A case can be made for Bitcoin cash after the recent drop in pricing from Bitcoin. It’s up to the investors to decide where they want to invest in. Here is a post explaining the pros and cons on both sides while deciding which coin is better.
Bitcoin & Bitcoin Cash
Everybody in the crypto community knows Bitcoin. It’s a revolutionary idea. Virtual currency stores value, disrupts legacy companies, and gives power back to the actual coin holders. So much has been made from Bitcoin that it invokes excitement and desperation. But to technology-savvy people, Bitcoin is simply a cryptocurrency that exists in a network of computers within a blockchain. Now, in today’s world, there has been a hard cross between Bitcoin, and it’s potential successor, Bitcoin Cash.
Bitcoin Cash was created by Bitcoin miners and developers who saw a different future for cryptocurrency. Having concerns with scalability, developers, and miners went with a hard fork. A hard fork is essentially upgrading the blockchain. It’s called a hard fork because there’s one path of the old version of the blockchain, and there’s the new version of the blockchain. Eventually, old users who have the old version transition to the new version because there are benefits available on the new version that weren’t available before.
Obviously, Bitcoin Cash is newer. With the hard fork, the Bitcoin community is having problems deciding between the two coins. Although Bitcoin is the older coin, its scaling issues are a problem and will limit Bitcoin’s growth. Problems like being unable to handle more transactions and more users limit Bitcoin from reaching a higher potential. This all stems from the fact Bitcoin was created almost a decade ago, and its code base is outdated compared to newer coins.
Pump & Dump
To play devil’s advocate against Bitcoin Cash, speculators believe Bitcoin Cash is all about the classic “pump and dump”, and no, this is not a dirty reference. The “pump and dump” refers to people in power making the coin’s price artificially high, and then selling it for a tidy profit. All this happens in a short time frame, and makes potential investors cautious.
On the other hand, Bitcoin has another problem regarding transaction verification speed. More users means more scaling, but it also means transactions need to finish faster for the user to have a great user experience, and vice-versa. As of now, there are two solutions to solve scaling and transaction problems. The first solution is to make the data requirement for each block smaller, or to make blocks of data bigger so more information can go into the process of verification.
Hashrate means the speed on which a computer is completing an operation on the Bitcoin code. And the speed at which Bitcoin Cash hashes is faster than Bitcoin itself. A faster hashrate is also better for mining. So if the hashrate for Bitcoin Cash is faster, it gives more incentive for users to transition to Bitcoin Cash because it’s more profitable. This alone has people saying Bitcoin Cash can overtake Bitcoin and eventually cause its “downward spiral.”
Although Bitcoin Cash answers the problem of scalability and transaction speed, another problem comes out of those solutions.
When Bitcoin forked into Bitcoin Cash, people who had Bitcoin now had Bitcoin Cash. This meant Bitcoin holders had motivation and interest in Bitcoin Cash. Exchanges that supported Bitcoin now felt the pressure to also support Bitcoin Cash. This rushed Bitcoin Cash onto exchanges even though the complexities and technical nuances of knowing Bitcoin Cash were virtually little to none. If a customer were to ask technical questions about Bitcoin Cash, exchanges would have no answers.
Important security issues such as systems for processing deposits, compliance, security auditing, and quality assurance testing are all important when integrating a new coin into the exchange. Compound that with the fact software for wallets and mining Bitcoin Cash need testing and you start to see why so much of the success of a coin depends on security. Nowadays, anyone can start an exchange. Multiply that with the greed and the volatile nature of cryptocurrency and prices for Bitcoin Cash can seem artificially high. The only way to see if it’s the real deal is to see how long Bitcoin Cash lasts.
The compromise for users seems to be between speed and security. But for users that worry about speed, Bitcoin Cash is the solution. For users that worry about security, Bitcoin is the answer. There is no middle ground.
There hasn’t been a middle ground until February 2016. During February, representatives from Bitcoin Core, SegWit, and several mining companies came together to find a solution for a middle ground. What they came up with was an increase in block size limit along with continuing with SegWit. Although nothing was agreed upon, this shows both sides can come to an agreement. What will need to happen to make sure both sides execute their part? Who knows, but it can come from the government, or everybody coming together once again to force a change. The most likely situation in my opinion is something major needing to happen to force action between both sides.
Businesses that have to decide between Bitcoin and Bitcoin Cash will be between a rock and a hard place. Imagine being a business owner who accepts Bitcoin, and then all of a sudden Bitcoin Cash comes along. Now, as a business owner, you have to accept payments for both or risk losing business. Then, all of a sudden, Bitcoin Cash upgrades which appeals to more users. Will you risk alienating your Bitcoin user base by fully supporting Bitcoin Cash? Or will you risk losing out on a potentially strong market base in Bitcoin Cash? It’s hard picking sides, but being a business owner who supports cryptocurrency seems like a whirlwind.
Looking at the bigger picture, we can see that both Bitcoin and Bitcoin Cash users will benefit. Having each coin duke it out with improvements only benefits users. And the coin which comes out on top means they provide the most value. In essence, reasons which have made Bitcoin famous like, decentralization, democracy, and power to the people will come to fruition because the coin that comes out on top will re-enforce these qualities.
Sorry to say, but there’s no clear winner here. As I said in the last paragraph, the only winners are the people. Although we have to deal with forks, which are annoying, especially for old Bitcoin holders, we benefit from new upgrades. And who said both coins can’t co-exist. Both coins pushing each other is good for the crypto community. It’s the same as two companies pushing each other to be better.
The main beneficiary are the people because they get to reap the benefits of innovation. Plus, if both companies keep pushing, costs will go down. In the crypto world, the same is true. Two coins competing directly with each other can force exchanges to adopt both and increase the liquidity of each coin. When liquidity is high, the best price for value prevails. So if you want to pick a winner, it’s neither Bitcoin or Bitcoin Cash, it’s us…