From time to time floats around the concept that Bitcoin BTC chain might collapse and suffer a chain death spiral.

What is a chain death spiral ?

In Bitcoin BTC, transactions are bundled in a block roughly every 10 minutes. The exact time depends on the difficulty of the chain, a parameter that adjusts itself every 2016 blocks (about two weeks when blocks are produced around every 10 minutes). The higher the difficulty, the higher the number of operations to process the next block.

If - for some reason - the processing power plummets, the blocks will take much longer than 10 minutes. In turn, this means severe delays and network congestion for transactions. This clogging can lead investors to dump the coin, making its mining even less profitable, increasing further the loss of processing power, which results in further congestion up to a point where the next block can take days to process.

In that situation, the blockchain does not move forward anymore, transactions are just stacking up. For all intents and purposes, the underlying ecosystem is at a (nearly) complete stop and the economy is dying. In the worst case scenario, people would start dumping the coin on every exchange, sending its price to 0 or close.

Why it is not impossible but very unlikely

The described scenario is not at all impossible.

One could have a glimpse of its premises in November 2017 when Bitcoin Cash prices spiked to more than 2000$ : as the price of BCH in dollar was climbing, more and more miners switched from mining BTC to BCH, slowing the block production to a crawl. However, the new difficulty adjustment algorithm (DAA) kicked in for BCH, just in time for processing power to come back to BTC and resume operations to a more regular pace (and probably save the coin).

From this DAA moment, the situation is nowadays more complex.

As long as mining BTC is profitable (and so far, it is), miners continue to devolve hashing power for this coin - even if it is to sell it as soon as possible for BCH, as one the main miners, Jihan Wu, recently explained :

It is estimated that if the price per BTC falls under 5000$, the deal changes and this might push the miners to switch to BCH for instance. However, contrarily to November 2017 where the more hashing power there was on BCH, the higher the profit for the miners, the current DAA will ensure a swift difficulty adjustment, and thus a much more difficult to predict curve of profit for miners.

On the other side, each miner has to take into account that abruptly switching from BTC to BCH is not without risks in that it directly jeopardizes a huge ecosystem : having BTC falling too fast means markets in panic and will also mean BCH prices falling like everything else. When and how the dust settles is, at that point, anyone's guess and there is no guarantee that this situation would end up favorably for any cryptocurrency.

On top of that, a brutal change like this one would also leave a lot of heavily invested merchants, exchanges and users in quite a pickle, that would push them to react very negatively to crypto afterwards. In any case, this would be very bad publicity for miners at first, and all of crypto-assets after that.

In practice, if such a death spiral should happen, there is only minimal probability that it comes from miners : time is needed in order for all ecosystems to adapt, they know it and to some extent, take it into account.

Why flippening will happen and how

As seen in the previous paragraphs, a flippening , this sudden or abrupt change in the current cryptocurrencies paradigm, seems neither realistic nor desirable in the short term.

In any case, the amount of capital, the number of people involved and the brand recognition of Bitcoin BTC is big enough to guarantee its position for the coming months.

However, there is already a trend that one can pick here and there : Bitcoin is clearly loosing steam as more and more merchants drop this coin. The high fees, the regular network congestion and the price volatility make the Bitcoin case difficult for both online and brick-and-mortar merchants. Recently, Expedia, a very early adopter of Bitcoin, decided to abandon its support altogether.

On the other side, adoption is growing for other cryptocurrencies, especially for Bitcoin Cash since switching from BTC to BCH is rather easy.

Parallel to merchant adoption, the efforts for world usage are continuing unabated.

Banking the "unbanked" seems everyday more reasonable as solutions emerge to ensure a smooth scaling. Cointext for instance, a service to transact Bitcoin Cash through SMS on regular phones, is deploying on many countries and was recently able to raise 600.000$ in seed funding, which gives it solid prospects for the future.

And as another example to this general trend in favor of BCH and its slow gain to dominance, CoinEx recently introduced a new trading policy, Trade-driven Mining, in which the trading platform returns its users some of the trading fees in the form of the exchange’s native token, bringing host of new users to test it and benefit from its low prices and its internal own coin, CET.

Only time will tell if this influx of new transactions on CoinEx is solid and will last long enough, but as CoinEx is a Bitcoin Cash based exchange (each cryptocurrency can be exchanged to BCH), this will certainly help it to spread : direct usage and experiencing first hand is probably the best way for a user to understand and adopt a cryptocurrency and with CoinEx and its trading policy, there is a clear incentive for users to test it.

As this trend seems to continue, one can reasonably expect Bitcoin Cash to gain traction as it covers more and more use-cases, is made more easily available and intuitive to end-users and reaches populations that were not given the chance to experience electronic cash prior to it.