Bitcoin cash is the hottest cryptocurrency around right now for more reasons than one might imagine.
The offshoot of the biggest digital token has surged about 25 percent since Friday last week, in part because Antpool, one of the largest mining groups, is “burning” a portion of the coins it receives in exchange for solving the complete mathematical puzzles that serve as the backbone of the network, potentially reducing supply and driving up the value.
The maneuver is the latest salvo in an escalating battle between backers of bitcoin and bitcoin cash, which was spun off last year.
Photo: Bloomberg
Through a war of words playing out on Twitter and Facebook, some of the largest holders of both cryptocurrencies are attempting to influence the coins’ prices after seeing significant losses since last year.
“Antpool has burned US$12 worth” of bitcoin cash a day, said Kyle Samani, managing partner at the Austin, Texas-based crypto hedge fund Multicoin Capital, in an e-mail.
“This was purely a PR game so they could say ‘reducing supply,’” Samani said.
Antpool, whose users’ computers confirm 8.2 percent of all bitcoin cash transactions, on Friday announced on Twitter and Facebook that it would voluntarily “burn” 12 percent of the coins it receives.
The mining outfit is sending a portion of the fees it receives “to a black hole address.”
Bitcoin cash has the advantage of lower transaction fees and faster transaction times.
The more widely used bitcoin has been testing a new technology, called Lightning Network, that, if deployed at scale, could significantly cut bitcoin cash’s advantage, Digital Asset Research senior analyst Lucas Nuzzi said in an e-mail.
“Now, projects like bitcoin cash are struggling to remain relevant, which is hard when very few users are using the network,” Nuzzi said. “Miners have to liquidate their holdings regularly to pay for their expenses. The move from Antpool is intended to slow down further price depreciation, by attempting to increase the perception of scarcity. Whether the move will be successful remains to be seen.”
The number of bitcoin cash transactions per day has roughly doubled since August last year, when the coin made its debut, according to bitinfocharts.com.
The number of daily bitcoin transactions is actually down from August’s levels.
Other bitcoin cash adherents, such as investor Roger Ver, who was widely known as “Bitcoin Jesus,” have also been actively promoting the coin on Twitter.
Ver often calls bitcoin cash the better bitcoin, where “the old, pro-freedom, economically and philosophically literate radicals have been replaced by a bureaucracy of charlatans who destroyed bitcoin so they could cling to their power.”
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