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Bitcoin’s rivals multiply amid battle for crypto dominance

Proposed new coins include super bitcoin and bitcoin silver.
Ongoing feuds in the bitcoin community mean its top-dog status is far from guaranteed. Picture: Shutterstock

It’s getting tougher and tougher to keep track of all the different versions of bitcoin.

New iterations of the cryptocurrency are multiplying as disagreements over bitcoin’s design persist and opportunities for making a quick buck prove hard to pass up.

The biggest offshoot, called bitcoin cash, emerged in August after a so-called hard fork in the bitcoin blockchain. That spinoff, currently valued at $18 billion, was followed by a less successful fork to create bitcoin gold in October, and now several other planned splits are in the works. 

There’s bitcoin diamond, bitcoin silver, bitcoin unlimited and, in what looks like the latest proposal, super bitcoin. The website advertising super bitcoin says the offshoot is backed by Chinese cryptocurrency entrepreneur Li Xiaolai. It promises to “make bitcoin great again” by, among other things, increasing the size of blocks on which transactions are processed — a move that would reduce confirmation times and fees.

The proliferation of bitcoin breakup plans is partly a result of the cryptocurrency’s decentralised design. The software underpinning bitcoin is open source, meaning anyone can simply copy it and make adjustments to form a new version of the coin if they have issues with the original. There’s also a profit motive: if offshoots are successful, the creators can earn windfalls by “pre-mining” coins for themselves or foundations they control.

Bitcoin gold’s main change is how it is mined. Unlike bitcoin’s mining algorithm, which requires high-end server farms, anyone with a gaming graphic card can validate transactions on bitcoin gold’s network. The idea is to democratise the mining process, bringing it closer to the vision outlined in the original bitcoin white paper.

The question for the crypto community — which includes a growing number of Wall Street banks and fund managers — is how fractured bitcoin will become. The popularity of bitcoin cash, along with talk of other offshoots, has fueled big price swings over the past two weeks as traders struggled to gauge which cryptocurrency will come out on top.

Bitcoin, which touched a record on November 8, sank as much as 29% from its peak before recouping most of its losses this week. It traded at $7 478 as of 7:30am in New York.

Despite the turbulence, bitcoin still has a commanding lead in the crypto league tables. Its $124 billion market value is at least four times larger than its closest competitors, which include “alt-coins” like ethereum and monero, according to Coinmarketcap.com.

But bitcoin’s top-dog status is far from guaranteed, given the ongoing feuds among its many stakeholders.

“The community is really divided on the technological direction and since bitcoin is such a decentralised network, there is really no method to come to a good consensus,” said Gavin Yeung, chief executive officer at Cryptomover, a Hong Kong-based investment company.

Yeung says C, adding that multiple versions of the cryptocurrency could prove successful over the long haul.

“We’re not bitcoin maximalists who believe there’s one chain that rules them all,” Yeung said. “We think there are multiple use cases.”

© 2017 Bloomberg

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