Last week I had a realization that I wasn’t really buying into the scarcity argument for Bitcoin given the ease with which new currencies and forks were entering into the mainstream for traders and acting as competition for BTC’s assets and attention. I likened it to the tidal wave of dot com IPOs that eventually swamped all investor demand by the first quarter of 2000.
As if on cue, a few days later Bitcoin Cash, a forked version of BTC, was added to the Coinbase platform and Bitcoin “classic” plunged by 30%.
Now of course, the purists are out there screaming that Bitcoin Cash is illegitimate and is merely the Frankenstein creation of “Bitcoin Jesus” Roger Ver – a centralized coin that he controls and therefore just a distraction. This could be true.
But that’s not the point. In the end, competing coins and tokens and forks are a threat to the “store of value” claims that so frequently come up in support for BTC as an asset class. Back to my original rhetorical question:
There are only three coins on the platform. If there were five or ten, isn’t it more likely that they would all individually be worth less per coin, because Coinbase retail people would have more places to spread their bets? Wouldn’t the price of Bitcoin be lower if the most popular platform were not “Bitcoin maximalist”?
There are now calls for Coinbase to suspend trading in Bitcoin Cash or to eliminate it from the platform. It’s become a major controversy. The bull case for Bitcoin classic is that these are the growing pains it has to go through on the way to supremacy, and that other forking attempts (challenges) will be slower to come should Cash be defeated.