in Bitcoins and holding on to them. When it comes to actual transfer of value across the Blockchain, issues arise. Bitcoin trading is something of a novelty and once it becomes necessary for increased Bitcoin trading, the liquidity issues will become more pronounced.
In response to these issues, Oldenburg has decided to sell his Bitcoins and has made the switch to Bitcoin Cash. He isn’t the only one though as there are quite a few people who are jumping the Bitcoin ship to sail onboard the Bitcoin Cash vessel. In the year 2018, we will probably begin to get a clearer about the real state of affairs as far as Bitcoin is concerned.