Bitmain’s Jihan Wu Addresses The Company’s Bitcoin Cash (BCH) Position
Jihan Wu, the co-founder of China’s largest bitcoin mining hardware manufacturer Bitmain, has addressed the company’s Bitcoin Cash (BCH) position in a series of posts on social media network Weibo. Wu reflected on the current position Bitcoin (BTC), the world’s largest cryptocurrency, has in the market and explained the reasoning behind Bitmain’s latest liquidation.
Namely, he acknowledged Bitcoin’s position on the market as a sort of “digital gold,” an asset whose volatility doesn’t prevent people from using it as a store of value and a hedge against inflation and government interference. However, he noted that for this model to work, there needs to be a very strong consensus among Bitcoin users and developers. And while this makes the asset more stable in the long run, it also prevents meaningful changes from being implemented to the network. Changes that could, according to Wu, make it closer to its original intention—a peer-to-peer cash system.
Another cryptocurrency asset that replaces Bitcoin’s utility as a means of payment is Bitcoin Cash (BCH), a controversial hard fork of the token that puts its focus on everyday utility rather than a store of value. According to Wu, Bitcoin Cash’s development has been pointed in the direction of making it a peer-to-peer electronic cash system.
This is why Bitmain took such a significant position in Bitcoin Cash a few years back. However, Wu explained that having too much BCH concentrated in the hands of a single player, even if it was Bitmain, was harmful to the overall market and made BCH unusable as a peer-to-peer cash system.
When the latest bear market hit, Bitmain took the opportunity and sold “a lot” of BCH, Wu revealed. The company needed to replenish its cash and used the token’s rapidly declining price as a motivator. And while he didn’t reveal how much of its position Bitmain liquidated, he said that he believes that the problem of Bitcoin Cash ownership centralization “has largely been eliminated.”
He compared the problem Bitcoin Cash experienced with the problem that has become more prevalent in Ethereum in the past few months. As Ethereum 2.0 has been nearing completion, many have been worried about how much ETH Vitalik Buterin and other Ethereum founders have.
“If he held less [ETH], people would be more comfortable with Ethereum,” he explained. “The coins belonging to Satoshi Nakamoto have also worried people for years.”
Wu noted that he expects Elon Musk, the founder and CEO of Tesla, will also become more concerned about the concentration of Dogecoin (DOGE) in the hands of large whales. With early investors in the coin estimated to hold close to the majority of the coin’s supply, Wu believes that Tesla and other Dogecoin believers like him will start seeing centralization as a much bigger problem in the future.