Bitcoin Cash: Surprise Windfall, Money Out of Nothing, or a Big Problem?

What is Bitcoin Cash? Whether you hold Bitcoin or not, what will be the role of this new coin in the cryptocurrency ecosystem?

For several weeks now, Bitcoin has its clone- Bitcoin Cash. You will tell it apart by its left-leaning logo, as opposed to Bitcoin's old logo. This symbolizes that the two coins have taken a different direction on an important decision, which led to the split.

Bitcoin Cash immediately climbed to number 4 on the market capitalization chart. With a price of around $300, it is still way behind Bitcoin, but it remains an important coin that already trades on many major exchanges.

How Bitcoin Cash Started

For a few months leading up to August 1, there were talks of a potential split in the Bitcoin blockchain. The Bitcoin community needed to decide on block size- the number of data that is wrapped up into one cryptographic block on the blockchain. At the time of the split, the Bitcoin network was handling one transaction every seven seconds. There were concerns that this was not enough to handle large transaction volumes to ensure that Bitcoin becomes a mainstream payment method.

But what is different about Bitcoin Cash? Many other coins are in fact a fork of the Bitcoin blockchain and share its features- coins such as Dash or ZCash. But these coins started with an empty blockchain and grew organically. Bitcoin Cash holds all the transaction history of Bitcoin before August 1st. And that is why every Bitcoin owner also owns coins on the alternative blockchain.

After that, exchanges rushed to support or deny Bitcoin Cash. Coinbase decided not to deal with the new coins, but others added trading pairs immediately, even before users had stored coins in their wallets.

Bitcoin Cash had a creation process unlike any other. It did not go through an ICO; it did not build a community first. It was just a risky jump off a cliff. And some two weeks after the split, it is still unknown whether Bitcoin Cash will flоat or flounder. It is still unknown if the reputation of Bitcoin would be enough to sustain the network, which for now exhibits all signs of a low user base and computing power. While block size has grown above 1 MB, block discovery time is as long as 60 minutes, and hashing power has fallen.

The Bitcoin Cash Blockchain

The technical characteristics of a blockchain can tell us a lot about the potential of a coin to serve as a payment method, but also of the robustness of the community.

The Bitcoin Blockchain started off with a hash rate of 245 PH/s. To compare, the Bitcoin hash rate is more than 6,000 PH/s.

The Bitcoin Cash chain is at 13% of the Bitcoin mining difficulty, meaning there are not too many miners right now and so the difficulty of block discovery was adjusted downward. The fewer miners and hashing power support a currency, the lower the difficulty number.

For the Bitcoin Cash blockchain, there will be a significant difficulty adjustment in 455 blocks (information as of August 15, 2017). This means that calculating new blocks will be 213% more difficult. The change will show if more miners join, or if the mining pool decreases.

The well-established Bitcoin network has 9127 nodes connected over the globe, according to https://bitnodes.21.co. For Bitcoin Cash, bitcointicker.co estimated 17 nodes connected, a much smaller network for now.

Bitcoin Cash Market Price

Bitcoin Cash trades under either the BCH ticker or as BCC and has had a wild ride, swinging between a peak near $700 and lows near $200. All of this happened while Bitcoin had a long bull ride, reaching new records above $4,300. So far, BCH is in a stage of price discovery. The current market price still makes mining unprofitable, as breaking even would require prices above $520.

Cryptocoin Market Price (as of August 2017) Market Capitalization 24-Hour Trading Volume
Bitcoin Cash $296.69 $4.89 bln $134 mln
Bitcoin $4280,41 $70.6 bln $2.84 bln
Ethereum $295.70 $27.7 bln $908 mln

 

On Poloniex, accounts were credited with BCH as late as August 14th, and there is still time to see whether the holdings get dumped onto the market. Holding a cryptocurrency instead of selling signals investors' loyalty and trust that the asset would continue to appreciate.

Bitcoin Cash Exchanges

Currently, Bitcoin Cash (BCH) is available on the following exchanges and services:

HitBTC

Poloniex

Bittrex

Kraken

Changelly

Unlike other cryptocoins, BCH was also immediately available for cash purchase or selling for USD or EUR on Kraken, where European investors visit frequently.

Coinbase, for now, declined to add the currency. This US-based exchange is more concerned with user experience and decided for now not to add a new asset with an unknown future. Coinbase has been relatively conservative in its coin offerings.

Bitcoin Cash Trading Pairs

For the exchanges that quickly included Bitcoin Cash as an asset, several trading pairs were introduced.

Exchange Pair Exchange
BCH/USD Bittrex, Kraken
BCH/ETH Bittrex, Poloniex
BCH/BTC Poloniex, HitBTC
BCH/EUR Kraken
Other pairs and combinations Changelly

 

On Poloniex, accounts were credited with BCH as late as August 14th, and there is still time to see whether the holdings get dumped onto the market. Holding a cryptocurrency instead of selling signals investors' loyalty and trust that the asset would continue to appreciate.

Bitcoin Cash Wallets

As of August 14th, the issue with Bitcoin Cash is not on how to hold it, but how to claim it. For a longer guide, read our article on How to Claim Bitcoin Cash. Right after the launch, Coinbase warned Bitcoin holders to move their holdings off the exchange wallet. After that, the exchange did not credit the accounts with Bitcoin Cash. Other wallets offered tools to download the split chain and access the coins. Currently, some users may choose to wait and not claim the coins, until the tools to claim Bitcoin Cash improve and there are no threats of theft or loss.

So far, Ledger Nano S and Trezor hardware wallets offer the most trustworthy tools to claim Bitcoin Cash.

The Bitcoin Cash cannot go anywhere- the history of the blockchain cannot be altered or deleted. What matters is how fast users would get access to their coins, and what they would do with them.

The Future of Bitcoin Cash

The fate of Bitcoin Cash is still undecided two weeks after its launch. The market price is still volatile, often wiping out more than 20% of its value.

Mining Bitcoin Cash is still under question, as mining pools choose which side to take and which blockchain to support.

There is still a backlog of users who need to do some work and claim their tokens, which are now only a mathematical abstraction on the blockchain.

It is still early to say if Bitcoin Cash would have a claim to the widespread usage and stable position of its parent, or if it would remain an underdeveloped blockchain, much like Ethereum Classic.