Behind Bitcoin Cash’s Stellar Rise

DISCLAIMER: This is a guest post, the information provided in this post is the responsibility of the writer.


The sentiment shifts that take place during hard forks in bitcoin, cryptocurrency’s banner asset, are a new market dynamic with far-reaching implications for the industry. While hard forks have resulted in little tangible success for other coins, bitcoin’s notoriety casts any hard fork in a more sentimental light. Markets first witnessed this curious market movement in the months following bitcoin cash’s fork in August. The fork itself seemed to justify its price, which has steadily risen since.

Bitcoin cash’s split from bitcoin proved that miners could be enticed to participate if they could use the new coin to be more profitable. With similar infrastructure, yet different difficulty adjustment algorithms, bitcoin cash walked a thin line. It set itself apart enough to justify people’s belief in an alternate solution, yet was similar enough to its predecessor that financially-minded miners also had a reason to make the switch. Now, the market has nearly forgotten the controversial split, and has more forks to look forward to.  However, it remains to be seen if they can reach bitcoin cash’s level of success.

Cash by the forkload

Hard forks are special events in bitcoin, because the king currency represents a lot to its loyal community. This notion is not specific to the bitcoin cash fork, as bitcoin gold has also made its appearance, and additional hard forks are a real possibility. The market has very conflicting opinions on bitcoin forks, mostly because they bring the entire bitcoin ecosystem more capital, but also signal a lack of consensus in the community. This contrast is difficult to comprehend.

When bitcoin forks, investment from the entire cryptocurrency community balloons its price as holders anticipate receiving “free” coins after the split. Generally, this money not only stays in bitcoin but also in its new relative. Bitcoin was worth little more than $5,000 when bitcoin cash forked from it, and the latter around $400. Since then, both have experienced meteoric growth in dollar terms. The other side of the coin sees this new relationship as dangerous. If bitcoin can be split an infinite amount of times, doesn’t that cheapen its value as an idea?

This precarious balance of sentiments may tip over as more forks are introduced to bitcoin’s core chain, but many aren’t worried. Bitcoin and bitcoin cash seem to be the main beneficiaries of this trend, and it remains to be seen if newly-spawned forks can grow in their combined shadow. Bitcoin fans see the scaling debate as a two-sided coin, and not a die, for now

Bitcoin cash capitalizes on its momentum

Being the first cryptocurrency is important to bitcoin, and crucial to its first-mover advantage and support, which translates to price. Bitcoin cash can also claim a bit of fame itself, for being the first real “fork” the community witnessed. In many ways, we are still coping with the event, but it cemented one concept in the minds of investors permanently. Consensus has value.

Bitcoin cash is gaining consensus, and support from community infrastructure like wallets, exchanges, and more. Moreover, investors are watching it and putting their money in, eager to catch the first wave of “the flippening” that some believe will happen between bitcoin and bitcoin cash. This would see majority hashing power move to bitcoin cash instead of bitcoin, with price following close behind.

Thanks to the self-perpetuating cycle of social awareness, miner support, volume and price, this yet-unrealized dream is making steady progress. This advent means that the community at large is helping to satisfy this steady new demand from traders eager to buy bitcoin cash and bitcoin alike. Whether bitcoin cash manages to obtain a per-coin value higher than bitcoin is still unclear, but there have been many days in recent months where their market capitalizations were converging thanks to the degree of interchangeability on the mining front.

What a time to be an investor

Bitcoin cash is a nuanced cryptocurrency, and much deeper than its negligible differences from bitcoin indicate. The implications for its technology and its creation of a new dynamic between cryptocurrency stakeholders have equal parts in its significance. Few people doubt that bitcoin cash is here to stay, yet the bright horizon is still obscured by forks and other upcoming events.

The compromise that bitcoin cash has struck with its older brother bitcoin is delicate, and may be upset as incoming institutional investors favor the latter. However, this too is inconclusive. Wall Street’s initial choice of bitcoin should not be construed as hesitancy to onboard other cryptocurrencies, and is not indicative of their unwillingness to incorporate newer entrants like bitcoin cash into the fold in the future. At the end of the day, adoption comes down to functionality and which stands out as the best universal problem solver.

Alex Buelau

Alex is CEO and Co-Founder of Coinschedule. He has a long-term relationship with technology, he taught himself how to code at age 9 and built his first tech start-up at age 14. He has been involved in many projects and companies over the years and got into cryptocurrencies in 2013 as a Bitcoin miner. Before starting Coinschedule, he was already active in the crypto space, having developed block explorers and online wallets. His geeky passions are software, business and product management.