Earlier this year Brisbane Airport in Australia became the first airport to have its merchants accept cryptocurrency including Bitcoin and Bitcoin Cash.
This is just another sign that the cryptocurrency that was until a few years ago lurking in the fringes has become mainstream. It’s also an indication of how much Bitcoin Cash which just turned one-year-old a few weeks ago has become an accepted form of payment in its own right.
In August 2017, Bitcoin the largest, and most valued currency was split into two which sent shock waves around the cryptocurrency world that are still felt to this day. And even though they both come from the same open source code, each currency has its own set of unique features that make it more suitable for specific purposes.
The Rise Of Bitcoin
While the technology behind cryptocurrency has been around for years since at least the 1990s, Bitcoin was the first digital currency to really make it out of a programer’s head into the complex world of finance.
Its origins are shrouded in mystery and intrigue. Bitcoin’s whitepaper was first sent to a mail list by a person or persons using the nickname Satoshi Nakamoto. The purpose of the paper was to create a currency that was hard to control by a single entity, bank, or government.
The underlying platform of Bitcoin ensured both the anonymity and security of all parties involved in any transaction. Furthermore, Bitcoin could be used online where fiat currency was needed. It could be used to purchase products or pay bills anywhere a vendor accepted it.
For the first few years, Bitcoin flew under the radar unnoticed. It was mined and traded solely by a small circle of crypto enthusiasts. Then the media caught up and merchants started to accept it. This started with WordPress. Then Microsoft came on board and other businesses followed suit.
At the same time, the currency’s value skyrocketed. It went from $5 at the end of 2011 to peak at $1000 by December 2013. But the cryptocurrency’s popularity and the high demand in the market created problems for the BTC community and the investors themselves. One of the biggest issues was the transaction fees which jumped from a few cents to $5 per transaction by June 2017.
The Hard Fork
Of course, these steep fees went pretty much against the original principles of the BTC platform. Not only did they become an obstacle for small investors but they also came in the way of many people who use Bitcoin not to trade but simply to transfer funds or purchase something online.
Many developers in the community raised their concern and suggested that the source code of the blockchain needed to be modified to address these problems. For years both factions fought over the changes that needed to be implemented. Finally, the reformists got tired of trying to see Bitcoin shaped according to their vision and decided to split the ledger on August 1.
This wasn’t the first fork in the BTC blockchain but it was the most dramatic. It created a separate ledger which was identical to the original blockchain at the time the split happened. This also duplicated the holdings of everyone who had BTC coins on the original blockchain. Only the new blockchain had the coins in Bitcoin Cash or BCH as they preferred their new symbol to be.
Many people chose to sell their holdings in one coin and buy more of the other one. Those who were enthusiastic about BCH decided to dump their holdings of BTC and put all their investments in the new coin. Others, the more prudent ones, held on to both coins at least until the dust settled to see which coin prevailed.
Two Currencies, Different Applications
With each camp standing firmly behind their preferred blockchain the cryptocurrency market became stable again. Additionally, the new coin, BCH, proved to be a favorite among traders and investors alike.
For one thing, BCH had cheaper transaction fees than BTC. Instead of paying $5 and sometimes more to have a transaction verified on the BTC blockchain, BCH only charged about 20 cents per transaction.
Another change to the source code of the new ledger increased the size of the block of the BCH blockchain to be 8 times that of the BTC ledger. This had the desired result of absorbing more transactions per second than the BTC network and increased the speed of these transactions as well.
In other words, the BCH blockchain got faster, cheaper and more scalable than the BTC blockchain. Which might explain why it’s attracting more users as time goes by. And while BTC has been the most valuable cryptocurrency for years, BCH is catching up fast.
It might not be as fast as many Bitcoin Cash investors like, but its progress is steady and always moving up. BCH started at 5% of BTC’s value and has climbed to 10% where it has been holding fast for the last few months.
This doesn’t mean that Bitcoin has lost its appeal to investors as a value holder. Far from it. It is still the go-to coin for those looking for value. But the Bitcoin community will need to deal with the issues that forced the Bitcoin Cash developers to split the ledger in the first place.
Bitcoin Cash, The Pros And Cons
Apart from the fact that it’s new and carries the name and branding of its older and more famous sibling, Bitcoin Cash attracts newcomers with its speedy and cheap transactions. It also has a great community that is passionate about creating the best blockchain that users can interact with in a reliable and secure way. Those were the advantages.
As for the disadvantages, they are many and have to do with the currency’s short history. As a newcomer to the cryptocurrency world, it doesn’t inspire much confidence in investors as Bitcoin does.
As for mining, despite the vast difference in value between the two coins, mining Bitcoin Cash costs the same as mining Bitcoin. That’s one downside that will surely discourage miners from investing their time and energy bills in the new coin.
Last but not least, Bitcoin Cash has less trading pairs than Bitcoin on cryptocurrency exchanges. This might be an indication of lower investor appetite which in turn makes the size of its trading quite small compared to the heavily traded Bitcoin.
Bitcoin, The Advantages And Disadvantages
Because Bitcoin is the more established of the two currencies, many investors consider it the real thing.
The currency has been going strong for years and having the highest value in the cryptocurrency market still means something. With a long history behind it and the largest presence in relation to the number of exchanges, size of trading, and trading pairs, Bitcoin is the cryptocurrency that all other currencies trade against.
This is the currency that sets the industry standards. The brand alone instills confidence in traders and consumers alike. Different businesses from retailers, to domain registrars, bitcoin online casinos, hosting providers, online and offline shops gain a lot of traction and popularity simply because of the Bitcoin brand.
That’s what Bitcoin has got going for it.
What’s going against it has to do with the high transaction costs and network lags. Add to that the lack of coherent policy among its community. Changes are not easy to agree upon let alone adopted. They don’t have a unified voice and are more likely to argue among themselves.
These are the exact same reasons that led to the ledger split that created Bitcoin Cash in the first place.
While differences in vision were the reason Bitcoin Cash came into existence, each currency offers features that make it appealing to a certain sector in the market.
Bitcoin Cash is cheaper and faster than Bitcoin which makes it a favorite among small investors and less experienced users. Bitcoin, on the other hand, has more value and investor confidence which makes it a better option for serious investors who are in it for the long haul.
What do you think on Bitcoin & Bitcoin Cash. Leave your comments below and let us roll the discussion.