Bitcoin's dominant hashrate suggests that forks are overvalued

When Bitcoin accounted for more than 64% of the entire cryptocurrency market, rivals BCH and BSV were lagging behind.

Although the two most prominent Bitcoin forks have a much smaller market than BTC, there is evidence that they are overvalued. For example, if the hash rate alone determines the true value of each Bitcoin Cash and Bitcoin SV network, they are only traded for part of the current price.

Bitcoin is even more dominant in terms of hash rate

So far, the market has clearly shown which version of the Bitcoin protocol is most popular. With a market capitalization of more than $ 129 billion and priced at $ 7,051, no Bitcoin fork has reached that number as King Coin.

Currently, the fork project from Bitcoin in August 2017 - BCH is priced at over $ 240. Meanwhile, Bitcoin SV is the controversial hard fork of Bitcoin Cash held by Craig Wright and Calvin Ayre with a market capitalization of only $ 3.6 billion and a trading price of $ 196.

However, according to Bitcoin industry analyst Meme Hub, the above price is a significant valuation. Because the market is not really reasonable, the more reasonable price for both hard forks is just under $ 41.

“Bitcoin has a hash rate of 98.7% right now!

BCH & BSV have 0.6%.

If the market makes sense

BTC = $ 6821

BCH = $ 40.9

BSV = $ 40.9 ”

The reason for the tweet above is that Bitcoin SV and Bitcoin Cash own only 0.6% of the total hash rate mined. Therefore, the fair market will value them at 0.6% of the BTC price.

Currently, each hard fork has a significantly higher price than their relative total hash rate. BCH has a market capitalization of $ 4.4 billion, accounting for over 3.22% of the total market capitalization of the 3 main forks. With a market of less than nearly 900 million dollars, the BSV price accounts for 2.52% of all.

Hash rate increased on the porch Halving

Like Bitcoin price, the hash rate will continue to fluctuate until 2020. After enjoying a strong upturn trend earlier this year, the crash price caused BTC to drop to a lower level of $ 4,000 on some forced exchanges. Many miners have to shutdown.

However, recent price increases have seen miners return to the net. In fact, mining difficulty increased to a level when Bitcoin price exceeded $ 8,000 earlier this year.

With halving Bitcoin just after 1 month, the supply shock will boost the momentum. Reinforcing this theory is the price of BSV surging around its own halving last week.

After the Bitcoin halving event, does the network security model require adjustments?

One of the main features of blockchain-based cryptocurrencies like Bitcoin is its immutable nature. While not the best scaling solution, Bitcoin's PoW has brought powerful and secure transactions. In such an ecosystem, transaction fees, hash rates, profits, etc. are tied to a larger security story and play an indispensable role in preventing the possibility of 51% network attacks.

In a recent episode of Chain Reaction podcast, Kraken Digital's Business Development Director Dan Held emphasize Issues related to Bitcoin security model along with the role of transaction fees in the ecosystem. Over the next 30 days, Bitcoin will experience halving the third block reward and this may affect security. He pointed out that:

"Important thing was ability Bitcoin's security, whether the security model will stand up to attackers for a long time? And element At the core of that is block rewards, including block subsidies and transaction fees. What if transaction fees to replace block subsidies and enough to Ensure network security?”.

He emphasized that when it comes to Bitcoin and cryptocurrencies in general, users will always aim for more secure blockchains.

“People will naturally be drawn to blockchain with the highest security. There are many costs involved when you trade through block space. We look specifically at Bitcoin and trade on Bitcoin block space, when are people trading on Bitcoin block space?



Interestingly, according to network data from Coinmetrics, Bitcoin transaction fees over time have increased. Held also details the fees people are willing to pay to trade Bitcoin by comparing what they have to pay with other valuable storage assets. He concluded:

“Bitcoin is actually a much better asset than other things. With real estate, not just you must return these transaction fees but There is also maintenance cost and it is a very liquid market. So, in fact, users will be willing to pay higher amounts and transaction fees. ”

Few days ago, BCH experienced its first halving. What's alarming about this event is that BCH witnessed hash rates and profits plummeting, causing many network security holes. Because Bitcoin will also be halving, miner incentives will be reduced and likely to become more dependent on transaction fees arising from the verification of transactions on the blockchain.

Thuy Trang

According to AZCoin News

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