12/05 ANDY HOFFMAN (CryptoGoldCentral.com): What Will SV’s Destruction of ABC Mean For Crypto? - Part I

Going back to Mt Gox, where I held one Bitcoin (and expect to receive about $200 in compensation when the Trustee doles out funds), I have been following Bitcoin for five years…and three years next month, since I went all-in. During this time, I have witnessed the growth, and growing pains, of the second great technological innovation of our lifetime – the first being the internet itself. Also, the best investment opportunity of my 30-year career – which I have taken advantage of, and expect to remain deeply entrenched in for years to come.

To say Bitcoin is in its “early days” is an understatement – as at just 10 years old, no more than 1% of the world’s population owns it, and far less understand how it works. That said, Bitcoin is a virtual relic compared to altcoins – most of which, are no more than two years old; most of which, were pure pump and dumps borne of the Bitcoin/Ethereum hype; nearly all of which, are destined to lose all their value.

In its meteoric rise to a $350 billion market cap, Bitcoin fought through all manner of attacks from within and without – time and again, proving its “anti-fragility.” From the Chinese government to “big blockers,” all attempts to destroy or control Bitcoin have failed. However, they continue unabated - as some fear its potential, and others want to commandeer it for their own purposes…some for personal gain; and others, socialistic or libertarian causes, as misguided as they might be.

Misguided, in that “Satoshi’s Vision” was decidedly NOT for Bitcoin to be “controlled” for any purpose - be it profit, welfare, or social revolution. Instead, it was simply intended to be the world’s soundest money - to be utilized outside the traditional financial system by anyone who wants to use it, with access to a computer.

That said, the “scaling debate” had to happen – as until last summer, there was no consensus how to solve the issue of Bitcoin’s rapidly rising usage in the context of nearly full (1 MB) blocks…which anthropologically, provided a perfect case study in human nature – bringing out the best and worst in mankind.

The “best” being the united front of a Bitcoin community determined to prevent a hard fork – via the UASF and other proactive, grass roots efforts; and the worst, the unethical profiteering of Bitmain, supported by Roger Ver’s Pied Piper-like rantings. Together, they wreaked unimaginable havoc on Bitcoin – ultimately, destroying both Bitmain’s balance sheet and Roger Ver’s reputation. Yes, Bitcoin was more anti-fragile for the experience - but it could have earned this distinction with far less angst if not for the actions of a handful of wealthy; powerful; and in my view, evil people.

The result of BCash’s first defeat was an unprecedented wave of capital investment in cryptocurrency - including, ironically, BCash; and hope, bordering on expectation, that crypto was on the verge of a major viral outbreak - to the detriment of the status quo, and the benefit of mankind.

Unfortunately, must of this capital was misallocated – as while some went into developing Bitcoin, and potentially useful altcoins; most was purely speculative, based on comically stupid ideas – some of which, were outright scams. Hence, the massive bear market that ensued, that continues a year later – which unquestionably, will destroy the vast majority of useless altcoins, just as the 2000-02 bear market destroyed all but the best dotcoms.

Until last month, Bitcoin’s hash rate continued to exponentially grow – which consequently, enabled the “Hoffman Line” to hold for nine months following the initial, Mt-Gox-Trustee-catalyzed plunge in February. However, Bitcoin could not generate the level of investment support to overcome the sellers – one of which was Bitmain, which desperately sold its Bitcoin to support the BCash Ponzi it created, in the hope of being “bailed out” by the Wall Street IPO that quite obviously, will never happen.

Still, the Hoffman Line held until a new threat emerged – quite opportunistically, given the weak sector sentiment – to decidedly break it, and catalyze a new wave of Bitcoin FUD…yet again with BCash right in the middle of it. Only this time, most investors were sitting on huge losses – and thus, bailed without attempting to fight. This, as the Core developers sat idly, assuming nothing can go wrong because Bitcoin is so amazing.

In this case, the threat is “Faketoshi” Craig Wright – a controversial, polarizing figure that frankly, I cannot get a good read on. With a history of lies and deceit – including a false claim to be Satoshi Nakamoto; partnering with a billionaire gambling mogul; and the maliciousness of his attempt to destroy BCash AND Bitcoin; it’s fair to say he’s at least the threat Roger Ver and Jihan Wu presented – particularly in light of the sector’s currently weak sentiment, and the fact he MAY have a huge amount of Bitcoin to spend on his mega-big block folly. That, and the fact that not a single Core developer has stood up to challenge his claims that mega-big blocks work, SegWit is fatally flawed, and Bitcoin destined to lose its monetary properties.

Unquestionably, his goal was to break the Hoffman Line – and with it, the spirit of the current crop of Bitcoin supporters…and man, has he succeeded. Quite literally, crypto Twitter has died; as has crypto YouTube, the crypto media, and crypto Wall Street – which cumulatively, have gone into an “SV coma” as passively as a small dog under the command of a cruel master. In other words, demonstrating Bitcoin is not yet ready for prime time, even if its technology is stronger; its myriad use cases more obvious, and needed; and the size of its network larger than at any time other than the past five weeks.

This morning, the battle for BCash hash rate continues to rage on – with both ABC and SV having essentially equal positions…to the detriment of Bitcoin, which clearly has had some of its hash power “recruited” for this nonsensical war of the two most useless altcoins.

https://cash.coin.dance/blocks/hashrate

https://bitinfocharts.com/comparison/bitcoin-hashrate.html#1y

However, the far more telling battle is occurring in the capital markets – where SV’s market cap is at an all-time high 67% of ABC’s and growing…to the point that it appears inevitable it will overtake it – potentially, in the next few days.

https://twitter.com/Andy_Hoffman_CG/status/1070136189032718336

Also, that unquestionably, the price of Bitcoin – and ALL cryptocurrency - has been catalyzed SOLELY by the SV/ABC price war for the past month…rising when ABC gains momentum, and falling whenever SV garners a leg up. In other words, the entire crypto space is assuming, from an investment perspective, that rightly or wrongly, everything will be fine if SV is defeated; whilst conversely, further destruction is likely if it succeeds in destroying ABC. It’s pathetic that I, a complete technological basket case - who at the moment, owns no Bitcoin; am writing this instead of Core developers – who cumulatively, are completely silent; but I’ll try to give some perspective as best as I can.

https://twitter.com/Andy_Hoffman_CG/status/1069637266404892672

The way I see it, Craig Wright has no discernible plan other than to destroy the already mortally wounded BCash – and from that platform, advance selfish personal goals from his platform as SV “CEO.” Likely, he has access to a large stash of Bitcoin he has been using to fund his Hash War with ABC, and simultaneously create a massive wave of Bitcoin FUD. Breaking the Hoffman Line – with the help of his billionaire partner Calvin Ayre; who unquestionably, was well positioned to “gamble” on this attack’ was part of the strategy - as well as vicious, terrifying innuendo about what he “knows” about Bitcoin, and intends to “do” about it.

https://twitter.com/ProfFaustus/status/1064614518280634368

In fact, his “plan” – of a BCash with 4x the block size – appears to be the rantings of a lunatic, given it has been proven big blocks can’t scale. Let alone, his claim that SegWit, which has operated without a hitch for more than a year, is fatally flawed - which he intends to “expose” sometime in the future. Which again, is the type of lunacy that is laughed at during good times, but paid attention to during bear markets – particularly by the enemies of Bitcoin, who no doubt would love CSW to succeed…and potentially, offer financial support to the effort.

That said, Bitcoin didn’t advance this far without maximum anti-fragility – and to those who built it, it couldn’t be more obvious how unfounded Wright’s claims are. Let alone, when he suggests he knows more than everyone else – as he did last week, when he announced “we’re going to create a replacement for the internet,” rendering it a mere “sidechain” compared to the awesome power of his brilliant, patent-protected inventions.

https://twitter.com/ProfFaustus/status/1066635842565914624

https://coingeek.com/new-exciting-bitcoin-sv-projects-announced-coingeek-week/

Consequently, Bitcoin sits on the precipice of a potentially major inflectionary point – as a potentially imminent SV victory over ABC coincides with the entire crypto space looking technically terrible, and Craig Wright at the height of his FUD-spreading powers. So, what will happen if SV’s market cap surpasses ABC?

Obviously, no one has a crystal ball – as just no one predicted the result of the 2017 scaling debate, and no one knows how this will play out. However, I find it hard to believe its anti-fragility won’t shortly display itself in a big way – in the form of a new wave of investment capital that, perhaps quite violently, overcomes the selling pressure, establishing a new, permanent price low…which in turn, fosters a new wave of confidence - awakening the crypto media and institutional interest in this historic, game-changing technology.

Yes, there’s always the chance a worst case scenario occurs – of Craig Wright gaining more power…and with it, the relative valuation of SV. Then again, the same was thought of BCash a year ago – which at the time, was supported by financial interests at least as large as Faketoshi’s. Moreover, a year ago there was still considerable doubt as to whether SegWit would work, as opposed to scaling with big blocks – that, safe to say, no longer exists today.

As for altcoins, the purge of the weak, stupid, and duplicitous will continue – just as it did with the dotcoms two decades ago. Perhaps, even Ethereum and the entire “platform” sector will die – as frankly, I STILL have not a clue what their use case is…other than creating other altcoins, most of them useless, via a technology that can easily be subsumed by Bitcoin. Heck, BRhodium’s developers have proven altcoins can be created without Bitcoin OR Ethereum – and in my view, the future of altcoin creation will decidedly NOT be anchored by “platforms” like Ethereum.

However, cryptocurrency is too broad to be contained – which even Craig Wright would likely concede, when not actively pushing his agenda of SV dominance and Bitcoin FUD. Thus, I believe numerous altcoins will emerge with use cases that cannot be stopped by Bitcoin, SV, or any other attempts at cryptocurrency “maximalism.” Some, like BRhodium, will focus its efforts on financial investors; others, specific, real world business usage; and others, enterprising, entrepreneurial efforts to create value in areas ONLY cryptocurrency technology is capable of doing.

If – or more likely, when – SV’s market cap exceeds ABC’s, it may well catalyze another leg down in the crypto space. Or, alternatively, the current leg down is already discounting this “worst-case scenario” – when in reality, the winner of the ABC/SV war is ultimately meaningless. I believe the latter to be the case – as in my view, more uncertainty will be relieved by ABC’s destruction than added, particularly in a market suffering from historically weak sentiment in the face of catastrophic price declines.

Sitting on the sidelines, I can wait indefinitely – particularly given my view that the BRhodium “crypto call option” I possess has enough time value to survive the worst-case scenario. As for the rest of the crypto community, I find it hard to believe the vast majority have not already capitulated. Thus, at some point soon, it will become patently obvious to the world’s big, unbiased money that Bitcoin’s price WAY undervalues its potential.

To that end, don’t be surprised if an SV/ABC “flippening” turns out to NOT be a major negative for crypto – but instead, the event catalyzing a KEY UPSIDE REVERSAL. And don’t forget, there’s always the chance ABC wins the Hash War…which in my view, would also catalyze a major, sector-wide price explosion.

Until then, we watch and wait – for a Hash War denouement that in my view, will arrive relatively soon.