Bitcoin Cash – Is it a Wise Investment?

‘Is Bitcoin Cash a good investment?’ is a question that we are encountering every so often. So we thought we would cover the topic for those that are interested in having an answer to consider.

Some context

To keep things short for those that are not aware, Bitcoin Cash is a fork of Bitcoin. In this case the fork was an ‘upgrade’ that modified the transaction order on the blockchain. Some Bitcoin developers were against the upgrade. The developers that were in favour of the upgrade decided to go ahead with it anyway.

However because they could not implement the upgrade on Bitcoin due to developer opposition, they created Bitcoin Cash. As a result the developers that supported the upgrade migrated to Bitcoin Cash. So Bitcoin Cash at that point was a carbon copy of Bitcoin except it included the upgrade.

The aftermath

Bitcoin Cash is the best performing fork of Bitcoin. However, although Bitcoin Cash has the upgrade, it has not performed as well as Bitcoin. It has its ups and downs, but the crypto has been lagging behind. It seems to be getting less popular over time and falling out of favour.

Crypto enthusiasts are more interested in other crypto projects. There are so many at this point that there is a lot of choice. There are of course a lot of projects anyone would want to keep away from. However there are also plenty of good projects. These projects have good use cases and good teams that have good skills and vision.

Comparing Bitcoin and Bitcoin Cash

Bitcoin and Bitcoin Cash are slightly different. Since the upgrade their developers have set out to work on different projects on the networks. Bitcoin has the Lightning Network and Bitcoin Cash has CashFusion.

The lightning network project addresses the scalability problem Bitcoin had. However Bitcoin does have some cons.

The main criticism of Bitcoin is the high transaction fees.

Additionally Bitcoin is not a private blockchain. Transactions and addresses are visible for all to see. This may be a problem to some since privacy is about fungibility and one of the pillars of sound money.

CashFusion brings some privacy to the Bitcoin Cash blockchain. This is great, but it would be better to have full privacy rather than some privacy features.

Regarding comparisons it is really about preference. It about what people think are the most desirable features they would want in a crypto. Whether this is Bitcoin or Bitcoin Cash or another crypto or perhaps the space will be shared among some cryptos. Most importantly is what the crowd thinks or will eventually think.

At the end of the day you want to of course make money. However you also want a crypto to succeed in some way, shape or form. The profits and succeeding go hand in hand.  

The effects of the Bitcoin Cash halving

Bitcoin Cash has a halving like the Bitcoin halving. Essentially the halving means that every 210,00 blocks there is a reduction in the block reward for miners. The block reward gets cut down by half, hence why it is called the halving.

Since miners do not get as many rewards as before the halving they make less profit. This applies for both Bitcoin and Bitcoin Cash. The issue is that Bitcoin Cash has not maintained a certain level of value. As a result miners tend to migrate from Bitcoin Cash to Bitcoin.

There are times when miners migrate back to Bitcoin Cash and hence switch back and forth. With the last halving, miners migrated in droves to Bitcoin. However with less miners maintaining the network, Bitcoin Cash becomes much less secure and more susceptible to 51% attacks.

A 51% attack is when a malicious actor on the network gains 51% of the nodes on the network. They end up corrupting a blockchain for their own personal gain.

This is considered the worst case scenario for any blockchain network. Subsequently it undermines the credibility and integrity of the blockchain on which the 51% attack happened.

How to check the likelihood of a 51% attack

As mentioned, miners migrate back and forth between Bitcoin and Bitcoin Cash. However we do not know if this will continue. The best thing to do would be to check how likely a 51% attack is on Bitcoin Cash.

You can check using this link to take you to Exaking. This website is fantastic because it shows the cost of mounting a 51% attack on a per hour basis. From looking at the cost you will tell whether an attack is going to be a breeze or not. In other words how likely a hacker will target particular cryptos.

Should I buy Bitcoin Cash?

So, is Bitcoin Cash a good investment? And should I buy Bitcoin Cash? This question deserves some context to help you understand what the situation is. At least this way you can make a better informed decision.

Competition

At the end of the day Bitcoin Cash and Bitcoin are slightly different, but essentially the same. In that they are both competing in the same space. They are both aiming to become a medium of exchange and unit of account.

For example they are not a cryptocommodity like Ethereum, a crypto token or crypto collectable. Bitcoin and Bitcoin Cash are purely a cryptocurrency in the way in which they are defined in the book Cryptoassets. (You can read about the 4 types of cryptoassets in this article).

For this reason they are competing in the cryptocurrency niche within the cryptoassets space. This means you have to factor that there are other coins competing in the same space as well. Other cryptos also want to have the possibility to become a medium of exchange and unit of account.

What has happened so far

When the market is up, Bitcoin takes all the other cryptos up with it. At least that’s what has been going on for the last couple of cycles. As a result Bitcoin Cash will also have a nice rally up when this happens.

However this is not guaranteed that this will go on forever. This space is fast paced and anything can happen. Things can also happen in a relatively short span of time.

Additionally you have to be aware of the possibility of a 51% attack. You should check the link we provided above when the market is going down just in case.

For example Bitcoin SV had a 51% attack on the 3rd August 2021. This is the second attack after another attack that was staged late June and early July 2021.

Bitcoin SV is not Bitcoin Cash. However, we are just trying to make sure you aware that 51% attacks happen. So far Bitcoin Cash has not had a 51% attack mounted on it.

What are others doing

So far crypto enthusiasts seem to be decreasing their allocation in Bitcoin Cash. However they are still keeping an allocation into it. They seem to favour having a lot of different cryptos in their portfolio.

Is Bitcoin Cash a good investment? – Advice

You don’t necessarily need to be holding just one crypto like Bitcoin maximalists. There are a lot of fantastic cryptos out there to choose from.

Not all cryptos are good cryptos and a lot will likely fail. Additionally if one or more fail at least you have the rest of your cryptos that may do well. All you have to do is some research.

Still don’t know the answer to the question ‘is Bitcoin Cash a good investment?’ If you need some advice you can head over to our expert advice section. The advisors we recommend work in teams. They are deeply knowledgeable on the crypto space and different aspects of finance.

The expert advisors are The Crypto Vigilante and Real Vision. The Crypto Vigilante started from the Dollar Vigilante. They were early investors in the crypto space. They made huge gains for themselves and their subscribers which you will see from The Crypto Vigilante review. Alternatively you can sign up to The Crypto Vigilante newsletter straight off.

Real Vision provides free membership to Real Vision Crypto. You can sign up to their free Real Vision Crypto membership here. They have some of the best and brightest names in finance on their team and who they have contact with. The main face of Real Vision is famous macro investor Roaul Pal. He worked in a number of high profile companies.

Both advisors are great. We definitely suggest signing up to Real Vision Crypto because it if free. Real Vision Crypto focuses on a couple of a few cryptos. However if you are looking for a variety of crypto suggestions you will get that from The Crypto Vigilante.

If you would like to find out where and how to buy, you can use this link; buy Bitcoin Cash.  

Other Articles In This Section
What is Bitcoin? An introduction to the first major cryptocurrency.
The Bitcoin Whitepaper. Read Satoshi Nakamoto’s original plan for Bitcoin.
The Bitcoin Halving. And why it’s important.
Bitcoin Units. Breaking down the denominations of Bitcoin.
Why is Bitcoin Valuable? The mechanisms that make Bitcoin worth money.
Bitcoin Cash. How it differs from Bitcoin and is it investable?
How to buy Bitcoin. How and where to buy your Bitcoin.
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