Disclaimer: The information in this blog represents the opinions of its author and is for educational purposes only. It is not intended as investment advice. Cryptocurrency markets are extremely risky so you should only invest money you are willing to lose.
Guess Who's A Big Kid Now?
There's now more than $600 billion in the crypto-verse, and guess who just catapulted into the #3 spot?
That's right - the bitcoin baby that was born in August amidst the kerfuffle over block size, transaction time, backlog, and rising fees has grown up fast. It now boasts a market cap of $65 billion, just behind ethereum at $79 billion.
Much of that gain in market cap is due to the fact that Coinbase threw its full support behind the micro-payment alternative, crediting holders of bitcoin on August 1st an equivalent amount of bitcoin cash, and introducing trading immediately. Bitcoin cash price jumped 70% on the news.
Micro-Crypto For Beginners
Coinbase is cryptocurrency for beginners. Founded in 2011, the San Francisco-based exchange is one of the world's largest, fastest-growing, and most trusted exchanges.
But much more important is its ease-of-use, making it the entry-level wallet and exchange of choice for grandmas and bar-mitzvah boys, barbers and mailmen, who may have no idea what blockchain is and have never traded anything, but just want a piece of the action in this hot new market.
Driving The Mania
Since individual investors are driving bitcoin-mania, giving them an easy on-ramp to the altcoin realm by adding full support to bitcoin cash is a very smart move for the behemoth entry-level exchange, as it will increase the market cap of cryptocurrencies overall, and give the newbie investor multiple options in the micro-payment space. Coinbase currently offers support for bitcoin, litecoin, and ethereum.
The reason the market reacted so dramatically is that Coinbase has more than 13 million users, many of whom never venture outside of its safe and trusted confines.
The Psychology Of Crypto-Phobia
The psychology of crypto-phobia has as much to do with the weirdness of trading something virtual as it does with tech-hassles and no-name exchanges. Coinbase seems to grasp this key fact better than most, having made trust and ease-of-use the cornerstone of its development as an exchange since 2011.
Wayyyyyyy More Than 7
Everyone agrees that bitcoin, with its 1 Mb block size, suffers from serious scaling issues. As it inevitably grows, it will have to process wayyyyyyyyyyy more than 7 transactions per second to become the next Paypal or VISA (which processes 20,000).
BCH Is Born
In August, phase 1 of the SegWit upgrade, a kind of off-chain data compression, coincided with a hard fork that created a new chain with an 8Mb block size, an on-chain solution called bitcoin cash.
The agreement to implement phase 2, a doubling of block size, fell apart in November when core developers failed to reach a consensus that Satoshi's original vision of a truly decentralized, distributed network could survive the block size increase.
Made Its Move
Bitcoin cash, the nascent cryptocurrrency that had been quietly operating for several months with an 8Mb block size, siezed the opportunity and made its move - its price almost tripled, from $600 to $1,500 in 3 days.
Hit The Big Time
Today, bitcoin cash is trading at $3,900. Having hit the big time with access to Coinbase's 13 million users, will the big-block, fast-transaction, low-cost, micro-payment cryptocurrency overtake its forebear to be the de-facto global borderless currency?
Weeeeeeel .... it depends. It depends on the ongoing battle for the soul of bitcoin. The community will obviously have to agree on a scaling solution. But, more importantly, they will have to decide whether bitcoin's ultimate future is that of the next digital gold (a store of value), a speculative investment, or a truly global borderless, transparent, quick, cheap, secure, and universally accessible value-transfer mechanism that can provide financial services to the entire world.
Bitcoin Baby Grows Up
In the meantime, the bitcoin baby has grown up, now occupying the number 3 spot, with a market cap of $65 billion, and access to Coinbase's 13 million investors. Regardless of who wins this battle, on thing is certain - Dollars and Euros and Yen will keep pouring into the cryptocurrency ecosystem, whose total market cap now exceeds $600 billion.