Bitcoin has been in headlines consistently over the last year. Photo/Getty Images.
Bitcoin has been in headlines consistently over the last year. Photo/Getty Images.
Craig Wright, the self-proclaimed inventor of Bitcoin under the pseudonym Satoshi Nakamoto, is poised to win a fight that will likely lead to the creation of another version of Bitcoin Cash, the original offshoot of the biggest cryptocurrency.
A group headed by the controversial Australian is expected to take controlThursday of the world's fourth-largest cryptocurrency following a software upgrade. A rival faction that disagrees on how to best expand has been trying to persuade the community of computer operators running the network to adopt their version. About 70 per cent of the so-called miners that process the transactions that keep the network afloat are signalling they support the version backed by Wright's allies, according to crypto data tracker Coin Dance.
With both sides resorting to name calling and showing few signs of compromise, the division risks creating two weaker versions of Bitcoin Cash, which could threaten the long-term viability of both. The rival group is headed by Chinese mining giant Bitmain Technologies and investor Roger Ver, known as "Bitcoin Jesus" for his promotional zeal of the original digital coin, who helped bring Bitcoin Cash to prominence.
"This seems to be a personality conflict as much as a technology issue," said Lex Sokolin, global director of fintech strategy at Autonomous Research in London. "Since the most contentious (from a philosophical perspective) part of the community amputated itself into Bitcoin Cash, it should not be a surprise that they are capable of further self-mutilation."
Market participants are being forced to take sides. The San Francisco-based exchange Coinbase Inc. said it will support Ver's Bitcoin ABC version, while Malta-based Binance implied it would support and handle any coins that emerge. Merchant service BitPay said it will support ABC as well.
"The chain will split in two, but the economy will support ABC and reject SV (Satoshi's Vision)," which is Wright's version, Jonathan Bier, head of research at Hong Kong-based BitMex, said in a message. If major exchanges don't list Wright's token, that could pressure its price, he said.
"SV will have a low price and miners will leave it in a few weeks," Bier said. "That is my prediction."
Satoshi Nakamoto claims to have invented bitcoin. Photo/Getty Images.
Billionaire Calvin Ayre, who controls rival mining giant CoinGeek and is an ally of Wright, said he plans to ask exchanges to only list his coin as true Bitcoin Cash.
"If they do go their own way we are going to lobby all exchanges, since they are forking away from Bitcoin technology, that they should not be able to keep the Bitcoin name and create market confusion," Ayre said in an email.
Wright, meanwhile, seemed to threaten Bitmain, which is planning to go public, with losing business. In a Nov. 13 tweet, Wright said, "So Calvin purchased a LOT of machines from Bitmain (Most of the revenue for the IPO). Now Bitmain wants to attack one of their largest customers. . . . Sounds like a winning strategy - for the competition. ..."
In a Nov. 8 YouTube video Ver rubbed his head and said he was mistaken in Wright, and said he hoped the split will end up being like Y2K - much ado about nothing.
"I think it's probably unlikely that there will a long-term fork," he said. As the two sides battle it out, both - as well as their cryptocurrencies - may suffer in the short term.
