The bitcoin halving has been a few weeks now and we are already feeling some fundamental changes.
Due to the block reward halving, there has been a sharp drop in the bitcoin hashrate in recent weeks. this in turn has led to longer block times and higher transaction fees. meanwhile, transaction fees have increased in a short time by 1250%. this will normalize again with the next difficulty setting.
Reading: Why is bitcoin cash not going up
bitcoin cash has already shown its weak side before the bitcoin halving. This was mainly because the bitcoin cash halving took place several weeks before the bitcoin halving. consequently, the block rewards were reduced from 12.5 to 6.25 earlier. as a result, some miners have switched to btc to work for higher block rewards.
but what about bitcoin cash now that the block rewards of both cryptocurrencies have been adjusted? have many btc miners gone back to using bitcoin cash? an analyst on twitter has posted a brief analysis that casts strong doubt on the bch project from a fundamental point of view.
yassine elmandjra, a cryptanalyst at ark invest, recently assessed some of the fundamentals of the bitcoin cash network and found that they have deteriorated since the halving on April 8. elmandjra says that the bch network “doesn’t look healthy”, particularly due to some fundamentals that have deteriorated.
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bitcoin cash miners have pulled out a few days before the actual bch halving. only when the bitcoin halving happened and the block rewards adjusted did some miners probably come back and the hash rate rose for a short while in bch. however, there were still fewer transfers to bitcoin cash than might be expected.
Secondly, elmandjra argued that economic performance on the bch network is at an all time low. The number of transactions on the network dropped from 90,000 to 56,000. This surprising decline in economic performance has resulted in lower revenues for miners.
Currently, btc cash miners earn only 0.05% of revenue from transaction fees. By comparison, for BTC miners, they get transaction fees in the amount of about 10% of their income. this is very important for the long-term security of the network. at some point, there will be no or very small block rewards.
Probably one of the most concerning aspects of the bitcoin cash network is the current security. the lower hash rate makes the bch network more vulnerable to attack. elmandjra pointed out that evil miners could easily launch a 51% attack on the network. The cost of such a malicious attack on bitcoin cash is currently around $10,000 per hour. he even said that he was “surprised that we haven’t seen a major attack yet.”
Of course, at this point, one or two people will ask how the price will affect these weak fundamentals. We have seen in the past that even relatively bad fundamental news has had little to no impact on the bitcoin cash price. however, this does not mean that it should stay that way.
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for example, if a 51% successful attack occurs, then the trust in the network, which is currently not that high anyway, is completely gone. So many investors would sell their BCHs on the market as quickly as possible. that would lead to an extreme price collapse. a healthy demand would also disappear. in the long term, the price of bitcoin cash is likely to be close to zero.
The scary thing is that theoretically it could happen at any time. the only security is additional income for miners mining the bch blockchain. As long as there is money to be made here, I don’t think anyone will attack. there just isn’t enough motivation for that. but as soon as no more income can be generated with bitcoin cash, the network will probably be ignored.
bitcoin cash can never be established on such a basis as a means of payment. for decentralized money we need the highest security we can get and currently only bitcoin offers us this. so if the fundamentals don’t improve in the coming months and years, this cryptocurrency will die a slow death.
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