On August 1st, 2017, Bitcoin saw a hard fork which created Bitcoin Cash. I won’t rehash the reasons here. I want to focus on something that I feel is critically important when dealing with cryptocurrencies that fork off to create clones — new altcoins. It’s important to have real and unique attributes that make the cryptocurrency valuable. While Bitcoin Cash certainly has it’s reasons for why it exists, those reasons are anything but unique.
Nothing more than others
The thing is, you can claim that Bitcoin Cash was created to try and deal with Bitcoin’s slowing transaction rate and growing transaction fees, but there are already dozens of others that address this. There are others that have been around for years, and have already started their upward trajectory of adoption and integration. The best example of just one such altcoin is Litecoin. Litecoin is already accepted on every major cryptocurrency exchange. Litecoin maintains a healthy relationship with Bitcoin, just recently acknowledging that developments in both communities directly helps the other. Litecoin achieves it’s transaction rate speed by allowing for more frequently blocks of transactions to be generated. Besides, Bitcoin itself does have a plan for improving scalability.
Even less than some
Bitcoin Cash launched and was instantly behind in terms of technological development. Cutting edge features and techniques being deployed in other cryptos like Ethereum, Monero, and Litecoin put Bitcoin Cash squarely at the bad of the pack. While Bitcoin Cash is focusing on public relations and marketing hype, Bitcoin (core) is talking about new features, such as using ring signatures, a feature of Monero that provides anonymous transactions on a publically accessible blockchain. Ethereum was the first crypto to offer “smart contracts”. Bitcoin has been talking about doing the same. Litecoin already has SegWit and Lightening Network, Bitcoin is getting ready to adopt the same. Let’s face it, Bitcoin Cash started at the end of the pack, and will likely continue to be behind the leaders because, it isn’t actually trying to offer anything new. It’s trying to be a Bitcoin replacement, and that just isn’t going to work.
Pump and dump schemes
Many Bitcoin Cash supporters were quick to conclude that Bitcoin Cash is winning when it’s price more than tripled in a matter of a day. This action saw Bitcoin fall significantly. The action was quick to come… and it was also quick to go. Within the next 72 hours, Bitcoin Cash had retreated back to around the $1000 price point, and Bitcoin saw new record highs. This is a text book example of a massive pump and dump scheme. (This is where influential market actors manipulate an asset so that it’s value increases, then sells the asset before anyone else catches on.) It’s easy to attribute this to someone like Roger Ver, but I’m not convinced it was him. He’s just one of the most public faces of Bitcoin Cash, so it’s easy to call him out as a target. I believe that Roger Ver is genuine in his support for Bitcoin Cash, even if I also feel he is wrong. I’m betting that the clear pump and dump that occurred was orchestrated by others, whom we will likely never fully know.
Will Bitcoin Cash survive?
Honestly, I have no idea. While I feel reasonably confident in my opinions expressed above, the reality is that the world is a complex place. I could be wrong. Or the battlefield could change tomorrow. (For example, if Bitcoin Cash announces some new technology or new technique that is actually unique and provides significant value, this would change the dynamics.) But today, as I see it, I do not think Bitcoin Cash has a purpose when there are so many other altcoins out there. Being “easy” to switch from Bitcoin to Bitcoin Cash is not unique, this is true for Litecoin as well. Bitcoin has over 20+ “clone-coins” which are “easy” to switch to, if you wanted. So again, what makes Bitcoin Cash unique? Why should anyone choose it over any one of the altcoins, such as Litecoin?
I am invested in many cryptocurrencies, including Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and others. The content of this blog post are my opinions and are not meant to provide investment advice. Cryptocurrencies remain a highly speculative market, and as such, experiences extreme volatility. Tread carefully if you join in on the action.