Bitcoin Could Go Down Like VHS Competitor Betamax, Says Tech Investor

  • Prominent tech investor Glenn Hutchins argued bitcoin could lose its dominance to another cryptocurrency, like Betamax lost to VHS.
  • Currently, bitcoin is still the dominant cryptocurrency with 36.5 percent of the ecosystem’s market share.

Glenn Hutchins, one of the biggest tech investors to venture into the cryptocurrency world, has recently argued bitcoin, the flagship cryptocurrency, could be pushed out by competitors in the future, much like video cassette tape format Betamax lost to rival VHS.

Speaking at CNBC’s “Squawk Box,” the tech venture capitalist stated that “bitcoin could turn out to be Betamax,” referring to Sony’s home entertainment technology Betamax, which battled JVC’s VHS over which device would be used to record and watch videos and movies. VHS eventually won the battle, with Sony officially ending Betamax shipments in 2015.

Hutchins, a director at AT&T and an investor in various cryptocurrency startups - including Abra, Circle, and Ripple - claimed he believes it’s likely one cryptocurrency will eventually prevail, just like VHS. The winner, he said, could be an altcoin like Ripple’s XRP, litecoin, or ethereum.

Hutchins was quoted as saying:

"The token of exchange at the heart of the math solution that leads the technology will be there. Different tokens will be used for different applications."

Glenn Hutchins

The tech investor isn’t the only one seeing one cryptocurrency rise above others. Former Goldman Sachs President Gary Cohn, as covered, recently predicted a global cryptocurrency, but asserted it won’t be bitcoin. This global cryptocurrency, he claimed, won’t be “based on mining costs and costs of electricity and things like that.”

Similarly, Hutchins has in the past claimed bitcoin suffers from several “serious issues,” referring to how “expensive and energy-intensive it is to mine.” To him, bitcoin isn’t digital gold, but a utilitarian metal. He stated:

"I think it's more like copper, like an industrial metal that's used for a purpose to drive an outcome. There will be a token that's used just like there's an industrial metal that's used for wiring."

Glenn Hutchins

At press time, bitcoin is still the dominant cryptocurrency, as it has 36.5 percent of the ecosystem’s market share. Ethereum, the next biggest cryptocurrency, is at 17.3 percent, while Ripple’s XRP is at 7.2 percent.

The Monero Hard Fork – Did it Help GPU Miners?

Monero, the open-source altcoin created to provide fungibility, privacy and decentralization, successfully underwent a hard fork on 9th March, 2019, resulting in a hash rate plummet of over 80% and a purge of ASIC miners from the network. This is the latest development in Monero’s ongoing war against ASICs, which is designed to prevent too much centralisation of mining hash power. But what exactly does it mean for GPU miners?

The War with ASICs

Monero performed its first anti-ASIC hard fork in April 2018 to counter ASIC machines such as the Antminer X3. The Monero Core Team vocalized specific concerns over government manipulation or imposed regulation of the network and has consequently committed further to increasing ASIC resistance, building its strategy on making scheduled hard forks to prohibiting ASICs from engaging with the network.

In deliberately excluding ASIC mining, Monero is committed to CPU and GPU miners, and resisting centralisation. Preventing potential 51% attacks is doubly important for a privacy coin like Monero, and as mining farms grow in size and the number of hash-power-for-hire marketplaces increases, it’s important to remain committed to this path. The recent Ethereum Classic attack in January shows that it is possible to carry out a 51% attack, even on an altcoin with a fairly high market capitalization.   

The one danger is that over time, Monero’s commitment to its six-monthly hard forks may be unsustainable. This is because community consensus becomes increasingly harder to achieve – the last fork spawned four Monero spin-off projects.

 The Implication for GPU Miners

Monero’s introduction of the anti-ASIC Proof of Work protocol saw hash rates plummet by 83%, boosting profitability for GPU miners who typically mine other more profitable coins. However, the hash rate is already beginning to climb, recovering to 313.75 Mh/s from 95 Mh/s.

The drop in hash rate made Monero one of the most profitable coins to mine for a time, but through the laws of supply and demand, the hash rate is already equalizing. The market didn’t rally in response to the hard fork as one might have expected, the sluggish response may be because most mining farms and GPU mining rigs require too much manual effort to change mining algorithms – although software is becoming more sophisticated.

Monero Network Hashrate

Monero’s upgrade has also introduced further security-oriented changes to the dynamic block algorithm to help mitigate potential ‘big bang’ attacks. Sticking to its privacy coin roots, the upgrade further introduced a dummy encrypted payment ID, improving the homogeneity of each transaction.

The latest hard fork is therefore a significant improvement on Monero’s founding principles of privacy, security and decentralisation which should be welcomed. Plus, it’s a boon to GPU miners, and demonstrates that if you’re agile, there’s still money to be made through GPU mining.

Matt Hawkins, CEO at Cudo Ventures

Matt Hawkins is a distributed computing expert and entrepreneur. He founded and sold a data centre business and is now applying his knowledge, network and his enthusiasm for crypto market and technology developments in Cudo Miner. Matt believes decentralised computing is better for the environment, and Cudo’s vision is to help make computing more ethical and sustainable – whether its reducing waste or creating innovative ways to support good causes.