Good Start for Bitcoin Cash: Focus on BCH Price Trends

Everyone knows about Bitcoin because of its meteoric price rise in 2017.

However, a cryptocurrency that flew under most people’s radars (until it exploded as well) is Bitcoin Cash. Bitcoin Cash is a fork or split from the main Bitcoin network in the form of a new cryptocurrency. As the name suggests, Bitcoin Cash focuses on the cash or peer-to-peer value exchange aspect of digital currency since Bitcoin can no longer really perform this function. Due to its long-standing issue with transaction speed and fees, Bitcoin is more often referred to as a “store of value.”

Bitcoin Cash (BCH) was announced on July 22, 2017 and by the end of its first day of trading, was already valued at $310 and nearly hit $500 per BCH the next day. In less than 5 months, the price hit $4,000 at the end of December. It took Bitcoin 8 years to perform the same feat (2009 to August 2017). Of course, cryptocurrency was much more popular when Bitcoin Cash had its rise, but an impressive feat nonetheless.

As of March 15, 2018, the BCH price is set at $959.19 and is the #4 cryptocurrency by total market capitalization. Given that the cryptocurrency is barely over half a year old (the fork happened on August 1, 2017), it is quite promising. At first, not many took BCH seriously as Bitcoin forks in the past had all more or less fallen flat on their face. However, Bitcoin Cash is different, and its high price can be attributed to factors such as cheap and fast transactions, the cancellation of another Bitcoin fork, SegWit2x, and support from major cryptocurrency exchanges and members of the Bitcoin community.

Lower Transaction Fees and Faster Transaction Times

Though Bitcoin is the first cryptocurrency and was the undisputed king of crypto for much of its existence, its popularity has led to problems, namely the fact that transaction fees and transaction times have become too high to make it viable for use as a day-to- day, peer-to- peer (p2p) currency.

As of March 14, 2018, the average Bitcoin transaction fee is $1.71. However, transaction fees are currently low because cryptocurrency in general has cooled off, with less people using it due to the decline in prices across the board. When cryptocurrency was white-hot towards the end of 2017 and going into the beginning of 2018, Bitcoin transaction fees were unbelievable – On December 22, 2017, the average transaction fee was $55.16. In comparison, Bitcoin Cash’s average transaction fee on the same day was just $0.31. It makes no sense to use something like Bitcoin for everyday purchases like coffee if the transaction fee costs more than the actual product being purchased.

Bitcoin transaction times are not much better. For instance, the average block confirmation time for Bitcoin (a transaction is part of a block, which has multiple transactions) on January 1, 2018, was 2,322 minutes (38.7 hours or about 1.5 days). Imagine waiting in a coffee shop for one and a half days to make sure that your transaction went through. Though most merchants don’t wait for blocks to be confirmed for inexpensive transactions or transactions where the product or service rendered is non-fungible or unable to be exchanged for an identical product or service. On the other hand, Bitcoin Cash’s average block time on the same day was 11 minutes. While not lightning fast, Bitcoin Cash obviously is more useful for daily transactions than Bitcoin, which is one reason its value has risen.

Cancellation of SegWit2x

After the success of Bitcoin Cash, numerous hard forks followed in an attempt to emulate Bitcoin Cash’s success. One such proposed fork was SegWit2x. SegWit2x was a compromise between members of the Bitcoin community who wanted to improve scalability (the Bitcoin network’s ability to handle more transactions efficiently) by implementing Segregated Witness, SegWit, which in essence made transaction sizes smaller by separating witness or signature data from the main body of transaction data, and members of the community who wanted to improve Bitcoin scalability by increasing Bitcoin’s block size multi-fold.

While forks, such as Bitcoin Platinum, Bitcoin Diamond, Bitcoin Silver, Bitcoin Cash Plus, and so on weren’t taken seriously by most of the community, SegWit2x was. However, the fork was cancelled due to a lack of support. As a result, much of the value that would have gone to SegWit2x flowed to BCH since both forks were similar and had similar supporters who believed in improving Bitcoin by increasing Bitcoin’s block size.

With fewer forks to divide value of Bitcoin investment, Bitcoin Cash naturally gets more of the pie and a higher price as a result.

Support from Major Community Members

Another key factor in driving up Bitcoin Cash’s price is the support it has from major influences in the Bitcoin community. However, it wasn’t always this way.

At first, much of the community, such as miners and exchanges, did not support BCH. Only a handful of major cryptocurrency platforms credited coins to their users and started BCH trading. Among early adopters were CEX.IO, Binance, Kraken, Bitfinex and several more.

The tide started to turn, however, and more and more community members, including ViaBTC, one of the world’s largest Bitcoin mining pools, and Roger Ver, known for his early Bitcoin evangelism and investment in cryptocurrency-related companies began to show support for BCH.

Things really came to a head in December 2017 when Coinbase launched BCH buying and selling on its exchange. BCH’s price exploded and nearly tripled, giving birth to the term “Coinbase effect”.

Conclusion and Future Outlook

Though Bitcoin Cash is just a little over 7 months old, the young cryptocurrency has shot up in price due to many factors that heavily played into the holders’ hands.

It’s hard to say what the future holds for BCH, since other cryptocurrencies have emerged in response to Bitcoin’s inability to scale properly. Some are even faster than Bitcoin Cash and have pitifully low transaction fees. Nevertheless, it’s clear that Bitcoin Cash is here to stay (for now), but as always, do your own research!