It’s Bitcoin Cash Hard Fork day. And it’s still stupid. But it’s also important. Please read this so I can explain why. Please.
For those living under a rock/living a regular, healthy life, the Bitcoin Cash community is riven with disagreements over today’s scheduled BCH software upgrade.
Craig S. Wright, the chief scientist at research firm nChain, is advocating an increase in block size from 32MB to 128MB to build up the currency’s transaction speed. BitcoinABC, a large mining pool, with the support of mining giant Bitmain, wants to keep the block size the same but upgrade Bitcoin Cash so that it can support smart contracts.
The fighting over this is embarrassingly intense. Wright, whose supporters now account for some two-thirds of the Bitcoin Cash hashrate (though the “pre-fork” speculative value of Wright’s proposed coin has now declined by 14 percent), has vowed to exert this power on BitcoinABC’s network and stifle trading by mining empty blocks and overriding transactions. Leathery old man John McAfee has pledged his “sword” and his “loyalty” to Bitmain’s Jihan Wu, and McAfee’s the “oldest warrior still standing on the battlefield,” according to himself. Roger Ver looks like he's about to cry. Traders are frightened of losing their funds entirely.
Hilariously trivial, sure, not least because BitcoinABC actually plans to implement a block size increase, but just, like, in a few months. Yet that’s also what makes it so fascinating. Software upgrades in cryptoland are expressions of political ideology, and their advocates affect the characteristics of noble statesmen vying for a better future. Lest we forget what an impassioned Roger Ver said on that weird idiot boat. Well, I have forgotten, but it was probably about how cryptocurrency is really great.
So, a minor drama played out in melodramatic proportions, maybe. But Bitcoin Cash, in its wildest dreams, wants to be the global currency, remember. That this brave new world can quite possibly be utterly undermined by a single, populist, trash-talking interloper is not great. But that is, we suppose, democracy. And in this new cryptocracy, software is policy.
Bitcoin plummets below 6,000. Everybody pretends they’re fine with this. Basically, bitcoin dropped from around $6,200 to $5,600—a drop of 11 percent—overnight (Is it pegged to the British pound???). Normally, it’s hardly worth covering Bitcoin’s inexorable slither to the grave, but this is the first drop below $6,000 since June 24, when it fell $6 dollars below the $6,000 mark for about a day. But this year, instead of scuttling their depraved sex liners and selling their daughters into prostitution, bitcoin holders are making out like they’re...ok?
Bitcoin maximalist Michael Goldstein, whose life mantra is “Eat meat. Lift weights. Hodl bitcoins,” wrote on Twitter: “Let's get Bitcoin down to $1500. I need to see some maximum butthurt ragequit. Full Hearnia [sic].”
Popular pundit Joseph Young took a more circumspect tone, but nevertheless made it sound like he wasn’t that bothered. “Now we will really start to see who and what crypto projects are here to build. Crypto bear market has always been very bad historically, but it always recovered. A few years from now, those that stick around will be called ‘lucky investors’ by newcomers.”
Others framed it as a necessary cleansing moment: "I wish we crash 30% more so all the shitcoins are cleared from the system,” said Redditor hamerH3a4, to an eardrum-shattering chorus of approval. “Full-time trader” Daniel, meanwhile, tweeted: “I believe overall this is good for Crypto.”
One commentator did, at least, give a credible reason to cheer bitcoin’s downfall: famed British racist Tommy Robinson has reportedly started using it after authorities blocked his PayPal. Bearish on white nationalism.
Augur’s midterm market is acting weird. The midterms were a good time for prediction market Augur. A market worth $500,000 correctly predicted that Democrats would take the House. Which they did, giving the DApp a whiff of respectability.
Yet the market still hasn’t resolved and paid out. Instead, the resolution date is set for December 10, a month after the midterms will have ended. Supposedly, this is to give the market leeway in case of a sudden shift in the results due to, say, a recount of ballots. Yet a mysterious influx of $40,000-worth of ostensibly pro-Republican trades has raised suspicions that it’s actually an attempt to game Augur’s process, a “bad faith attempt to mislead traders,” as u/DazzlingCrow so eloquently puts it on Reddit.
The market, you see, is titled: “Which party will control the House after 2018 U.S. Midterm elections?,” not “Which party will win the House after 2018 U.S. Midterm elections?” meaning a particularly savvy trader—with enough sway over Augur’s legions of “reporters” and their resolution process—could win enormously from a sudden switcheroo in which Republicans, because they still technically control the House (until January) are voted the winner, writes Andrew MacDonald on the Block, a publication we seldom think about or read.
As MacDonald points out, there are three ways this could go. The market could resolve as most have construed it, as a wholesome Democrat victory. Second, it could be invalidated, with reporters judging the market “ambiguous” and cancelling payouts. Or it could go to the scant Republican bettors, which would show Augur, or at least the masses relied upon to maintain its sanctity, to be deeply, deeply corruptible. It’s a bad day for crypto-democracy.
Elsewhere on Decrypt.