Unraveling Bitcoin Cash: Expert Price Predictions 2022

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In the vast and often confusing world of cryptocurrency, you’ve likely come across different versions of ‘Bitcoin.’ One of the most significant and debated is Bitcoin Cash (BCH). Born from a pivotal moment in crypto history, BCH was created to fulfill the original promise of Bitcoin as a true peer-to-peer electronic cash system. But what exactly is it, how does it differ from the original Bitcoin, and does it represent a sound investment for your portfolio? This guide will walk you through everything you need to know about Bitcoin Cash, from its contentious origins and underlying technology to the practicalities of buying, storing, and analyzing it as an investment. Whether you’re a seasoned trader or just starting your crypto journey, understanding BCH is crucial for navigating the market.

Key Takeaways

• Bitcoin Cash (BCH) was created through a 2017 hard fork from Bitcoin to solve scalability issues by increasing the block size.
• The primary goal of Bitcoin Cash is to be a peer-to-peer electronic cash system, offering faster transactions and significantly lower fees than Bitcoin.
• With a 32MB block size, the BCH network can process more transactions, making it practical for everyday payments and micropayments.
• While useful for transactions, BCH faces risks including lower network security (hashrate) compared to Bitcoin and brand confusion.
• BCH is widely available on major exchanges, but for optimal security, it should be stored in a personal hardware or software wallet.

The Origins of Bitcoin Cash: A Story of a Contentious Hard Fork

To understand Bitcoin Cash, you have to go back to 2017, a time of intense debate within the Bitcoin community. The core issue was scalability. As Bitcoin’s popularity surged, its network became congested. The original design limited the size of each block of transactions to just 1 megabyte (MB). This bottleneck led to slow confirmation times and soaring transaction fees, making small payments impractical. A simple coffee purchase could cost more in fees than the coffee itself.

The community split into two main camps. One side believed in keeping the small block size to ensure the network remained decentralized and secure, proposing off-chain solutions like the Lightning Network to handle more transactions. The other side argued that the original vision of Bitcoin, as laid out by Satoshi Nakamoto, was a low-cost, global payment system. They believed the most straightforward solution was to increase the block size directly on the main blockchain.

When no consensus could be reached, the disagreement culminated in a “hard fork” on August 1, 2017. A hard fork is a radical change to a network’s protocol that makes previously invalid blocks/transactions valid, or vice-versa. This event permanently split the blockchain into two. One chain continued as Bitcoin (BTC), while the new chain, with an increased block size of 8MB, became Bitcoin Cash (BCH). Every holder of Bitcoin at the time of the fork automatically received an equal amount of Bitcoin Cash, marking one of the most significant schisms in crypto history.

How Bitcoin Cash Works: A Look at the Technology

At its core, Bitcoin Cash operates on the same foundational principles as Bitcoin. It uses a decentralized, peer-to-peer network and a Proof-of-Work (PoW) consensus mechanism to validate transactions and create new coins. Miners use powerful computers to solve complex mathematical problems, and in doing so, they secure the network and add new blocks of transactions to the blockchain ledger.

The defining technological difference is BCH’s approach to scaling. While Bitcoin relies on secondary layers, Bitcoin Cash is committed to on-chain scaling. Its primary weapon in this fight is a much larger block size. What started at 8MB at the time of the fork has since been upgraded to 32MB. Think of a block as a single page in a ledger. A larger page (block) can hold many more entries (transactions). By allowing for 32MB of transaction data every 10 minutes, the Bitcoin Cash network can process significantly more transactions per second (TPS) than Bitcoin. This increased capacity directly translates into the two main benefits BCH proponents champion: faster transaction speeds and consistently low fees, making it more practical for everyday commerce and micropayments.

Bitcoin Cash vs. Bitcoin: Understanding the Key Differences

While they share a name and a common history, Bitcoin (BTC) and Bitcoin Cash (BCH) have evolved into distinct projects with different goals and technical specifications. Understanding these differences is key to evaluating their respective investment cases.

Block Size and Scalability

The most fundamental divergence is their approach to scaling. Bitcoin maintains a small block size of 1MB (with technical optimizations like SegWit that can effectively allow for up to 4MB of data) to prioritize maximum decentralization and security. The philosophy is that a smaller blockchain is easier for individuals to run a full node, preventing centralization. Bitcoin’s scaling solution is the Lightning Network, a layer-2 protocol built on top of the main chain.

Bitcoin Cash, on the other hand, champions on-chain scaling through its 32MB block size. The BCH community believes this is the most direct way to achieve the throughput needed for a global payment system without compromising the user experience by moving transactions to a secondary layer.

Transaction Fees and Speed

This difference in block size has a direct impact on the user experience. Because Bitcoin’s block space is limited and demand is high, users must bid against each other for their transactions to be included, leading to potentially high fees and variable confirmation times. During peak congestion, a BTC transaction can cost several dollars and take hours to confirm.

In contrast, Bitcoin Cash’s ample block space means there is rarely a backlog of transactions. This results in consistently low fees, often costing less than a penny, and faster, more reliable confirmation times. This makes BCH far more suitable for everyday purchases, like buying a coffee or sending money to a friend.

Development Philosophy and Community Governance

The technical differences stem from a deep philosophical divide. The Bitcoin Core development team is guided by a conservative ethos, prioritizing security and decentralization above all else. Changes to the protocol are rare and require overwhelming consensus.

The Bitcoin Cash community is more focused on utility and adoption as a medium of exchange. Its development is more agile, with a willingness to carry out protocol upgrades (via scheduled hard forks) to improve scalability, add new features, and enhance the user experience. This reflects their core mission to be the world’s best peer-to-peer electronic money.

Investing in Bitcoin Cash: A Practical Guide

If you’re considering adding BCH to your portfolio, you need to know the practical steps for acquiring and securing it. Like any digital asset, proper procedure is crucial for a safe investment experience.

Where to Buy and Trade BCH

As one of the earliest and most well-known cryptocurrencies, Bitcoin Cash is widely available on most major cryptocurrency exchanges. You can easily buy, sell, and trade BCH on reputable platforms such as:

• Coinbase: A user-friendly option for beginners in the US and Europe.
• Binance: The world’s largest exchange by trading volume, offering a vast array of trading pairs.
• Kraken: Known for its strong security and reliability.
• Gemini: A regulated exchange with a focus on security and compliance.

When choosing an exchange, consider factors like your geographic location, available payment methods, trading fees, and the platform’s security track record. Always enable two-factor authentication (2FA) to add an extra layer of security to your account.

How to Securely Store Your Bitcoin Cash

Once you’ve purchased BCH, the next critical step is securing it. While leaving your coins on an exchange is convenient for trading, it’s not the most secure long-term storage solution. The golden rule in crypto is “not your keys, not your coins.” To have true ownership, you should store your BCH in a personal wallet.

There are several types of wallets to choose from:

• Software Wallets: These are applications for your desktop or mobile device. They offer a good balance of security and convenience for managing smaller amounts. Popular options include Exodus, Electron Cash, and the Bitcoin.com wallet.
• Hardware Wallets: For the highest level of security, a hardware wallet is the gold standard. These are physical devices (like a USB drive) that store your private keys offline, protecting them from online threats. Leading brands like Ledger and Trezor offer robust support for Bitcoin Cash.

Analyzing BCH as an Investment

Beyond the technicals, you need to evaluate BCH based on its investment potential and the risks involved. A balanced analysis looks at both the bullish case and the valid criticisms.

The Case for Bitcoin Cash as Peer-to-Peer Electronic Cash

The primary investment thesis for Bitcoin Cash is its adherence to the original vision of a fast, cheap, and reliable global digital cash system. Proponents argue that its low fees make it genuinely useful for commerce, remittances, and micropayments, use cases where Bitcoin has become too expensive. This focus on utility could drive real-world adoption, especially in developing countries or for online content creators. If the world eventually needs a decentralized, censorship-resistant currency for daily transactions, BCH is positioned to be a strong contender.

Besides, the BCH community continues to innovate. Projects like the Smart Bitcoin Cash (smartBCH) sidechain aim to bring Ethereum-compatible smart contracts and DeFi applications to the network, potentially expanding its utility beyond simple payments.

Risks and Criticisms to Consider

But, investing in BCH is not without significant risks. One of the main criticisms is its relative lack of security compared to Bitcoin. Security in a PoW network is measured by hashrate, and Bitcoin’s hashrate is exponentially higher than Bitcoin Cash’s. This makes BCH theoretically more vulnerable to a 51% attack.

BCH also faces immense brand confusion. Many newcomers to crypto are unaware of the difference between BTC and BCH, and Bitcoin has overwhelmingly captured the public’s imagination and the “digital gold” narrative. Also, Bitcoin Cash faces stiff competition not only from Bitcoin but also from a host of other cryptocurrencies like Litecoin, Solana, and Cardano, which also offer fast and cheap transactions. Its price performance has significantly lagged behind Bitcoin’s since the fork, which is a major concern for investors focused on capital appreciation.

The Future Outlook for Bitcoin Cash

The road ahead for Bitcoin Cash is both challenging and filled with potential. Its success hinges on its ability to break out from Bitcoin’s shadow and prove its utility as a superior medium of exchange. The future outlook will largely depend on a few key factors: adoption, innovation, and market perception.

Driving merchant and user adoption is paramount. The network needs to grow beyond a niche community of enthusiasts to become a widely used payment method. This requires continuous improvement in wallet software, point-of-sale integrations, and user education.

Technical innovation, such as the development of smartBCH and other protocol upgrades, is crucial for staying relevant in the fast-paced crypto industry. By expanding its capabilities, BCH can attract developers and build a more robust ecosystem of applications. Eventually, the market will decide if there is room for both a “digital gold” (Bitcoin) and a “digital cash” (Bitcoin Cash). Its ability to carve out and dominate this transactional niche will determine its long-term viability and value.

Conclusion

Bitcoin Cash is more than just another cryptocurrency: it’s the product of a fundamental disagreement over the very purpose of Bitcoin. It stands as a dedicated effort to create a scalable, low-cost digital cash system for the entire world. While it offers clear advantages in speed and fees for everyday transactions, it also faces significant challenges in security, brand recognition, and competition.

As an investor, your decision to allocate capital to BCH should be based on a thorough understanding of this trade-off. Do you believe in the vision of a peer-to-peer electronic cash system, and is BCH the best project to achieve it? By weighing the potential rewards against the inherent risks, you can make an well-informed choice that aligns with your investment strategy. As the crypto landscape evolves, staying updated through trusted resources like Cryptsy will be your most valuable tool.

Frequently Asked Questions About Bitcoin Cash

What is Bitcoin Cash (BCH)?

Bitcoin Cash (BCH) is a cryptocurrency created in 2017 from a hard fork of Bitcoin. Its primary goal is to be a peer-to-peer electronic cash system, focusing on fast transactions and very low fees by using a much larger block size than Bitcoin (BTC).

What is the main difference between Bitcoin (BTC) and Bitcoin Cash (BCH)?

The main difference is their approach to scaling. Bitcoin prioritizes decentralization with a small block size (1MB) and uses layer-2 solutions like the Lightning Network. Bitcoin Cash uses a large block size (32MB) for on-chain scaling to ensure low fees and fast transactions for everyday use.

Why was Bitcoin Cash created?

Bitcoin Cash was created to address Bitcoin’s scalability issues. As Bitcoin’s network grew congested, transaction fees soared and confirmation times slowed. BCH forked to increase the block size, aiming to fulfill the original vision of Bitcoin as a low-cost, global payment system.

How can I securely store my Bitcoin Cash?

For maximum security, store your Bitcoin Cash in a hardware wallet like a Ledger or Trezor, which keeps your private keys offline. For smaller amounts or frequent use, software wallets on your desktop or mobile are a convenient option. It’s not recommended to store large amounts on exchanges.

Is Bitcoin Cash the same as Bitcoin?

No, they are two separate cryptocurrencies. While they share a transaction history up to the 2017 fork, Bitcoin (BTC) and Bitcoin Cash (BCH) now have different development teams, scaling philosophies, and network rules. They operate on independent blockchains and are not interchangeable.

What are the main risks of investing in Bitcoin Cash?

The main risks include brand confusion with Bitcoin, which has a much larger market share and brand recognition. BCH also has a significantly lower network hashrate than Bitcoin, making it theoretically more vulnerable to attack, and it faces stiff competition from other cryptocurrencies designed for fast payments.

The post Unraveling Bitcoin Cash: Expert Price Predictions 2022 first appeared on Cryptsy - Latest Cryptocurrency News and Predictions and is written by Ethan Blackburn