Last night, both Bitcoin and Ethereum reached record high prices, being over $3,000 and $400 respectively. However; right after Bitcoin reached that price, a huge drop off occurred, making BTC down by over 11% for the day. People were freaking out over the drop off, as with every other fast drop, people think that the end of Bitcoin is near. From my knowledge, I conclude that the drop can be attributed to people putting sell orders to automatically sell their BTC when the price hits $3,000. People normally put sell orders on easy round numbers so this is a very plausible theory. Ethereum is still holding strong, bouncing between the $390-410 mark and is still up over 17%. Today is more historical than others huge crypto-booms like this for a few reasons. First of all, Bitcoin market dominance fell under 40% at 39.6% to date. If you are new to Bitcoin, market dominance means how much total cash invested in cryptocurrency is invested in Bitcoin. In recent months BTC dominance has been plummeting while total market capitalization has been skyrocketing. This means that money has been being invested not in Bitcoin, but in other larger Altcoins like Ethereum or Ripple. Second of all Bitcoin market capitalization is at $43B while Ethereum market capitalization is at $37B. This means that Ethereum is rapidly becoming as large as Bitcoin, and people are anticipating that Bitcoin will lose its spot as the largest crypto and Ethereum will take its place. People call this future event the flippening, and I will explain to you why this event is even happening in the first place.

Scaling Debate

Bitcoin over recent months has been divided over how it should handle its giant influx of transactions that cant be supported by the current three transactions per second limit. Two sides have formed in the debate, Bitcoin Unlimited and Bitcoin Core. Each side has a differing opinion about how Bitcoin should handle these transactions and my articles called “What is Segwit” and “Bitcoin Core vs Bitcoin Unlimited” will go into much greater detail about each side and what they stand for. The problem with this debate is that while it is healthy to debate and to come to a compromise, that has not been happening with the Bitcoin community. For years the community has been debating and over time the two sides became more polarized and less willing to be criticized or hear the other side. This has led to no progress in scaling, leaving users and investors frustrated at the lack of progress of Bitcoin while other Altcoins like Ethereum or Dash make progress and are innovating constantly. When I watched the latest big Bitcoin conference called the Consensus, the only thing any developers had to show for innovation was a hat with the letters UASF on it!(I will explain the meaning of it later). This lack of innovation has made investors much more willing to use and put their money into other coins, rather than a coin where their issues are not being fixed.

UASF BP148

BP148 is a proposal for Bitcoin that might solve all of its scaling problems. Starting on August 1st, any miners that do not signal Segwit will be put on a separate Blockchain. Picture the U.S making a law for all states to follow. Whichever state doesn’t follow the law will secede and make their own country. It is essentially the same thing with this Bitcoin proposal, if enough miners run the proposal, then it will go into effect. A Blockchain split will be catastrophic in my opinion, because at-least for the short term, people will panic sell and the split will confuse any new investors or users that want to put their money into Bitcoin. For the long term I think the issue will be fixed if there is a split and confusion will slowly be fixed. Bitcoin would become a viable currency again as many more transactions per second would be able to happen and the existing infrastructure would only help the BTC cause.

Overall these two issues make any potential crypto investor more skeptical of Bitcoin than Ethereum. Bitcoin is the juggernaut of crypto, and it has the brand recognition to keep it popular for years to come. Unlike a lot of people I do not think Bitcoin will die, I think Bitcoin will simply be passed over for Ethereum over time if these issues are not addressed quickly. If the issues are fixed and transactions are processed more efficiently, Bitcoin has the infrastructure and userbase to stay relevant at the most popular crypto. This is my opinion, please do not be offended or hate.

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Sources

https://bitcoinmagazine.com/articles/bitcoin-beginners-guide-surviving-bip-148-uasf/

http://coinmarketcap.com/