The colossal train wreck over the Bitcoin cash hard fork is not the best advertisement for the stability of cryptocurrencies.
Stability is the holy grail here, as the SEC tries to determine whether or not to allow Bitcoin ETFs – as pundits and others ponder the future of cryptocurrencies in general, and mourn the volatility and chaos that so often accompanies these equities.
Then there’s the Bitcoin cash saga which as Lewis Carroll might say seems to get “curiouser and curiouser” over time.
Three weeks in, we’ve seen the experts rush to crown Bitcoin ABC as the beauty queen, and then the ascendant rise of Bitcoin SV through its market cap and trade interest.
We’ve seen arguments for and against both forked currencies related to mining, trading and positions on exchanges.
What we’re also seeing is legal activity coinciding with SV’s rise and ABC’s descent.
United American Corp. is suing Roger Ver and other top ABC people for price manipulation – but what does that really mean?
“This action involves a scheme by a tight-knit network of individuals and organizations to manipulate the cryptocurrency market for Bitcoin Cash, effectively hijacking the Bitcoin Cash network, centralizing the market, and violating all accepted standards, protocols and the course of conduct associated with Bitcoin since its inception,” Mandy Williams writes, quoting a portion of a litigation document.
Further details can be seen at CCN, where writers specify that the manipulation involved not following the usual “rules of consensus.”
According to CCN reporting, United Corp. cites “the use of computational hashing power that did not contribute to the network just prior (sic) and then was withdrawn shortly after the network upgrade was put in place.”
The purpose, they say, was to create an artificially long chain governing existing rule sets.
Then these specific accusations start to sound more like Spy versus Spy.
CCN reports United Corp. is alleging the use of a “poison pill” inserted into the blockchain. Industry pros are calling this a “deep re-org prevention” and suggesting that these actions were taken to centralize control data of future implementations and rule sets.
In one sense, you could say the issue here is the violation of the decentralizing principles that cryptocurrency pioneers have put their muscle into. In other words, when parties don’t honor the rules of consensus and fair play, when the process is not allowed to play itself out in a decentralized way, that leads to legal challenges.
It’s all a cautionary tale in how conventional protocols established for crypto coins break down, and too much complexity wreaks havoc in the trading system. Who wants to invest in digital currencies that are so tenuous and so contested? That’s leading to accusations that Bitcoin cash is causing Bitcoin itself to plunge, because everyone’s tarring all crypto with the same brush.
Nor is this the only legal challenge – the Coinbase exchange is fighting its own suit over lack of liquid accessibility to coin holders.
All of this adds to the arguments of crypto detractors who say these coins are inherently unstable. Look for the Case of SV/ABC to eventually resolve and cooler heads to prevail in the situation in order to prove to the world that cryptocurrency is still a viable way to manage transactions.