Bitcoin & Bitcoin Cash Can Co-Exist, If Bitcoin Cedes "Digital Cash" Status
It's very easy to do a quick test to determine if you're dealing with cash.
- Is there a counterparty?
- Are the fees high?
- Is the underlying highly volatile on the regular?
(Bonus points for speed.)
If you answered yes to 2 or more of these questions, you are most assuredly not dealing with cash. If you answered yes to even one of these questions, watch out! Your "cash" is still in the "experimental" phase, pending audit by the market.
It's agonizing to watch these issues occur while Steem sits here with no fees whatsoever. The speed, fees, and lower volatility make it a better form of "cash" than most of the other cryptocurrencies we can name. The value lost each day to Bitcoin miner fees alone could probably feed all of Venezuela, to say nothing of the electricity use of Bitcoin (which is a smaller problem than often advertised, but an issue of some merit nonetheless.)
Until we can get more people to transfer value via Steem, we must live in a world of forced minimum .001 BTC fees on exchanges (nearing $20). In such a world, can anyone afford to still think of Bitcoin as digital cash?
I can tell you some customers who certainly can't - anyone involved with Steam, the world's premier video-game downloading client.
The following complaint is barely a year old:
Provided the knowledge that Steam's median sale price is about $25, does anyone want to guess what Steam has done with a payment method with almost $20 fees?
If you said "stop accepting it", you got it.
Steam is probably less likely to adopt a new cryptocurrency as early/optimistically as they did with Bitcoin. What currency could we fairly recommend for them in light of their volatility concerns?
The logical path forward for Bitcoin is to become digital gold, or in other words, embrace the reserve-asset role it could effectively play in the cryptocurrency market due to its first-mover advantage.
Bitcoin refuses to increase block-size, as prescribed in the white paper to scale. Seg-wit has done nothing to help. Atomic swaps are neither ready, nor can they do more than cut the problem in half. The Lightning Network remains "almost ready", as it seems to have been for quite some time.
Bitcoin's ineptitude has lost forever the first-mover advantage in the "digital cash" department. Scaling is its white whale. However, none of this need be bad. Embracing a fate as a fundamentally poor means of transferring value, to become the deflationary reserve this market needs, could be far more valuable.
After all, rare is the time in history when the people have clamored to trade in their Gold for Silver or Copper. However, thanks to Gresham's law, the reverse is often true.
PS - Ethereum, I don't like what I'm seeing out of you, at ALL. Shape up or be shipped out by EOS.
If you have any additions or errata for this post, please let me know! I will see that they are voted to the top of the comments, and will make the appropriate edits (if possible).
We also have a Radio Station! (click me)
...and a 5000+ active user Discord Chat Server! (click me)
Sources: BBC, Google, CoinMarketCap, @natxlaw, Wikipedia, The Supreme Court's 2000 Election Decision
Copyright: Steam, Cryptokitties.io
Do you think if the number of users go high on steem is there a chance of steem value going more than or equivalent to Bitcoin / other crytocurrency ??
I am totally new to this, like literally being my first day on Steemit & this being my very first reply/comment/question ?? kind of. What would you recommend your followers to do to make the most of it ??
Awaiting reply @lexiconical . Cheers. Happy weekend. Well its Dubai so hell yeah its weekend.
First of all, welcome!
" is there a chance of steem value going more than or equivalent to Bitcoin / other crytocurrency ??"
It's certainly possible. On fundamentals, Steem is mostly better than Bitcoin. It's faster, lower fees, etc, but does require a more convoluted sign-up process.
"What would you recommend your followers to do to make the most of it ??"
That depends on what your goals are. If your asking whether to buy or sell Steem, that depends on when you bought it and what you want to do. There's no clear cut answer right now. Steem price is moving into uncharted territory.
We could drop to $1 or do something like EOS and fly up another 3-4x.
@lexiconical summed it up pretty neatly so a screenshot if you will:
Maybe, I am thinking if Facebook or other Internet giants move their services to block chain, what will happen to steemit
One might argue this would be a huge legitimization of what Steemit is doing.
Watup Lex. So I've been reading up on the Lightning Network and you're probably the first person I've seen address that it is being dragged out. See...I thought it was a fairly new concept. So what you are saying is they have known this for a while? So...I found myself looking at Decred the other day...So if Decred says Ligthtning Network implemented...I'm over here like...hmm....WHy is it taking so long for Bitcoin to implement the Lightning Network. I addressed this on my Bread and Cheese podcast though...that the same snakes, leeches, and rats in the fiat world exist within crypto. So do you think that they're draggin their feet with the Lightning Network implementation...because I was actually thinking that Bitcin would skyrocket if that gets implemented. Wouldn't they want to do that? WOuld you say the miners wants have made them gluttonous or is it not that serious?
Yes, Blockstream has publicly stated their goal was to push people into their off-network solutions for profitability reasons.
The best explanation for them not having a working one ready is probably incompetence, since they think it will print them money.
Your comment about snakes is dead on.
What are you stand on my recent (self-thought) understanding that cryptos are not money at all, but property rights to digital scarcity and thus we are bartering when we transact with cryptos? In that case, perhaps Bitcoin Cash has missed the point (which I believe). As you mentioned, I also believe BTC is going to be (or are in fact) digital gold, and function like a reserve or buffer in the crypto space. In either case Bitcoin Cash should loose this battle. If you apply Gresham's law and Bitcoin has higher intrinsic value, then BCash should be in competition with all other cryptos (many with better scaling and equally fast transactions). If BCash has higher intrinsic value, then nobody will use it as cash, and it is made irrelevant.
Yeah, I basically think Bitcoin Cash's period of dominance, such as it will be, will be a lot shorter than BTC for all the reasons you listed. But it's going up before that, IMO.
Also, a generally scarce token without any intrinsic value that serves as a unit of account is pretty much the definition of money, so I would say at least "many" cryptos are indeed a form of "money". It's currency for trade, much like Gold once was... although now trading in Gold for items would be more like barter since it's a reserve now, not currency.
Whether something is "money" or not can change...
Hey man; I remember your prediction (was right) about segwit2x failing but now its coming up again! I'm calling it "Segwit2x v2.0" and they want 4MB blocks now which would sure help, but it would obviously be a fork; checkout my article:
https://steemit.com/litecoin/@mikeparker/if-segwit2x-v2-0-fork-succeeds-we-don-t-need-litecoin-anymore
Interesting news, though I am getting to it late. Even 4MB would help a lot in the near-term, and would not be a technological strain at all.
I agree with you that they can exist but then Bitcoin's value is only in that it is rare but no more rare than BCH. It looses its fungibility if it does not get used for transactions. Gold is poor money and that is why we made paper bills.
I guess I am worried that BTC will become a way to do fractional reserve lending. When it was designed to be a replacement for that very system. BCH looks more like what I signed up for back in 2015 than BTC these days.
Thanks for the great write up mate <3
"BCH looks more like what I signed up for back in 2015 than BTC these days."
Tell me about it!
Hi @lexiconical, great article that ties in what we talked about the other day. I actually stole your Gresham's Law pic from this post for my own post because it applies perfectly! I am argueing that Money itself may be outdated, and crypto is perhaps a return to a barter economy, would love you hear your thoughts!
Crypto would represent more of a money in such an example, as crypto wouldn't be the end goal of either party, merely a means of transaction.
Barter is more primitive, and has the problem of double-coincidence of wants. For example, I'm a chicken farmer and I need milk, so I have to find a guy that both HAS milk and WANTS eggs. Then, he can gouge me if I'm desperate (or vice versa), because it's hard to find another in that situation.
Crypto, by preventing us from ending up in that situation, avoids barter by becoming money itself.
Excellent! You have moved into the ranks of my "Top 10 Sources of Serious Crypto Analysis", @lexiconical. I'm really growing to ENJOY and LEARN from your posts. I couldn't agree more. Last week I got RAPED when doing a BTC -> Potcoin buy via Shapeshift.Io . Although I have my doubts about their ultimate ethical standards I AM starting to see how they are likely having trouble THEMSELVES with these exorbitant fees - but I'm STILL going to troll them on Twitter for a few more weeks (just to get some value from the $$$ I lost). Then this morning I wanted to do a SBD -> Potcoin via Changelly, and they are not even processing most alt-coins right now. Lo and behold I logged in to Steemfollower this morning, and using the good info from that "F*cking savage""@valorforfreedom (in his detailed post on using the SF market) I found the ONLY way for me, right now, to liquidate SBD, so I just did a buy for $3.65 USD of your points, for a whopping ~ $61.00 USD worth of points. So, it seems that Steemfollower has come to the rescue in terms of being able to liquidate SBD. I still have 5 SBD left and will see how today's 3.65 performs before deciding to buy another round. It makes me nervous when I ANY of my funds are "frozen" and so I take the current "capital controls" as a strong signal so sell SBD and take a nice little profit which can FURTHER work for me on SF then wait and watch SBD (very possible) correct without ANY way out. Thanks to the @steemfollower crew for all they do...
Thank you!
I noticed a ton of wallets were down at Bittrex across a number of coins. This tends to be a theme during big market crashes. Poloniex Steem withdrawals have been down forever...
Yeah. I just got paid out on a post and went ahead and bought a new batch of points (1.99 worth) on SF. Quick and simple, and I think it is a good investment with the SBD price being at $9.00 + USD - even against the conversion from SBD to Steem right now. What do you think? Are points generally a good investment - especially right now?
I know this reply is late, but I'd say if you are otherwise out of points, yes. If your goal is to be higher in the promoted list, then it becomes subjective, much like using bid bots.
@lexiconical
That is an awfully cute moment of realization.
Thank you! great post friend :)
Agonizing to watch it may be - but it gives us a bit more time to power up!!
In the knowledge that he shift will come in time...
Cheers
Always try to keep a little bit liquid, too - so you can profit when we get a nice pump like we've had lately!
Good insightful post buddy. Yes, agree with u that bitcoin fees are extremely high and with no sight of the lightening network, the high fees and extensive transaction time would be the reality in near future as well. Steem however looks more stable and its matter of time it will shoot up to its potential.
Regards Nainaz
#thealliance
Lightning network is no solution, either. It's a centralized, for-fee option that Blockstream favors.