Is BCH A Good Investment?
Since the creation of Bitcoin by Satoshi Nakamoto in 2009, there have been many hard forks and spin-offs including Litecoin, Bitcoin Gold and Bitcoin Cash. Even though these cryptocurrencies are derived from and are similar to Bitcoin, they have their own uniqueness and perform a set of functions that Bitcoin is not capable of.
What Is Bitcoin Cash?
Bitcoin Cash was a hard fork created out of Bitcoin on August 1, 2017. Even though Bitcoin is the most successful cryptocurrency, it is not perfect. It also has its shortcomings which include its speed and security.
After much deliberation in the Bitcoin community, they could not reach a consensus about developing Bitcoin to improve its speed, scalability, and security; this led to the creation of Bitcoin Cash.
Bitcoin Cash was created to accommodate the needs for a growing community and faster transactions. Bitcoin blocks are limited to only 1MB and although it gives enough time to validate transactions, it cannot be used for fast transactions as it is prolonged.
Citing Bitcoin’s weaknesses, Bitcoin Cash was created to provide a faster way of validating transactions. It improved on Bitcoin by creating 8MB blocks compared to Bitcoin’s 1MB. It later improved on its block, and it now boasts 32MB.
How Does BCH Work?
Similarities Between Bitcoin and Bitcoin Cash:
As a fork off of Bitcoin, Bitcoin Cash shares many similarities with its elder coin. They both use a Proof of Work system for validating transactions where potential coin miners are given hashes to decode and a successful hash decoder mines the coin. Miners who validate transactions receive a fee through newly minted coins.
Both Bitcoin and BCH are also hard-capped at 21 million coins and use a hashing algorithm of SHA-256
BCH has a decentralized network where transactions are recorded on distributed ledgers. The decentralized network keeps the network secure and eliminates attacks on the system by an individual user.
Differences Between Bitcoin and Bitcoin Cash:
What sparked the hard fork between Bitcoin and Bitcoin Cash was a significant disagreement. The Bitcoin team wanted to adopt a lightning network and segregated witness (SegWit).
The lightning network would add another layer to the Bitcoin Blockchain and foster Bitcoin transactions on the Blockchain. SegWit, on the other hand, was an update to the Bitcoin Blockchain. This update was made to remove signature data in transactions, thereby making transactions smaller and validation faster.
However, the Bitcoin Cash team was against the idea. As they could not reach an agreement, they split off from Bitcoin and created their cryptocurrency, Bitcoin Cash.
While Bitcoin Cash can process 116 transactions per second at 25000 per block, Bitcoin can only process a mere 7 per second at 1500 transactions per block. Bitcoin has a block size of 1MB, while Bitcoin Cash has a 32MB block size; hence, the latter can process transactions faster and meet scalability demands.
Bitcoin Cash also has a lower transaction fee compared to Bitcoin. The one-time transaction fee is 0.000018 BCH, while the latter trades at 0.0004 BTC.
Bitcoin Cash is also considered a safer investment platform. It has not been hacked despite its larger blocks. On the other hand, Bitcoin has been associated with the Silk Road’s illegal activities.
Bitcoin Cash Price History and Prediction
After the fork-off in July 2017, Bitcoin cash entered the market and was traded for $400. It has experienced significant spikes and drops since then.
It traded at an all-time high of $3,923 in December 2017 when the general value of cryptocurrencies rose. Since then, it has witnessed a downward spiral and was at an all-time low of $75.08 on the 15th December 2018.
It began a recovery in 2019, spending much of 2019 and 2020 around $100 and $500. Then it spiked with the cryptocurrency boom of 2021. However, it had never broken its all-time high price of December 2017.
Bitcoin Cash’s Price was at $421.79 on January 3, $767.51 on February 15, and around $559.91 around the end of February. It reached a high of $607.07 on March 23 and came down to $543.24 on March 31.
It clocked another high of $1170.73 on April 16 and $1203.59 the following day. It traded around the $1000 mark from the beginning of May. It went as high as $1635.15 on May 12 and around $507.73 on May 19.
It has never reached the $1000 mark since then. At the time of writing, Bitcoin Cash’s price is $606.31, ranking as the 19th top cryptocurrency with a market dominance of 0.44%.
Most of the predictions for Bitcoin Cash are bullish. WalletInvestor predicts that it will reach $1,011.360 in 2022 and $2,326.64 in 2026. Digitalcoinprice predicts a high of $1,071.71 at the end of 2022, $1,643.32 in 2025, and $2,281.62 in 2026.
Is Bitcoin Cash A Good Investment?
Your goal for investing will determine whether Bitcoin Cash is good for you or not. By comparing its qualities and deficiencies that could dent its development, you’ll be able to determine whether Bitcoin Cash is a good investment or not. Here are the pros and cons of Bitcoin Cash.
Scalability: Compared to Bitcoin, Bitcoin Cash is more scalable and can meet the demands of a growing community. Its block size is 32 MB whereas Bitcoin’s is 1MB. This feature would only put the coin in good stead over the next few years.
Efficiency: With larger blocks, Bitcoin Cash is very efficient. It can be used to make instant transactions with lower fees. Its catalogue of unconfirmed transactions is meagre compared to other cryptocurrencies and it doesn’t exceed 200–250 transactions.
Transaction Costs: Its transaction cost is also low compared to other cryptocurrencies. Bitcoin Cash charges transaction fees at $0.0086, while Bitcoin’s charges are higher at $2.37.
Large Community: It also has comprehensive supporters across the world. Many believe it is Bitcoin’s successor, solving many problems associated with Bitcoin. The famous Bitcoin Jesus, Roger Ver, was known for his avid enthusiasm for Bitcoin and, more recently, Bitcoin Cash. Ver cited how Bitcoin is unviable over the long term as it loses coins due to its limited scalability and inability to conduct peer-to-peer transactions. It is also the most traded cryptocurrency in the crypto market.
Popular cryptocurrency influencer on Twitter, PlanB, acknowledged Roger Ver’s support for BCH in a tweet on May 14, 2021.
Low Adoption: Even though it has supporters from top cryptocurrency analysts like Roger Ver, it can’t boast of an adoption rate like that of Bitcoin or Ethereum. It doesn’t drive a lot of demand like some of its competing tokens in the cryptocurrency market.
It Looms in Bitcoin Shadows: Being a split-off of Bitcoin, Bitcoin Cash has issues distinguishing itself from its overwhelming counterpart.
Bitcoin Cash Mining: Although its coin mining is similar to Bitcoin’s, Bitcoin Cash mining is less profitable. It has a complex network that slows down data extraction, adversely affecting coin mining. This deficiency is a significant problem as coin mining could impact the price and security of the Blockchain.
Bitcoin and Bitcoin Cash: Where Should I Invest?
Having listed its pros and cons, it is obvious that Bitcoin cash is very similar to Bitcoin, albeit with a few tweaks. These differences can go a long way in determining whether Bitcoin or Bitcoin Cash is the best option for your crypto investment.
If you are looking for a store of value, then Bitcoin is the best option. On the other hand, if you want a cryptocurrency for transactions, Bitcoin Cash might be the best.
Bitcoin is also more suited to long-term investment, while Bitcoin cash could be very profitable in the short term. That doesn’t, however, rule out its profitability in the long run. Bitcoin is predicted to be the store of value that could rival gold over the long term.