BCH/USD: Does Bitcoin Cash Have a Chance to Outperform Bitcoin?

 

Difference between Bitcoin and Bitcoin Cash

To understand the difference existing between the two cryptocurrencies, you have to know about Bitcoin first. 

Bitcoin is based on blockchain technology, a highly innovative ledger that records each and every transaction made and enables Bitcoin to be immune to manipulation. The entire Bitcoin network is of a decentralized nature. However the transactions occurring are very slow, resulting in longer waiting times.

The lack of scalability and slow transactions are two important drawbacks that need resolution. The SegWit update was formed to resolve the fundamental flaws in Bitcoin. Nearly 90% of companies and mining pools voted to include Segregated Witness technology. This might have helped to reduce the size of data required for confirmation and enhance scalability.

Bitcoin Cash was introduced as a more scalable version of Bitcoin. Besides, concerns of democratization and removal of decentralization of the currency also forced the creation of a better alternative. The hard fork initiated by developers and miners resulted in a greater block size, faster confirmation, lower fees and higher transaction speed.

While Bitcoin is based on a single Bitcoin Core project with a large number of maintainers, developers and contributors to it, its hard fork, Bitcoin Cash, is under the care of 5 different implementators. 

Further, Bitcoin Cash has the EDA feature, which is the abbreviation for Emergency Difficulty Adjustment. This feature avoids chain death due to hash power loss that occurs suddenly in the network.

Value of Bitcoin Cash - its price performance

Although Bitcoin Cash has existed only from August 2017, it has risen stupendously claiming a leading position among the top cryptocurrencies. Shortly after the hard fork that created the digital currency,  its value tripled in just several days.

From its creation on August 1, the Bitcoin Cash price increased and stood at around $450 on the following days. But the price dropped midway in August because of lack of support from Bitcoin exchanges and absence of a wallet. After wider adoption from exchanges and trading platforms, its price increased.

The failure of SegWit2x Bitcoin fork in November 2017 resulted in the prices of Bitcoin Cash skyrocketing over $2,500.  However its price dropped to under $1,000 due to investor distrust. Soon, its value rallied and stood at $1,800. In December the value almost reached $4,000 as the largest Bitcoin exchange launched Bitcoin Cash trading; soon it dropped to $2,500 and remained as the stable value by mid-January 2018. Later on, the value decreased steadily as the correction of the whole cryptocurrency market took place and is now at around $1,200 (as of February 12, 2018).

Reasons behind the soaring value of Bitcoin Cash

The soaring price of Bitcoin Cash is due to two main reasons. One is investors’ intention to diversify the cryptocurrency portfolio. A diversified crypto token also helps to take advantage of the market trends.

Another reason is the attempt at trading the cryptocurrency in pairs. This involves arbitraging of rates in two assets that have some similar properties and risks. With Bitcoin Cash and Bitcoin being traded in pairs, both cryptocurrencies can mutually benefit.

Bitcoin Cash - future prospects

In view of the rising trend in Bitcoin Cash during its brief tenure, it is a virtual currency that offers good returns. Investing in Bitcoin Cash can benefit holders in the long term, as well as short term, at least some experts believe so. Market experts predict a steady increase in the Bitcoin Cash value with a five-year revenue of around +2233%. This means the current price of $1,230 will increase to $28,715 in five years. However, that remains to be seen -  so far it looks like a speculation, but not a well-grounded statement.

Still, the cheap transaction costs and high investor confidence in Bitcoin Cash makes it a good investment choice. During its creation many market experts predicted Bitcoin Cash to fade away soon, it did not happen. It has proved by its present value which has increased about 300% that the hard-fork coin is here to stay.

Coexistence of Bitcoin and Bitcoin Cash, or will it be the only winner?

So far, the two cryptocurrencies have coexisted perfectly well - each having their opponents and proponents. What is clear now that Bitcoin Cash is a serious competitor not only to Bitcoin but Altcoins as well. It has gained a decent market share and has been sitting tight within the top 5 cryptocurrencies since its inception. And if Bitcoin Cash is able to survive for sufficient period of time, it can lure more companies as well as individual investors to favor the virtual cryptocurrency. This happens when sufficient interest is garnered and when the currency reaches a critical amount. 

This may however trigger the creation of other alternative crypto coins just as Bitcoin Cash was formed from Bitcoin. Thus it would face the same issues as Bitcoin faces now with Bitcoin Cash as its rival.

The cryptocurrency market doesn’t stand still - it is a fast-growing and rapidly changing environment, which is constantly refilled with new promising coins. Bitcoin Cash is only six months in, and is not yet mature enough to resist tough competition. So, whether it is another over-hyped coin or a contender for the cryptocurrency ‘crown’  remains to be seen.

Key takeaway

With scalability being the highest priority among cryptocurrency miners and developers, it is imperative to look at solutions that help increase the size of blocks and also improve speed of transactions.

If such changes are brought about in Bitcoin Cash and Bitcoin, both may be able to survive side by side. But if Bitcoin Cash is the only one that can make the changes happen, it may become the sole survivor of the two. In the end, the future of Bitcoin Cash lies in the hands of the developer community as they hold the key to making the necessary changes and inclusions that can cover the required transformation. Investors trust is another issue that can lead to bigger changes.

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Mary Ann Callahan, Blockchain and Bitcoin Expert/Consultant, Freelance Journalist, Cex.io

Mary Ann Callahan was born in Madrid, Spain. She is an expert in Bitcoin and Blockchain-related topics. Her experience has spanned across the high technology and data worlds for more than a decade, as well as many other industries, from her current work as a Journalist and Blockchain authority/consultant at Cex.io, a cryptocurrency exchange, to work at Social Media Marketing Manager at Boston Globe Media, and within the Morrison & Foerster LLP. She holds a B.S in Economics from Yale University, and a M.S. in Journalism from Columbia University. She has written on many technical topics, especially related to Blockchain security, Bitcoin regulations for many different countries, and related purchase and help guides.

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