Bitcoin Cash vs. Bitcoin: What Investors Need to Know

Bitcoin Cash vs. Bitcoin: What Investors Need to Know

Bitcoin is without question the biggest name in cryptocurrency. Despite this ubiquity, many casual observers may be unaware of the significant change it underwent earlier this year. In August, a faction of the Bitcoin community launched Bitcoin Cash, a new currency fork designed to solve some of the growth challenges Bitcoin was experiencing.

The price of Bitcoin Cash reflects this pedigree — the new currency’s built-in user base has led to initial growth, though prices have been erratic at times. In this article, we look at some of Bitcoin Cash’s main features and try to explain why it is valued the way it is, and where it could go in the future.

What’s Different About Bitcoin Cash?

The main difference between Bitcoin (BTC) and Bitcoin Cash (BCH) is that the new currency does away with Bitcoin’s blockchain size restriction. Unrestricted blockchain size means the network can process more transactions per second, potentially enabling growth at a rate the old currency doesn’t allow.

Critics point to increased storage and bandwidth costs as limiting features of larger blockchains. However, advocates for Bitcoin Cash counter that the ability to process more transactions lays the groundwork for the next phase of the currency’s growth.

Why Is the Bitcoin Cash Price So High?

Is Bitcoin Cash an altcoin, or is it something different? The answer to this question partially explains why the price of Bitcoin Cash is so high. Although Bitcoin and Bitcoin Cash are incompatible, they share the same cryptographic keys — and the same transaction history before August 1, too. The Bitcoin name, as well as the large portion of its user base switching to the new currency, have contributed to current high price of Bitcoin Cash.

Despite this, the value of Bitcoin Cash has not increased predictably. While Bitcoin continues to rise, topping $7,000/BTC in November, Bitcoin Cash has been more erratic. After strong initial growth — at one point a single unit of Bitcoin Cash was worth over $1,000 —  it slumped in the early autumn months, bottoming out around $300. However, as BTC surpassed the $7,000 mark, BCH rebounded, hitting $600 in November.

Websites like CoinDesk and CoinMarketCap contain current and historical pricing for Bitcoin Cash.

Is Bitcoin Cash a Good Investment?

The unpredictable performance of Bitcoin Cash raises the question of whether or not it is a good investment. Unlike other altcoin, Bitcoin Cash tends to rise alongside the price of BTC. Bitcoin Cash has also experienced a surge in popularity in Asia — particularly in South Korea, which, in late fall, accounted for 64% of all new investors.

Beyond that, Bitcoin Cash’s name and pedigree are likely to add to its ongoing investment potential. If it continues to attract new users, its growth potential will position it to meet the challenges of scale with less risk and uncertainty.

While there is no telling what the future will bring, smart investors may want to start familiarizing themselves with Bitcoin Cash while its price is still relatively low.

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