Bitcoin cash is a fork of Bitcoin initiated by a Chinese company Bitmain, founded by Jihan Wu. Bitmain is a tech company producing presently most popular mining hardware Antminer, it also owns two major mining pools; Antpool and BTC.com.
Why was it made?
It was made in as a way to avoid implementing software upgrade called SegWit (Segregated Witness), which significantly changed structure of Bitcoin blockchain. Another reason was the fact that Bitcoin needed a scaling solution and proponents of the Bitcoin Cash hard fork refused SegWit (which is partly a scaling solution). Instead, Bitcoin Cash hard fork removed the 1 MB block size limit, still present in Bitcoin. Here you can see the initial announcement of hard fork that led to Bitcoin Cash, before it was named that.
So which scaling solution is better, SegWit or big blocks?
The approaches are different. The proponents of SegWit think of upgrade not as the final scaling solution but as a foundation for implementing a number of other technologies that will provide more functionality to Bitcoin. Since SegWit solves the issue of transaction malleability it allows safe implementation of different solutions for different purposes, including Lightning Network which is designed to make micro transactions fast, cheap and safe.
Bitcoin Cash on the other hand puts less accent on future development as opposed to present functionality of network. It also works on principles that are more favorable to miners which would, at least in theory, provide a base for a network with good hash power support, and thus stable and safe.
What are the risks?
Both the regular Bitcoin and Bitcoin Cash could in theory be destabilized by Bitcoin hard fork proposed as a part of SegWit2x proposal. Problem for Bitcoin is that the proposal is not widely supported within the user and developer community but it (at least nominally) has strong miner support. At present moment 94.5 percent of miners signal support for SegWit2x (you can check the latest data here).
Why would SegWit2x cause problems for Bitcoin?
Apart from possible risk of losing significant amount of haspower and causing even more confusion over the name, there is a much bigger issue that hard fork is planned without replay protection and thus certain to expose both private and business users to replay attack. It is this inexplicable decision of a hard fork with no replay protection that caused some to consider SegWit2x as an attack on Bitcoin network instead of actual well-meaning proposal.
Why is it problem for Bitcoin Cash?
To understand the potential risk to Bitcoin Cash network you must understand that Bitcoin Cash is presently mined by a mining entity willing to give up significant profit only to keep the network stable (see the image below for more info). Before this benevolent mining patron stepped in, due to sharing algorithm with Bitcoin, Bitcoin Cash had serious problems in maintaining network stability, instead alternating between overmined periods and a standstill. Should the miners change their mind and decide to support a completely new SegWit2x network Bitcoin Cash could fall into a destructive spiral of mining issues.
Is it possible for Bitcoin Cash value to rise above the value of Bitcoin?
The only reasonably imaginable way for this to happen would be if Bitcoin network was seriously compromised in some way. But you should be aware that due to difference in mining difficulty Bitcoin Cash network is being mined faster and thus it is inflating faster than Bitcoin. At the time of writing there were already 15 and a half more Bitcoin Cash coins in circulation than the original Bitcoin and the difference is growing. Adding to the problem is the AsicBoost technology which tends to produce empty blocks and thus hurts the network productivity while speeding up the production of coins. Its use will be impossible on the original network once SegWit transactions replace all of the old transactions (it will probably take months for that to happen). However it will remain operational on Bitcoin Cash network.
Any tips for trading BCH?
Same entity (or entities) that keep protecting the network from mining troubles are very likely to protect the price of BCH at a certain level to keep it from collapsing. To establish the protected price levels search for strong support levels where strong trading volume jumps in while BCH is in free fall. Those should make smart entry points.
Links in text:
https://blog.bitmain.com/en/uahf-contingency-plan-uasf-bip148/
https://en.bitcoin.it/wiki/Transaction_Malleability
https://en.bitcoin.it/wiki/Lightning_Network
https://medium.com/@DCGco/bitcoin-scaling-agreement-at-consensus-2017-133521fe9a77
https://bitcoinmagazine.com/articles/no2x-breaking-bitcoin-shows-no-love-segwit2x-hard-fork-
https://medium.com/@LordAesop/segwit2x-the-real-bitcoin-killer-995688f8d4a0
https://bitcoinmagazine.com/articles/miners-are-leaving-money-table-mine-bitcoin-cash-could-explain-why/
https://bitcoinmagazine.com/articles/miners-are-milking-bcashs-difficulty-adjustments-and-why-problem1/
