When bitcoin cash came on the scene I must say I was not a fan. I felt that Bitcoin was doing a good enough job so why clutter the market with another version of bitcoin. I`ve changed my mind since. Being of the view that Bitcoin must not fork into deferent versions of Bitcoin is like saying that Mercedes must not bring out a new models because the existing ones are great. As time progress people’s needs and expectations increase. So any product needs to evolve to meet future needs and expectations.
As an investor you definitely should own crypto currency in your portfolio. Even if only a small portion of your investment capital. But as far as bitcoin cash goes?
Should you own one over the other? Both? Or neither?
Let’s explore this question.
When Satoshi Nakamoto published his white paper on bitcoin, He stared by saying: “I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party necessary”
Cash involves no third party. There is no dependence on anyone else, no intermediary. It is paid directly from A to B. Satoshi Nakamoto was trying to create a digital cash. He aimed to create a digital system of payment that does not need a bank or card processing company to process the transaction. People have lost faith in banks and card processing companies. Satoshi wanted a peer to peer system, like cash is, directly from A to B. But the truth is that Bitcoin is to slow for real world use. Its processing speed are incredibly slow. Transaction fees to high. Yes the lighting network may change that. But the greater problem is people are hording Bitcoin and not spending it. Treating it like a new Gold rather than a new cash.
Hence the development of the new Bitcoincash as well as others like Litecoin and Etherium.
And so bitcoin cash was forked out of bitcoin (it’s like is a spin-off of Bitcoin). Everyone who owned bitcoin on 1 August, 2017 got some bitcoin cash. Bitcoin cash has since proved to be better for payments. The transaction times are quicker. The fees are lower. And Voilà, we have workable digital cash. So which one is the better investment now?
Bitcoin, bitcoin cash – or both?
They are both very different. Bitcoin for the foreseeable future is likely to be horded as a Digi-gold for speculative purposes. Very few people actually buy it to spend. It`s simply to valuable. Furthermore in the city where I live, I have not found one single shop that will take my Bitcoins as payments. Some websites accept crypto but even those are few. Mind you, that can be said about any crypto currency at the moment.
The main problem with Bitcoin is there is no company behind it. No CEO, no research and development team. No product manager and no chief operations officer. Therefore it only relies on crypto enthusiasts such as the developers of the lightning network to innovate.
Whereas Bitcoin cash has a team behind it. That can go out and seek capital for infrastructure development. Make deals and promote the coin. Same goes for others like Litecoin and Etherium and many more. These companies are in talks with organisers of major events such as the football world cup, the NFA and the Edinburgh Festival to accept crypto currency payments and offering to build the infrastructure for that. And who represents Bitcoin at such talks – nobody.
The company behind Bitcoin cash is an ambitious enterprise. They are really pushing the blockchain revolution. There are big deals for payments with major international merchants in the pipe line They are building an enormous payment infrastructure all over the world. Owning the coin is like owning shares in the networks, these networks which are rapidly growing and well marketed. They want bitcoin cash, Litecoin and Etherium to be used as widely as possible as a means of payment: to make sure these are actually used.
Its all systems go for Bitcoin cash, Litecoin and Etherium. We are in a middle of an “arms race” to see which coins are to become the Digi cash of the future. But for now, pretty much any crypto-currency cant be spent easily. So its buy and hold for now with any crypto. When the fork happened last August, bitcoin was sitting around $3000. Bitcoin cash started around $250. At its highs bitcoin went to $19,000+. Bitcoin cash hit $4,000+. Today bitcoin sits around $6,500. Bitcoin cash is $1,000. Bitcoin cash has outperformed. Likewise for Litecoin and Etherium. Litecoin went up 1400% in 2017 and Etherium over 2000%. In 2017, compared to Bitcoins 1000% in 2017.
Bitcoin cash and the smaller cryptos are more volatile and the downside risk is greater, but the upside potential is far greater. I would only ever put 20% of total investment capital in crypto currency.
To be wise one should only put a small portion of one`s investment capital into crypto. The bulk of one’s capital should be in good old stocks and bonds and off course cash. But the massive gains possible in the crypto space are too good to ignore.
Personally I want to deploy my capital across the spectrum of crypto currencies. About half of my crypto capital in the giants of the crypto currency space. E.g. Bitcoin, Litecoin, Etherium and Bitcoin cash etc.