Another Bitcoin - Reasons to Invest in Bitcoin Cash
Originated from Bitcoin, Bitcoin Cash has become a new valuable addition to the global ecosystem of cryptocurrencies. Due to the surge in the BCH to USD price, the token has come to the top so fast that it no longer plays second fiddle to Bitcoin and the other major market contenders that arrived before it. Rather, Bitcoin Cash has risen to prominence and become a major competitor considered by many as a potential substitute for Bitcoin if things continue to look the same.
So, what is behind Bitcoin Cash?
As you must have rightly guessed, Bitcoin Cash shares much more than just a similar name with the popular cryptocurrency pioneer. While both tokens are completely independent from each other, Bitcoin Cash takes its origin from Bitcoin and thus shares certain similarities with it.
Bitcoin still retains a top spot as the digital token with the highest market capitalization ahead of competitors like Ethereum, Litecoin, etc., because of it acting as a number one choice among investors. Those willing to diversify and look at other digital tokens aside from BTC, now focus on BCH and ask themselves the question of whether the coin is really a profitable investment and whether it is worth putting money in.
Before we delve into the subject of profitability of the coin, let’s examine its origin.
Yet another upgraded Bitcoin?
The relation of Bitcoin Cash to the first ever cryptocurrency Bitcoin is one of the major reasons why many beginner investors are interested in it. Simply put, Bitcoin Cash separated off Bitcoin as the result of a so-called blockchain "fork".
In technical terms, a fork is created when you develop a new blockchain with certain rules of the former one altered. Thus, the two cryptocurrencies (original and forked) share the same transaction history until you get to the block where they were split. After this block is solved, the two tokens will exist independently.
Bitcoin has undergone different “forks”. Bitcoin Cash is the most well-known mainly because it was forked to solve Bitcoin’s major problems at its onset. To keep spammers, DDoS attackers and hackers away, the block size limit of Bitcoin was set at 1MB, which meant the increased processing time. But as Bitcoin grew in popularity, the need for completing more daily transactions arose. Blocks started piling up and this grew into a major problem and a huge source of concern as transactions with BTC were both slow and expensive.
The solution proposed to this issue was to move a part of the signature data into separate files with the Segregated Witness (SegWit) update and thus increase the block size. However, some developers saw this approach as simply postponing a doomsday as the problem would still most likely occur again in future. Their own solution and approach included increasing Bitcoin’s size limit from 1MB to 8MB. On August 1, 2017, this drastic change was executed and Bitcoin Cash was created.
Right from the onset, BCH showed huge prospects. By the end of its very first day on the market, it had finished in the third position trailing closely behind Bitcoin and Ethereum in terms of market capitalization. BCH still remains a major force in the world of digital tokens. It is now ranked fourth in terms of market capitalization and has the second highest market value of over $1,000 (it took Bitcoin years to hit that mark once).
Reasons to put your money in Bitcoin Cash
The transaction fee on Bitcoin Cash is quite cheap costing about $0.1 per transaction when that of Bitcoin is around $1 USD. A transaction in Bitcoin Cash, therefore, saves you a lot of money. This was one of the major problems that has led to the creation of BCH as an alternative to Bitcoin. At some point BTC was being abandoned by merchants due to the high transaction costs which once amounted to $25 per transaction.
The transfer time for BCH is low. It usually takes about 10 minutes before a Bitcoin transaction is confirmed. With BCH this is eliminated. As a result, Bitcoin Cash allows you to handle and complete more transactions in a short span of time. Since the block size for Bitcoin Cash is times larger than that of Bitcoin, it gives room for more people to use the blockchain at the same time which translates to fewer transactions backlogs and faster clearance.
For those interested in investing in cryptocurrency, buying Bitcoin Cash is a lot more affordable. Side by side with Bitcoin, you will see a whopping disparity in price. As of end-May 2018, one BTC is priced at $7,500, while one BCH is traded within $1,000. This means you could get seven more tokens of BCH for one BTC. Even in times of price spikes, Bitcoin Cash managed to maintain a stable value.
The future outlook
Since Bitcoin Cash has been in circulation for a year now, but has yet been able to stand its ground and rival cryptocurrencies such as Bitcoin and Ethereum, the projection for the future looks quite bright. While Bitcoin remains a major controller of the market, Bitcoin Cash is gaining wider recognition among investors as a viable competitor in the global market. For those bothered about whether the strength and value of Bitcoin Cash are in any way connected to that of Bitcoin, you can rest assured that the two coins are acting independently.
Whether or not you opt for investing in Bitcoin Cash is completely up to you. There is no safe-haven cryptocurrency. Bitcoin Cash is affected by pretty much the same drivers that others are. Thus before you make a final decision to invest in any volatile asset you should take into consideration all the major market factors at play before you take the plunge.
About the writer: Mary Callahan
As an expert on Bitcoin-related topics, I've found myself as a Journalist at TheCryptoCoinCenter.com and also Cex.io - cryptocurrency exchange. I'm working on articles related to blockchain security, bitcoin purchase guides or bitcoin regulations in different countries.