On December 10 at 5:00 p.m. Central Time, the CBOE (Chicago Board Options Exchange) will launch a Bitcoin futures trading (although there is a feeling that an institutional investors are already heavily investing (for example, through the Asian exchanges Bithumb, Bitfinex and BitMEX (partly) where the trading volumes exceed $ 2 bln)).
There are expectations in a cryptosphere that this milestone will become rocket fuel no longer to the Moon, but to the Mars. And it is at many points justified. But what could be bad about Bitcoin futures? Could this step kill the idea of the Bitcoin?
Pre-futures situation
Several days ago the network difficulty has increased (to be more exact - it increased by 18%). This means, that for a while there will be a delay in a confirmation of a blocks. In addition, because for a while mining of the Bitcoin chain will become less profitable for miners with small hashrate, they may switch to a Bitcoin Cash mining (because miners will mine any coin that brings a profit as they are here for a freebies - not because of the saint idea of showing middle finger to a banks/ governments and regaining control over money back to people). But BTC right now is like skyrocketing to another galaxy, so this possibility is small.
What do we see now (December 8th)? The higher bitcoin grows, the more people are trying to jump-in to the last wagon. In less than 7 days, the price rose from $ 10,000 to $ 18,000. With the huge demand, the number of transactions is also growing. More than 220 000 transactions stuck as unconfirmed. Mempool is hammered again. To make a transaction got on the blockchain, people are raising a fee. At this moment, the fee for an average transaction is 113,000 satoshis ($ 17.61) while one year ago it was only $ 0,261. Segwit, created to solve these problems, is not so widespread yet - the percentage of Segwit-transactions is still small, and the Lightning Network is only at the beginning of its path (I've mentioned these and other problems in this article).
With that being said, the question arises: what will happen when an institutional investors will join the party?
What if due to extremely high fees, only institutional investors will be able to use the network, and for the rest of the people it will become unprofitable to use it?
Let’s suppose institutional’s will trade actively and the congestion of the already overloaded network will increase dramatically. To make a transaction happen, users will start increase fees. But if for institutional’s, who can trade in diverse volumes, fees may not be noticeable, for an average person, a fee that is slightly less than the amount needed to be sent, or even exceeding it, that can become a stop signal. For example, for the largest online gaming store Steam, the situation with volatility and high fees became a problem and they dropped out of a support of the Bitcoin.
Can a bitcoins "locked" on the exchange disappear with it?
Recalling the story of the Mt. Gox, different thoughts are coming to a head. Users are waiting for the situation with the fees to settle and keep hodling BTC on an exchange. The price of the BTC keeps rising... The private keys of the users BTC are held by the exchange... Why not wait for a specific moment and not exit with the money under the pretext of a server overload, or a DDoS-attack, in the style of a recent feint from the BTC-e (now called WEX.nz )? Recently users are start complaining about problems with the withdrawals from the Bittrex, as well as from the Bitfinex ... I'm not spreading FUD, but be cautious please.
Is there a possibility that nearly all bitcoins will be gotten by institutionalists, and we'll return to what Bitcoin was trying to save us from?
Bitcoin white paper was released in 2008, when the financial crisis occurred. Bitcoin was created to prevent that to happen again and to allow people to keep their digital money in their pocket. Digital cash. Safe and anonymous if you'll observe a certain tactics. With small fees and fast transactions. What do we see now? The network is overloaded, transactions are slow, fees are high. And now Wall Street guys, because of whom financial crisis in 2008 has occurred, received an access to it. What is a possibility that they will buy up most of the bitcoins and under the pressure of regulators they will resell them only after a full identification of the person and binding it to him (KYC / AML policy)? What is the possibility that they will lend bitcoins to those who want to trade them on an exchange, but the rate will fall and the trader will not be able to fulfill his debt obligations?
These days in the cryptoeconomic atmosphere there are different thoughts flying around, and I just expressed mine. What will actually happen we'll see very soon.
I will be glad to be wrong.
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