Hardly ever a dull moment, the cryptocurrency markets have once again captured the limelight. Bitcoin prices, at time of writing, are trading hands just under the $4,800 level. Several hours ago, the prime blockchain asset was above $4,900. If virtual currencies are in a bubble as mainstream-media pundits have claimed, this is an awfully strange one.
At the present valuation, Bitcoin is just 4.1% shy of its all-time high of $5,000. One of the catalysts that got the cryptocurrency over its month-long hump is news of the upcoming Bitcoin hardfork. Called “Bitcoin Gold,” the offshoot coin represents another derivative pathway from the original Bitcoin blockchain. Recall that in August, another Bitcoin hardfork created “Bitcoin Cash,” to much fanfare.
At that time, the mainstream “doomsday-ers” proclaimed that the hardfork would spark market cannibalization. With two different and competing blockchain pathways, dissenting analysts warned that the two currencies will split the investment base, thus capping upside potential for both assets.
In the end, the original Bitcoin hardfork was much ado about nothing. Early traders of Bitcoin Cash did very well. Bitcoin itself soared, then collapsed, then shot back up again to near record levels.
What will the new Bitcoin hardfork entail for the original cryptocurrency and other blockchain assets?
Reading into the some of the details of the upcoming Bitcoin Gold currency, there doesn’t seem much to be worried about. For one thing, the developers have a stated intention not to compete against Bitcoin, but rather, complement it. The Gold programmers refer to the change as a “friendly” hardfork. Certainly, the language lacks the vitriol surrounding Bitcoin Cash.
Furthermore, this latest Bitcoin hardfork, scheduled for October 25, addresses the inherent weakness within the original blockchain that fostered “elitist,” centralized mining and administration. In contrast, Gold features algorithms that are much more similar to the Ethereum blockchain, which incentivizes mining decentralization.
Since Ethereum utilizes a large sum of mining hardware, the logical conclusion is that the October 25 Bitcoin hardfork will compete directly with the number-two ranked cryptocurrency. Even Gold developers state as such.
But in the long run, I don’t believe Ethereum investors have cause for concern. For one thing, the hardfork concept is a dime a dozen in the cryptocurrency world. This is not the first time, nor will it be the last.
Additionally, the mainstream media and the general public hyped the original Bitcoin hardfork to seemingly no end. Yet none of the bearish prognostications as it related to Bitcoin panned out. Sure, the virtual currency dipped briefly below $3,000, sparking worldwide fears. But the blockchain asset is back on top.
You can’t argue with performance like that.