A Quick Look At Bitcoin Cash (BCH)

Today, we are going to talk about another cryptocurrency that runs in parallel to Bitcoin, but under a different name.

It is called Bitcoin Cash, a “hard fork” of Bitcoin that occurred on August 1, 2017 and has delivered incredible returns since then.

What’s a “hard fork”?

According to experts in the cryptocurrency area, a hard fork is “a change of rules that allows to create new blocks not considered valid by the older software.”

In July 2017, miners focused on BTC; the so called Bitcoin Improvement Proposal (BIP). The BIP was beneficial for individuals interested in making investments in BTC, while it was detrimental for BTC miners focused more on dealing with the transfer of coins.

What was the problem?

The 1 MB block size limit was causing problems for Bitcoin. Fees to transfer BTC were very high and some users had to wait many days to get their transactions confirmed. This was becoming a critical issue for the image of the BTC and many coin holders commenced to move to other cryptocurrency networks.

What was the solution?

A group of miners decided to create a new coin, called Bitcoin Cash, with a block size limit of 8MB, which multiplied the potential supply of BTC Cash. It helped create fast transactions once again. Block 478558 was the last block, in which BTC and BTC cash were “together”.

How is the coin price moving now?

Like other cryptocurrencies, its performance in 2017 has been incredible. From trading below $400 from August to September 2017, the price then commenced to creep up and reached the psychological resistance of $800 easily.

We believe that there was a serious increase in the demand for BTC cash, which pushed its price. This can be confirmed by the rising volume seen in the chart.

Have a look:

Bitcoin Cash Chart

But, everything has not been glorious for the BTC cash miners.

At the end of November 2017, they saw how demand decreased and the price of each unit declined sharply. We cannot say when this free fall will stop. But, one thing is sure, we can expect a lot of volatility in the price if the demand does not come back.

For those looking for a buy, we believe that the price turnaround will commence with a spike in trading volume. Be alert on this pattern!

What was the reaction of the exchange after the “hard fork”?

To the question on whether BTC is different to BTC Cash, the web of the project notes:

“Bitcoin Cash is the continuation of the Bitcoin project as peer-to-peer digital cash. It is a fork of the Bitcoin blockchain ledger, with upgraded consensus rules that allow it to grow and scale.” Source

In fact, the algorithm running BTC Cash is similar to that of BTC, thus miners focused sometimes on both cryptocurrencies.The main issue could not come from those individuals, but from the exchanges in charge of dealing with the BTC and the BTC Cash. If exchanges do not accept the new currency, coin holders cannot make transfers or acquire new units, consequently the demand diminishes.

What happened?

Some exchanges, like SFOX, ViaBTC or Bitfinex, announced that they would accept the coin from the very beginning. Others, like Bitstamp and Coinbase, took some time until they accepted the new coins. Their decision affected the unit price.

Could new decisions affect again BTC Cash price?

Yes, we encourage readers to be very alert in the next months, as some of these exchanges will officially commence to trade BTC Cash in the next months. Coinbase will start on January 1, 2018 and Bitstamp announced that it would do it on December 1, 2017. Additionally, BitMEX and Exodus, which don’t accept BTC Cash, could accept it soon due to pressure from the rest of the market.

If new exchanges accept the cryptocurrency, new demand could be added. The coin holders registered to trade on the exchange will be able to acquire BTC Cash and may create an increase in its price. It is a big catalyst ahead.

Conclusion

Currently trading with a market cap of $22 billion, BTC Cash is an interesting story among new cryptocurrencies. We encourage readers to study the chart with the help of technical analysis, mainly focusing on volume. It will help understand the price action.

We will be updating our subscribers as soon as we know more. For the latest updates on BTC Cash, sign up below!

Image courtesy of Zach Copley via Flickr

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.