What was behind Bitcoin Cash making a grand statement over the weekend
When Bitcoin originally planned to fork on Aug. 1, there was much fear and worry about the future of the original chain as the civil war raged on. However, the split happened, and Bitcoin Cash was born, but there was hardly any disturbance in the force.
In fact, soon after the fork, Bitcoin rallied and hit new heights as Bitcoin Cash was mostly seen as free money to be sold as soon as possible. In fact, many exchanges were debating about even supporting it.
Bitcoin Cash was mostly berated as a money making scheme and a waste of time, but suddenly, over the last weekend, it all became quite relevant.
What niche is Bitcoin Cash filling?
As the name suggests, Bitcoin Cash, with its larger blocks is intended to be able to handle transactions cheaply and quickly – like cash. However, building a coin that comes out as a payment network before it is a liquid asset offers up plenty of challenges.
A payment system needs stable liquidity, and that stability cannot be reached if you aim to be a payment network before you are an established asset. Bitcoin Cash also, as a potential global payment system, needs adoption and acceptance, something it has also been lacking.
But as Bitcoin’s monstrous growth has continued and Bitcoin Cash’s stayed relatively still, a new problem was emerging with the original chain.
The scaling was not over, Bitcoin as a payment network was still failing. It was digital gold and something needed to be done.
The SegWit2x failure really showed how people saw Bitcoin – they were after it for its digital gold status and its massive growth as an investable asset. Why would you spend something that keeps growing?
However, it thus became official that Bitcoin would not be good for payments anytime soon, so what about those who were banking on it, the merchants and the retailers?
There needed to be an alternative and with the name cash attached to it, Bitcoin Cash suddenly looked attractive and became relevant.
Pump and dump?
However, the issue is if people were indeed flooding to Bitcoin Cash for its core function as a cheap and almost instant form of digital cash, why did it pump and then dump? It reached highs of over $2,500 but slumped some 60% recently.
Werner van Rooyen, from international exchange Luno, shares his thoughts with Cointelegraph:
“The Bitcoin Cash boom over the weekend was interesting, but it appears to have been a short-term explosion, with most trading that happened on South Korean exchanges – at a very high price compared to other platforms,” Van Rooyen explained.
“I get the feeling that Bitcoin Cash developers see it as cash — something that is easy to send and pay with — and the Bitcoin developers and hodlers see it as digital gold — something that makes for an internationally recognized store of value.”
That difference between the coins is really starting to come to the fore now, and many can suddenly see the relevance of something like Bitcoin Cash – even with other similar ‘cash-like’ coins.
Van Rooyen does, however, add that some of the users at Luno are holding both coins and because the value of Bitcoin Cash suddenly shot up there will be more who are holding it like Bitcoin in case of another big pump.
“I’d personally rather be holding gold (Bitcoin) than cash (Bitcoin Cash) at this time. We also find that many people actually don’t take a position on either Bitcoin or Bitcoin Cash — they just hold both and look at the combined value of their digital currency portfolio.”
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Author: Darryn Pollock