Maybe. A fork will severely damage the price.
The hard fork to increase the max block size should have been a no-brainer and a non-event, a routine maintenance action predicted and proposed by Satoshi himself when he added the arbitrary 1 MB limit. Why has it become the most dreadful menace to the future of bitcoin?
My best guess is that the promises that the Blockcstream guys made to their investors, when they got their funding, depend on there being no block size increase, no matter how modest. That would explain their uncompromising and hysterical opposition to the increase -- and the changes that they
are making to the protocol.
Specifically, I guess that they promised investors that bitcoin network would become congested by 2016, and then users would be forced to move to some "overlay network" that would carry most of the payment traffic, with only occasional settlements being made on the old bitcoin network.
Blockstream (they must have said) would then be the key player in that "overlay space", because they already were developing the technology that will make the overlay network possible (sidechains, at the time). Moreover, since several key developers were partners or employees of Blocksrteam, they had commit control of BitcoinCore, the "official" implementation of the protocol; so they would be able to make any change that they needed to the protocol (like new opcodes), while blocking any change that competitors may need, or that might make the overlay network economically unattractive -- such as a block size increase.
But (the investors must have asked) if the capacity of the bitcoin network itself is not increased, the number of transactions will forever be limited to 300'000 per day; so how will mining continue to be viable while the block reward gets halved? Well, Blockstream's forecast (and this is no guess) is that by 2016, as the network becomes congested, there will arise a "fee market", where bitcoin users would have to offer higher and higher fees in order to buy space on the next block. If the average transaction fee increased to 1.5 USD or more, the revenue from fees (450'000 USD/day) would compensate the halving of the block reward, and there would be no drop in the hashpower.
To make that "fee market" more "efficient", Blockstream was counting on a couple of changes to the queue-management part of the core software ("replace-by-fee" and "child-pays-for-parent") that would allow clients to increment the fees of transactions that were stuck in the queue, and thus jump over other transactions with smaller fees.
According to this plan, the bitcoin network would be worth using only for large-value transactions, including the "export" of bitcoins to sidechains and settlements between the sidechains. (Since then it became clear that sidechains will not work as intended, but Blockstream found a new vaporware to take their place in the plan, the Lightning Network.) Most of the individual users, and services like BitPay and Bitstamp, would be forced to move to the overlay network.
If that is the plan that they sold to their investors, their attitude would made perfect sense. Gavin's proposal to increase the block size not only would postpone the need for the overlay network by many years, but also would show that Blockstream did not have control of the protocol. The investors who bought those claims would be quite displeased, to put it mildly.
So, at first Blockstream tried to block Gavin's proposal with the claim that it would make nodes terribly expensive. Which is nonsense, since an increase in the *max size* would not cause any immediate change to the *average size*: the latter would just continue growing (hopefully) at the current rate, and increase (gradually) beyond 1 MB only in a few years time. But since the increase proposal has been reduced to 8 MB, they ran out of technical arguments. So they had to resort to spreading FUD about the terrible risk of a hard fork (while doing soft forks themselves) and personal attacks on Gavin and Mike.
I have no particular admiration for Gavin. He should have distanced himself from the Shrem Karpelès & Friends Foundation when it started to smell bad; instead, he stayed there as long as it was paying his salary, and even criticized Antonopoulos for leaving it. And I had not noticed Mike's existence until a month ago.
Yet I must recognize that they are only trying to keep bitcoin working for a few more years as it was intended to work, and as all the community has come to expect it to work. Blockstream, on the other hand, is honoring their name, in an ironic and unintended way: their plan is to block the bitcoin stream, so that all the bitcoiners are forced to buy their water...
Moreover, Gavin and Mike have the prudence, competence, technical knowledge, and common sense that are needed to manage a large software project like bitcoin, that manages hundreds of millions of dollars for hundreds of thousands of users.
Whereas the new core developers, while they may be expert cryptographers and clever hackers, clearly lack those qualities. They seem unable to understand Mike's explanation of how queues behave as the traffic approaches the channel's capacity. They are unable to see the "fee market" will not be a market but a chaotic melee. They cannot make any quantitative estimates of what the traffic and fees will be in their planned future. (Had they done so, they would see that an overlay network will not solve the scalability problem, either.)
One of them explained that all wallet apps out there would have to be modified, so that, instead of just signing a transaction offline, issuing it, and disconnecting, the client would have to first check the queues at the nodes to guess an appropriate minimum fee F, then sign several transactions with fees F, 2F, 4F, 8F, etc., issue the first one, then remain connected to the network, so that his wallet app can watch the queues, re-issuing the other versions as needed in order to remain in front of the the other clients (who are of course doing the same), until the transaction is confirmed; or until the app runs out of pre-signed transactions, and has to ask the client whether he wants to keep trying, in which case he would have to sign a few more. And tha dev called it "a trivial change", because it would require only "a few lines of code ...
And, worst of all, they want to make bitcoin unusable for its stated goal, in order to force users to move to another network that has not been designed yet, may never work, will not be like bitcoin at all, and will not solve the scalability problem either...
As you may know, I am very skeptical about the long-term success of bitcoin, and I have no love at all for the pyramid investment scheme that has been built on top of it. Yet, I was expecting to see years of slow price decline, perhaps even delayed by another price bubble or two. But now, after watching this war and realizing what the players are up to, my hopes for a quick, spectacularly comical collapse have been revived...
