The Bitcoin Spilt and What it Can Mean Short Term
Functionally speaking, the attraction to Bitcoin is that it’s virtually created and is limitless; 1s and 0s make up the crypto-currency and thus it has no end…that is unless buyers evaporate…
Bitcoin Cash launched this week is to be run side by side with Bitcoin. The good news is that if you had one Bitcoin before the split, you now have two. The bad news is that Bitcoin proper is worth about $2,700 a unit and Bitcoin Cash is around $600 but only if you sell now. So hold on…
It’s only been a day so the fact that traditional Bitcoin users are choosing to hold on makes sense. The spilt made you an extra $600, on paper at least. In the worst case scenario, Bitcoin Cash could be D.O.A and you still lost nothing, provided you don’t sell off the traditional Bitcoin at a loss.
Main Reason for the Split
Like Bitcoin, the Cash creators are hoping for the same critical mass. It was invented by supporters worried about the congestion in the main network with payments and higher processing fees. The Cash concept removes that and could allow overall maximized exposure for Bitcoin, in addition to easier use.
Technically speaking, it would be trivial to change that one megabyte limit to a higher value. But proposals to do so have faced opposition from traditionalists who argue the limit is actually an important feature of Bitcoin‘s design that protects the network’s democratic character. To participate in the network’s peer-to-peer process for clearing transactions, a computer needs a copy of every transaction ever made on the Bitcoin network, which adds up to gigabytes of data per month. Even still, there’s more collateral backing Bitcoin than most national currencies; in that consumers pay to own it.
They could have started over with an empty block chain; the crypto currency version of a clean slate. But if they’d done this the new software would likely have languished in obscurity. Instead, they chose to branch off from the existing Bitcoin block chain. Bitcoin Cash has the same transaction history prior to August 1, 2017, which means that anyone who owned ordinary Bitcoins before the switch owns an equal number of Bitcoin Cash units, secured by the same cryptographic keys, after the switch.
Basically, if you believe in owning Bitcoins at $2,700, stay. You probably have made your money. Bitcoin Cash, at $600 could be a great investment (and boon after the split) in that the technology could make the growth leap forward years ahead because of the Bitcoin brand.
At the end of the day, these guys are service providers. IF Bitcoin proper suffers at all, Bitcoin Cash could evaporate just like that! If you were not a beneficiary of the split, wait before you buy outright.
Check out what Bloomberg Technology had to say about the split
As crypto-currencies go, it’s already third behind Bitcoin proper and Ethereum. But don’t get hasty as Bitcoin Cash is roughly 24 hours old. Pessimism and optimism are in the eye of the beholder and one should always mind their wallet when the beholder is out to sell “the next big thing.”