Bitcoin Cash cryptocurrency: history of development, differences from BТС, the advantages of the cryptocurrency and its future prospects.
On August 1, 2017, the controversial Bitcoin fork took place, being a kind of surprise. Originally, it was planned to be a soft blockchain updating, retaining its block-size of 1 Mb; but a small part of miners decided it to be not relevant, and so, they separated from the original network. That was when the new cryptocurrency, Bitcoin Cash, appeared, its block size is 8 Mb. Surprisingly, the new project soon featured positive response by investors, the coin’s price has been going up very fast, and, today it is included in the TOP 5 largest cryptocurrencies by market cap. What is, in fact, BCH and will it compete with BTC? Read on in the article.
Bitcoin Cash cryptocurrency: a controversial fork, catching up with BTC
Bitcoin Cash launch created much fuss in the media, mostly associated with unclear prospects of both BTC and the newborn BCH. By the way, the coin’s name, itself, resulted in confusion: originally, exchanges enlisted the Bitcoin Cash cryptocurrency with the ticket of BCC. But that contraction had been previously referred to the notorious coin BitConnect. Later, Bitcoin Cash turned into BCH, but you can come across both tickets on the Internet.
When BCH had just appeared, pessimists claimed the cryptocurrency to fail; say, investors would immediately choose the original Bitcoin after the fork. However, just 8 months later, the coin has developed so much that it is now in the list of the TOP 5 largest cryptocurrencies by market cap (according to Coin Market Cap - coinmarketcap.com). I will describe in the article how Bitcoin Cash appeared, what its main differences from Bitcoin, how to buy Bitcoin Cash and how to mine BCH, what its prospects are.
All about Bitcoin Cash
Although the first cryptocurrencies had appeared long before 2010, the real crypto boom occurred in spring 2017. Before then, the crypto-community hadn’t even known about forks (division, a new branch along with the old one). That is why one of the first significant Bitcoin updates attracted so mush investors’ attention. Nowadays, nobody will be surprised by soft and hard forks. But at that time, nobody knew what would happen next.
The algorithm of Bitcoin improvement, BIP 91 was activated on July 23. As miners accepted it, in fact, they accepted SegWit protocol, suggesting slight changes, but for the block-size, it was to remain 1 Mb. The scalability problem is BTC flaw, and the retaining of the block-size of 1 Mb, would mean a lower miners’ commission and lower cost-effectiveness.
Not everybody was satisfied with that situation. And, on August 1, the cryptocurrency minority (about 12% of miners) separated from the main BTC branch, developing the new cryptocurrency with the block-size of 8 Mb after the hard fork. By the way, the split was initiated by Chinese large farms that were focused on the mining profitability most of all. After the fork, each BTC holder received the same amount of the new BCH cryptocurrency, but the new coin aroused a mixed attitude. According to financial logic, its price was going to drop due to the following reasons:
- Miners received free coins that could be converted into the fiat right away.
- The coin’s future was unclear. Not every pool supported the hardfork; at first, there were only three of them.
Nevertheless, after a short drawdown, the coin went up already in late August. It is difficult to say whether investors believed in Bitcoin Cash, or someone decided to support the project.
A short summary: BCH success results, first of all, from BTC popularity; as, in fact, but for the block size, there hadn’t been any fundamental changes in the network. The fork was treated suspiciously during its first days; but some time later, Bitcoin Cash cryptocurrency was recognized by both exchanges and pools.
Bitcoin Cash advantages:
- It takes less time to find a BCH new block than to look for the BTC block. Taking into account that BCH costs far less than BTC, it turns out to be more cost-effective.
- Higher transaction speed and relatively less commission fee.
- It is protected from double transactions and deleting the data.
- It supports multiple versions of its software
Where to buy and to store Bitcoin Cash
As Bitcoin Cash cryptocurrency is included into the top-5 list of the most popular coins among investors, it is easy to buy it. Its turnover is equally allocated among more than 30 exchanges. BCH is most traded on OKEx (about 20%), where you can buy the coin for USDT and BTC. On average, about 6%-8% of the BCH is traded on HitBTC, Huobi, Bitfinex, EXX, Lbank, where you can buy the cryptocurrency for Bitcoins, Ethereum and South Korean won. It is remarkable that the large exchanges, like Binance and Upbit, are still using the old BCC ticket.
The BCH share in the turnover of each exchange is not that big. For example, its turnover on Binance is less than 3%, BCH is far behind EOS, Cardano, Ripple. Even on OKEx, BCH is behind EOS (not including the Bitcoin turnover). Only on HitBTC, Bitcoin Cash is the second most traded cryptocurrency, being ahead even Ethereum.
Taking into account that the exchanges are hacked more and more often, you’d better store your Bitcoin Cash on the wallets. The best wallets include:
- JAXX (jaxx.io);
- Coinomi (coinomi.com);
- Exodus (exodus.io);
- Edge (edgesecure.co);
- Melis (www.melis.io).
The easiest way is to visit the Bitcoin Cash official website and select the wallet from the list of the recommended ones. There are about 20 of them in total. They differ in terms of multi-currency (support of a single cryptocurrency or a few of them), type (cold, online, hardware) and functions.
- Bitcoin Cash is not a single attempt to copy the idea of the original BTC, though it is the best one. Other interesting forks (although they haven’t yet been added to the Forex brokers’ instruments) include the following:
- Bitcoin Gold. The cryptocurrency appeared in autumn 2017 as a result of the fork of the old algorithm of checking the working capacity. This algorithm is the startup’s special feature. The coin is included in the TOP 30 largest cryptocurrencies by market cap; and it is popular among miners because it is impossible to use ASIC. However, the coin’s rate is not so appealing for investors.
- Bitcoin Diamond. Another Bitcoin hardfork. Its developers were aiming at eliminating BTC flaws. The coin features a larger block size, 8 Mb, the larger issuance amount and a lower commission. Although the coin is included into the list of 40 largest cryptocurrencies by market cap, its rate is down to the critical low and isn’t going to increase.
This list can be also enriched by another Bitcoin fork, World Bitcoin, and the BCH fork, called Bitcoin Candy. The cryptocurrencies were launched in early 2018, and you can already buy them. But they are not included into Coin Market Cap ratings. Some of the forks, presented in the picture above, are not included in the list too. More than a dozen new ВТС and ВСН forks are planned in 2018. Optimists believe it to be a reason for the general rise of the entire cryptocurrency market. Pessimists, on the contrary, think that new forks with the price pump, followed by scam, will negatively influence the cryptocurrency reputation. Like the case with Bitcoin Unlimited, which disappeared soon after it had been launched in 2017.
Bitcoin Cash, compared to Bitcoin, is very appealing for miners. One of the BTC problems is complex computer processing, which requires special equipment of ASIC class; it is not always cost-effective for individual miners. For Bitcoin Cash mining, you can use both ASIC and graphic cards. To start Bitcoin Cash mining, you need:
- Chose a CPU or a graphic card (depending on the mining type);
- Select a mining pool, and sign in. The most popular pools are ViaBTC (viabtc.com), Antpool (antpool.com);
- Download mining program, compatible with SHA-256;
- Synchronize software, the program, and the pool (synchronization algorithm is different for different software, but you can easily find it on the Internet);
- Run the program.
Those, who are not willing to engage with either wallets or crypto exchanges, have an alternative – Forex. LiteForex broker has a special offer for such traders. The broker has enriched its list of trading instrument by a number of cryptocurrency pairs, including Bitcoin Cash. You can learn more by clicking this link.
Bitcoin Cash investment scope
Projections for BCH are very controversial, though optimistic, in general, The matter is that the BCH price move sometimes quite unexpectedly, to both USD and its main rival, BTC. Look at the chart:
It is clear that, after the whole cryptocurrency market had crashed in January, BCH was getting weaker to BTC as well, though not so fast (it is reasonable, as BTC was going down to the US dollar). It means that during the general fall, investors were converting their capitals from altcoins to Bitcoin, and it is not a bullish factor for BCH.
What happened next is more interesting. In February, BCH sharply jumped to BTC, rising more than to USD. It could have been suggested that it was the sign of investors’ greater confidence in BCH; but how can be explained the following drop in early March, when the BCH price dropped far less to USD than to BTC? The situation repeated in April. A similar chart was featured by Ripple, though Ethereum didn’t feature so strong volatility.
- Therefore, it may mean that BTC and ETH are basic currencies, a kind of safe-heaven assets. When the whole market is falling, BTC and ETH will be the best investment for those who want to cut their potential losses. When the entire cryptocurrency market is rising, the most effective investment will be long positions for BCH and other altcoins. The strategy can be proved by the situation in late April – early May period, when the total market capitalization increased by 1.5 times, but the BTC share declined to 36 %, from 45%.
Just like other cryptocurrencies, Bitcoin Cash is influenced by general crypto market trends and the local news. For example, ahead the fork, BCH rate was up to February levels in late April. According to developers, it is planned to increase the block size up to 32Mb during the next fork. In theory, it should be another step towards eliminating the original Bitcoin’s problems. The hardfork will cut down transaction commission. The next fork is planned for November 2018.
Conclusion. Unlike other forks and clones of Bitcoin, BCH can justly be called the most successful one. It is difficult to say for sure what the key to its success is, as there are many surprising things in the cryptocurrency market. I can just assume. First, it is the first BTC fork of such scale. All the following tries, doing the same, were not so much supported by investors. Second, BCH developers were not aiming at changing the network radically. They just eliminated the most serious Bitcoin flaws. And they seem to have succeeded, according to investors’ interest. BCH is a good cryptocurrency for risk diversification, which is worth including into investment portfolio, in addition to Monero and Ripple; the basic BTC and ETH go without saying.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.