Bitcoin is bloody, and we love it that way.
We love the promise -- unbank the world! We love the philosophy -- decentralize everything! We love the drama (whether we admit it or not) -- Antonopoulos vs. Ver! We love the intrigue -- Wright/Satoshi!
But most of all, we love the potential, even if we aren't sure what that means.
The Potential
I've gone the rounds with some of my crypto-anarchist friends. To them, the end-game is no less than, and success can only be defined by, the complete dissolution of the state and a reordering of the power structures of society. Some of my less radical colleagues cling to the hope of a real, immutable, distributed store of value. They just want their wealth immunized against theft or appropriation. To them, Bitcoin is an exit plan or insurance policy. If they must jump the ship of a sinking empire, a brain wallet is as good as it gets when it comes to taking your wealth across state borders.
Still others envision a frictionless and cheap remittance platform driven by electronic money - or cash - for lack of a better term. These are they who share the vision of Milton Friedman: "I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing, but that will soon be developed, is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A. The way I can take a $20 bill hand it over to you and then there’s no record of where it came from."
Bitcoin, since Satoshi's now canonized white paper, has been the sanctum sanctorum of all of these dreams. Every one of those dreams exists because it is one of the potential realities, given the right path, for Bitcoin's future. However, the path of least resistance to any one of those realities is often in conflict with the path of least resistance to the others. And so, the economic value of the Bitcoin protocol, [very] roughly expressed in terms of its market capitalization, is affected by as many sorts of interference as there are conflicting potentialities.
An Analogy
Imagine a pool of perfectly still water. Drop a pebble in at one end. A series of waves are generated, dispersing the expression of kinetic energy. Small waves spread in a circle until something solid deflects them, creating a one-of-a-kind fractal. That is an expression of one of the potentialities that existed prior to dropping the pebble. Drop another pebble in at a different place and watch a new fractal form, throwing ripples in different directions, different angles, different interaction. That is an expression of another of the potentialities that existed prior to dropping the pebble. Drop them both at the same time and, if you watch carefully, you will see waves from one moving directly toward the other and vice versa.
This is where the magic happens.
The expression of one potentiality crashing into the expression of another potentiality creates a chaotic exposition of creation and destruction. Where one wave's peak intersects with that of another, the amplitude is multiplied, this is creative interference. However, where one wave's peak intersects with that of another wave's trough, the amplitude drops to zero, destructive interference. The existence of two potentialities within one system can destroy, in certain places and times, the expression of either. All of that energy converging on one point in space and time creates, well, nothing.
And so it is with Bitcoin, so long as it is the sole treasury of all potentialities, the respective value of each potentiality is checked by that of the others and the energetic value locked within each potentiality is nullified by the others. It is a case where the value of the whole is less than the sum of the parts.
So What?
Along comes a few outspoken narcissists with deep pockets and a pathological antipathy for obscurity -- no not Trump -- Roger Ver and company. The once deified "Bitcoin Jesus" championed a hard fork of Bitcoin, hell bent on displacing the grip of a broad distribution of developers over the protocol's monopoly on potentiality. The coup d'etat gave birth to Bitcoin Cash, a rework of the Bitcoin protocol targeting the Friedmanite e-cash vision.
On the day of reckoning, August 1, 2017, Bitcoin's market capitalization was $47.3 billion. That is when the fork happened. Out of the blue, a new coin, BCH, emerged and within 24 hours carried an impressive $6 billion market cap. Curiously, within that same 24 hours, BTC only shed $2.4 billion as the market tried to find its legs again.
Within a week it was clear that we were in a whole new world. BCH was surviving and BTC had added, seemingly out of nowhere, $11 billion dollars to it's market share. Within a month, that number was dwarfed by BCH climbing 50% and BTC beginning a parabolic run, nearly doubling its value. Since the moment the potentiality we identify as BCH was liberated from the BTC protocol, $182 billion dollars of value has been created. And BCH wasn’t the only hard fork. Bitcoin Gold, with a current market cap of $4.5 billion, forked the Bitcoin blockchain again on October 24th and Bitcoin Diamond threw their hat in the ring with another fork on November 24. It can be argued that market capitalization is a poor measure of value, but until new means of determining value emerges, it is the best we have.
So where did the $182 billion of value come from? It was always there. Bitcoin Cash always existed, latent in the hoped potentiality of many Bitcoin advocates and observers. But, so long as the hopes of small-blockers and big-blockers converged in a single point in space and time, the energy of the one destroyed the energy of the other. Crypto-skeptics (I'm looking at you Peter Schiff) are quick to invoke tulip mania and no doubt the increase in market capitalization has driven emotional speculators into Bitcoin's ranks. However, the timing of the BTC-BCH hard fork shouldn't be ignored. Counterintuitively, by giving expression to the cadre of big-blockers, BCH unleashed the suppressed energy of small-block BTC loyalists, and it was a LOT of energy. Bitcoin is now free from the threat of big-block projects, and the small-block, digital-gold, solid store-of-wealth types are happily embracing a path free of resistance to their vision for Bitcoin.
This shouldn't be construed as an endorsement for investing in BCH, it isn't. I have my concerns about it. But it is a loud rooftop-scream type of endorsement for the existence of BCH, and any other hard-fork of the Bitcoin or Bitcoin Cash blockchains that may come along. With so many potential futures for this new technology, I welcome every fork.
Every. Single. One.