The bitcoin price has been on a tear recently, more than doubling to about $2,900 over the last three months. (It didn't hurt that Sunday, the popular Tim Ferriss podcast released a two-and-a-half-hour episode on the subject.)
But its meteoric rise belies a fact apparent to anyone active in the space: The bitcoin community is at war with itself and at greater risk of splitting apart than ever in its history. Already, the impasse has been a drag on its value.
The power struggle — over the seemingly simple question of how to upgrade the network to handle more transactions — is pushing fees so much higher that, for certain types of transactions, bitcoin is nearly unusable. Transactions that should take 10 minutes are taking days or not going through at all, and the average fee costs $4.75 — a negative development for a network whose proponents once touted the fact that it was cheaper than Visa.
Even more foreboding is the fact that, even as new money flows into crypto assets, businesses are pivoting away from bitcoin to build on other blockchains. That means countless transactions that could be processed with bitcoin, pushing up its price, will now take place on other blockchains, instead boosting their prices. Accelerating that trend is the fact that non-blockchain companies are now creating their own cryptocurrencies — but not on bitcoin. For instance, Kik, which plans to launch a new cryptocurrency called Kin, is building it on Ethereum. The factors above combined with the full speculative frenzy in non-bitcoin tokens and the civil war in bitcoin finally pushed its market cap as a percentage of all cryptocurrencies below 50% for the first time a few weeks ago; for years it had been at 80-90%. It hasn’t recovered since.
Noting that the community has been trying to avoid certain technical upgrades that run the risk of causing a “split” that would create two versions of bitcoin — one with a higher value and the other lower — Mike Belshe, chief executive officer of BitGo, a cryptocurrency security company that supports bitcoin, says that because of the inaction, “In a lot of ways, bitcoin already has split. A lot of people aren’t using bitcoin anymore. People are moving their coins out of bitcoin, converting it to another coin.… If bitcoin were performing and executing on all cylinders two years ago and meeting the demands of all its constituents, would we have these other coins at all? Bitcoin had all the market share. Today it doesn’t.”
more:
https://www.forbes.com/sites/laurashin/2017/06/07/bitcoin-is-at-an-all-time-high-but-is-it-about-to-self-destruct/#10502effcb31
