Ethereum likely to be #1 by August 5

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Steve Sokolowski
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Ethereum likely to be #1 by August 5

Post by Steve Sokolowski » Tue Jun 06, 2017 5:43 pm

I've been warning for years that bitcoin's future was in jeopardy due to the 1MB transaction limit. I pointed out that ETH would rise to $100, that LTC was undervalued at $4, and that bitcoin transaction fees would likely be at $50 by the end of the year. Today, I'm sorry to announce that the last of those warnings is likely to come true this week: we paid $37.32 for a single transaction this morning. As a result, we increased our bitcoin payout threshold to $250, at a time when the threshold for all other coins remains at $1. These payout transactions cost less than 50 cents at the beginning of the year.

Another warning that received substantial criticism back in 2014 was my prediction that the next bubble would be popped by the transaction limit. It is now difficult to see a world in which this prediction doesn't come true. Bitcoin is a broken, unusable, unaffordable network, and people are leaving it in droves. About 98% of our desired transactions are suppressed; if the space were there, we would expand our usage over 25 times (and end up paying even more fees in the end).

That's why I now believe it is more likely than not that Ethereum will become the #1 market-capitalized cryptocurrency before August 5. There is a large disconnect between the truth on the ground and what people believe.

The reason why didn't really hit me until recently. Why many don't seem to understand why bitcoin's current standing is so grave is because a large portion of the bitcoin community has become intertwined with reddit. While the ability for Michael Marquadt to censor his subreddit is old news, what tends to fly under the radar is that high-quality comments have slowly become less common because of reddit's content policies. Reddit's rules are extremely arcane and detailed, and there are no warnings or lesser punishments other than being permanently banned. One can be banned from reddit for writing that a post should be upvoted, for linking to people to read other subreddits, and for posting the real name of people who administrators judge aren't "public enough." There is also collateral damage where you can be banned for doing nothing at all: for example, if your family members use their own accounts from the same location as another account that was banned.

On the other hand, reddit's rules do not prohibit extremely derogatory comments. In one particularly idiotic exchange that marked the point where I decided not to post anything meaningful to reddit ever again, user "ocrasorm" responded to my report where a user was replying to my comments with "F*** you troll" by stating that (even though pointing out good content that should be upvoted is grounds for a permanent ban) that particular phrase didn't violate any rules. So I left.

I don't consider myself any more or less competent than the millions of other developers on the Internet, but I do have enough self-worth to recognize that I'm not going to belittle myself to contribute to a site where such comments are allowed. And while I also don't consider myself as writing New York Times-quality journalism, I do believe that the comments I wrote were more meaningful than "F*** you troll." It's not a stretch to suggest that other people who pride themselves in making quality contributions have also sworn off reddit due to their arbitrary bans and the attitudes of their administrators. As a result, the quality of the subreddits there has dropped off a cliff, consisting mainly of one-line comments and flame wars between the two sides of the blocksize debate.

When one removes himself from reddit (I haven't read or posted there in at least a month), he or she is more likely to come into contact with reputable people who are willing to have more detailed conversations. Those people largely do not agree with the prevailing attitudes on reddit, despite the site being a nexus of bitcoin discussion. They are more likely to have money, be involved with the industry, and work as developers, and those people see Ethereum as a project that has the potential to grow dramatically. The coin is already one of the best investments in the history of the world for early adopters, but the real reason Ethereum has a future is because the capacity is there for businesses to invest in. While both Bitcoin and Ethereum are rising in transaction costs, Ethereum has the potential to increase its transaction capacity far beyond its current limits because of good initial design and an exceptional community.

I do not believe that ETH will follow the same bubble cycle as Bitcoin did, and as many people believe it will. ETH is in a fundamentally different position than Bitcoin was. Bitcoin had its first few bubbles, especially the two in 2013, for its potential rather than actual usage. Until now, there was little actual usage of cryptocurrencies, resulting in "potential" bubbles.

The difference between this current bubble and the 2013 bubbles is that there is a dramatic suppression of bitcoin transactions. Some businesses would probably want to use hundreds of times more transactions than they do now. It takes time for businesses to modify their software to move to geth or another Ethereum client from Bitcoin's different API, so this suppressed demand has not yet been fully realized in Ethereum. This is why I believe that Ethereum continues to see a slow and steady rise in price directly proportional to the Bitcoin transaction fees. More and more businesses and users are making the decision to switch, but development and testing takes time. One of the reasons that Ethereum will emerge #1 is that these businesses will remain with Ethereum even if the bitcoin blocksize debate were to be resolved tomorrow.

And few seem to be recognizing the magnitude of the suppressed demand. Every single "donation address" on the Internet is worthless and is a candidate for a switch to Ethereum. If you doubt this, go to the Pirate Bay's site and look at its donation address. A few days ago, they spent $230, on one fee, to consolidate a single transaction! There are donations going into that wallet worth $1 or $2 that are completely worthless. For years, people have cried that Bitcoin had no demand for it and took no action to prepare for that demand. Now, demand is through the roof and Bitcoin is useless.

What has Bitcoin done about this problem, besides wasting two years while other coins prepared to dominate? One side wants to create a user-activated-soft-fork, an insidious client that amounts to an attack on the network because of how it is designed. Rather than simply forking off from the main chain and permanently severing the two chains to implement Segregated Witness, user-activated-soft-fork supporters have written their code so that it is possible that their chain could, at any time in the indefinite future, completely revert all transactions sent since August 1. It's that bad.

The user-activated-soft-fork chain rejects all non-SegWit blocks. The way the nightmare scenario works is that if 50% of miners join the user-activated-soft-fork chain for even a little while, then the main bitcoin chain has the potential to reorganize because the chain of SegWit-only blocks will exceed the work of the standard chain, which includes other blocks.

So if you're afraid, like I am, what is the solution here? You let everyone fight against each other, don't take a side, and hold ETH. We plan to profit off this by introducing profit-switching mining between these two chains, so that we can sell all the BTC and UASF-BTC we mine into ETH as soon as possible. Many others who don't want to sell will have to deal with a possibility that will exist forever that this user-activated-soft-fork could essentially steal all their money.

There is an ideal solution to the reorganization problem that permanently solves the blocksize issue: incompatible hard forks. I've been advocating this for years, and nobody seems to be listening, unfortunately. There should be multiple forks on August 1. Someone should fork to Bitcoin Unlimited on August 1 by publishing a 1.01MB block. Then we would have three forks, traded at exchanges, and the best one would win.

By the way, that's the only way that Bitcoin survives an ETH takeover - if the question is put to users with an Unlimited block option. Use common sense with this one: if there are three options for bitcoin (SegWit, which doesn't have the Lightning Network yet; the original bitcoin; and a bitcoin with theoretically Unlimited maximum capacity in the future), which one are businesses and users going to support? They will go to the chain where there is capacity, just as they are being forced to ETH now. Why is this fact not obvious to the people in charge? Give people an option and they will take it.

Unfortunately, this "ideal" solution where Bitcoin Unlimited is hard forked is not likely to occur. This is similar to Republicans and Democrats. Republicans are more willing to do whatever it takes to win, which is how they redrew Congressional districts to gerrymander safe seats for a decade. Democrats tend to believe in fairness and equality, and they don't engage in confrontational tactics like that. Therefore, the Republicans win, and that's why despite there being a significant advantage in party registration, more votes cast for Democratic candidates in the House, and more people having voted for Clinton than Trump, Republicans control all three branches of the Federal government and more than two thirds of state governments. Bitcoin Unlimited is like the Democrats - the other side decides to attack the network with a user-activated-soft-fork, but they aren't willing to execute a much safer hard fork with larger blocks, despite that more miners support Bitcoin Unlimited than do SegWIt.

So what is the future for Bitcoin? It will most likely go like this: as August 1 approaches, bitcoin price will plummet in anticipation of the user-activated-soft-fork. As I predicted two years ago, the main chain will probably see the largest DDoS attacks in the history of the Internet. The UASF will fail to gain widespread support, but will continue to cast fear about a large chain reorganization. Jeff Garzik will finish the "compromise" implementation that supports 2MB blocks, a fork will occur sometime in 2018, if the non-confrontational group can get a nearly unattainable 80% agreement, and the minute that fork happens the 2MB blocks will be full again because the suppressed demand is enormous. Then, when they see that what should be obvious now - that 2MB is not enough - everyone starts over with the next blocksize increase debate. Meanwhile, the world will end up with not two or three, but five, six or ten chains: the UASF chain, the original chain, the 2MB chain, the chain representing the next hard fork, and so on. The number of chains these compromise forks will create alone is staggering.

Bitcoin ran out of time long ago. While the odds of both may be low, ask yourself whether an Apple Watch next year is more likely to have support for Bitcoin or for ETH. Bitcoin will still have value, and may even retain its current value, but the future is in ETH.

In conclusion, Ethereum is likely to become the #1 cryptocurrency by market capitalization before August 5. LTC is also likely to see dramatic gains due to its wide support with altcoin trading pairs. BTC will peak and then crash in anticipation of the forks as people move their money to safer investments, like ETH. The only way that BTC can retain its leadership is if Bitcoin Unlimited announces that it will simultaneously publish a large block on August 1 to make a large chain available to users - allowing Bitcoin to permanently move past the issue after a single period of chaos.

Updated odds for the dominant cryptocurrency in 2018:
  • Ethereum: 70%
  • Litecoin: 15%
  • Bitcoin: 15%
tmopar
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Re: Ethereum likely to be #1 by August 5

Post by tmopar » Tue Jun 06, 2017 5:56 pm

So that I understand you correctly, You are saying now paying the default BTC fee does not guarantee the transaction would go through? If its orphaned is the sender out the money?
JoeTheMiner
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Joined: Wed Nov 19, 2014 10:30 am

Re: Ethereum likely to be #1 by August 5

Post by JoeTheMiner » Tue Jun 06, 2017 6:42 pm

Totally agree with you Steve. It is sad it has gone this far for Bitcoin. Starting today I am trialing getting paid in Ethereum instead of Bitcoin because of all of these recent events. Fees are totally outrageous and really defeats the purpose of Bitcoin in the long run in my opinion.
spauk
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Joined: Wed Apr 27, 2016 7:33 pm

Re: Ethereum likely to be #1 by August 5

Post by spauk » Wed Jun 07, 2017 12:10 am

$37.32 for how big of a transaction? Still seems steep no matter the value. That's the first time I've ever seen the word gerrymander used, bravo. Scrabble bonus x3. All your points seem valid, but is this because bitcoin is rapidly increasing in value, or USD is decreasing?
Mrrt
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Re: Ethereum likely to be #1 by August 5

Post by Mrrt » Wed Jun 07, 2017 12:20 am

Steve. Less time ranting, more time bailing water from your own sinking ship. Chop chop.
GregoryGHarding
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Re: Ethereum likely to be #1 by August 5

Post by GregoryGHarding » Wed Jun 07, 2017 12:40 am

Mrrt wrote:Steve. Less time ranting, more time bailing water from your own sinking ship. Chop chop.
Shots Fired.
GAWminer27
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Re: Ethereum likely to be #1 by August 5

Post by GAWminer27 » Wed Jun 07, 2017 1:31 pm

I have been reading a lot about Ethereum in the past few weeks, and that is why I have been taking 90% of my payments in ETH, I agree it may become #1, but not so sure it will happen, in August or any time soon. There is the possibility, that the rumors are all hype, and a way to get everyone to ditch it, and then certain people can buy it all up for a very low price. Just like the Y2K hype. But I do think that Ethereum will be a major player, from here on out.

https://www.youtube.com/watch?v=Y2fUPNbBF60
jzcjca00
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Re: Ethereum likely to be #1 by August 5

Post by jzcjca00 » Wed Jun 07, 2017 2:53 pm

> Why is this fact not obvious to the people in charge?

This fact is amply obvious to the bankers who sign the paychecks of the Core developers, censors, and troll army. What you're missing is the fact that their goal is to destroy the "peer-to-peer electronic cash system" aspect of Bitcoin so that the bankers can continue to pillage the masses, and for that to happen, they need for SegWit to activate. They will do anything, including unethical and illegal means, to make sure that happens.
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Steve Sokolowski
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Re: Ethereum likely to be #1 by August 5

Post by Steve Sokolowski » Wed Jun 07, 2017 3:12 pm

jzcjca00 wrote:> Why is this fact not obvious to the people in charge?

This fact is amply obvious to the bankers who sign the paychecks of the Core developers, censors, and troll army. What you're missing is the fact that their goal is to destroy the "peer-to-peer electronic cash system" aspect of Bitcoin so that the bankers can continue to pillage the masses, and for that to happen, they need for SegWit to activate. They will do anything, including unethical and illegal means, to make sure that happens.
The Core aren't the people that I'm criticizing here. I'm criticizing the Bitcoin Unlimited developers, who I initially saw as wanting to make a difference but now see as cowards. It's time for them to take a stand and announce a unilateral fork to larger blocks. If they don't, then they should also be replaced as leaders.

There are too many people in bitcoin who are stuck in an endless loop of worrying about how they can avoid multiple "bitcoins." They need to wake up. There is no way that Bitcoin survives without a fork. There will never be "consensus." There are going to be multiple Bitcoins whether they offer one or not. It's time for people to stop the endless "consensus" gathering and set August 1 as the date that there will be 3 bitcoin chains, and resolve this problem once and for all.

The problem with Bitcoin is the Core. If Bitcoin Unlimited activates using the traditional method, the Core will just change their tactics to convincing miners to set low EB values. A 3-way fork on August 1 permanently removes the Core from what will undoubtedly become the largest and most valuable of the "Bitcoins." Why does nobody see the benefit of forking away from the Core, or allowing the Core to fork itself away, and getting rid of all the negative people?
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FRISKIE
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Re: Ethereum likely to be #1 by August 5

Post by FRISKIE » Wed Jun 07, 2017 3:50 pm

@ Steve - +1
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