Bitcoin Cash – A Preferred Alternative to Bitcoin?

Bitcoin vs bitcoin cashThe answers are: Guarded Yes! May be!

Is the Bitcoin (BCT) off spring – Bitcoin cash (BCH) a better investment? The answer to the question is as complex as the subject cryptocurrency and attendant Blockchain fundamentals. In order to evaluate these currencies, in this article, we review them, their genesis and their evolution thus far, and future trends.

 

BCT Blockchain Splits:

Bitcoin cashThe year 2017 made the Bitcoin a household name. When it jumped from about $1,000 in January 2017 to about $20,000 in December 2018, it caught the fancy of individual and Institutional investors alike. As Bitcoin price swings were making history for investors, the underlying Bitcoin Blockchain technology was also evolving for making Bitcoins a more use-friendly currency. A cumulative result of those innovations was the birth of a new currencies Bitcoin Cash (BCH) and Bitcoin Gold (BCG) in August and November 2017, respectively.

Before we delve into detailed BCT versus BCH comparisons, we need to understand one basic term associated with BCH formation – Hard Fork. Although, reviled by many in early 2017 – the hard fork is simply the splitting of the parent Blockchain protocol into two or more children protocols. The child coin, in this case, BCH retains some or all of the properties of the parent coin and some more.

 

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Hard and Soft Forks – What are they?

In simplest terms, hard forks are like equity splits – where an investor gets two shares for the original one share. However, hard forks are created for more technical reasons than just financial incentives. For example, hard fork is implemented to correct the risks embedded in the original block chain, to introduce new functionality, or to reverse the transactions as in Ethereum Block chain. A simplistic Block Diagram of a typical hard Fork is given below (Investopedia). Thus, in Bitcoin’s case the Bitcoin pathway followed the same rules as older Bitcoin Blockchain, while Bitcoin cash followed the new Blockchain rules.

Hard Fork

In order to understand, effectiveness of Bitcoin Blockchain and Bitcoin cash Blockchain, we need to briefly visit a ‘Soft Fork,’ – SegWit2X – Blockchain also. In its simplest form, SegWit2X is the upgrading of the current Blockchain, in this case, Bitcoin to introduce some enhanced features. For example, in one proposal, the inventive Segregated Witness Technology (SegWit2X) would minimize data required for verification of each block by eliminating the need for it from every block. It also solved a scaling problem somewhat by allowing 2 MB blocks in the protocol.

However, a key difference between Bitcoin cash and SegWit2X remained to be the fact that ‘Hard Fork,’ resulted in two distinct coins, while the SegWit2X maintained the Bitcoin features in improved fashion. All three, Bitcoin, , SegWit2X, and Bitcoin cash maintained the same block time at 10 minutes though they differed in Block size – 1 MB, 2 MB, and 8 MB – respectively. Going from Bitcoin to SegWit2X to Bitcoin cash also improved the speed of transactions; 1.2 mil, to 2.4 mil, to 4.8 mil per day respectively.

Which is a Better Coin? Bitcoin or Bitcoin Cash? 

As SegWit2X is merely an improvement in Bitcoin Blockchain, we will compare Bitcoin and Bitcoin cash for their utility from the use and investment stand points.

The general consensus is that Bitcoin cash is better than Bitcoin for the following reasons:

  • BCH is faster, has lower fees, and less expensive to mine than BCT. Hence, BCH is better,
  • BCH is more centralized than BCT. Majority of BCH mining rights and coins are owned by two Korean Cryptonnaire, making it a risky investment,
  • Transaction times for BCT and BCH are relatively similar, and
  • Investment Value variations.

 

The following Figure compares price fluctuations between BCH and BCT. The Figure Clearly shows BCH replicating BCT behaviour over a period between August 2017 and April 2018. This indicates both the currency providing similar percentage returns between August 2017 and now.

BCT Fluctuations

Thus, selecting an investment option between BCT and BCH is rather a difficult task. However, on the surface BCH seems to offer better investment value compared to BCT. Although, a prudent investment strategy would be to use these to coins in some type of ‘hedging Strategy,’ along with other ALTCOINS.

This article clearly delineates challenges associated with selecting a wise investment from among the same family of coins. This is where the expertise of the Platinum trading Institute’s (PTI) come into the play. Our experts have intimate knowledge of these various block chains, and have analysis tools to differentiate between various coin options.

 

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Earnings Disclaimer:

The information you’ll find in this article is for educational purpose only. We make no promise or guarantee of income or earnings. You have to do some work, use your best judgment and perform due diligence before using the information in this article. Your success is still up to you. Nothing in this article is intended to be professional, legal, financial and/or accounting advice. Always seek competent advice from professionals in these matters. If you break the city or other local laws, we will not be held liable for any damages you incur.

By | 2018-04-10T06:31:47+00:00 April 10th, 2018|Crypto|0 Comments

About the Author:

Dr. Jayesh Mehta
Nationally recognized Advanced Technology leader with over 25 years in the Aerospace Industry. Sustained track record of providing innovative solutions to advancements in the gas turbine and alternate energy fields. Dr. Mehta is an innovator and a passionate financial analyst who has turned his attention now to intricate world of FOREX and Crypto trading education. Academically, Dr. Mehta shares Mr. Nirav Shah’s passion for developing algorithmic strategy based trading approaches for financial instruments applied to FOREX, Crypto, and Equity markets. As a part of his MBA in financial engineering at Xavier University, Dr. Mehta had developed and published several peer reviewed papers on Black-Scholes options models in flagship financial journals.

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