Bitcoin Cash was one of the marvels of the Bitcoin bubble. It is a fork from Bitcoin. A fork of a cryptocurrency takes place when someone, anyone declares that a blockchain is coining to be transferred to a new set of rules and network infrastructure. The blockchain,is a public ownerless database information, mostly transaction data and anyone can get a copy of it and load it into their own system. The new system which is likely a hacked about about version of the original code running the established crypto is the new Fork, it could be called Clem coin, Bitcoin dung, Utrillium (actually noty a bad name for a new coin or whatever. The fork then takes on a life of its own.
Bitcoin Cash was a fork brought into existence to scale Bitcoin-style transaction by having bigger blocks. These bigger blocks can contain more transactions and therefore allow a lot more business to flow through the system. Bitcoin’s system can get congestion and fees can skyrocket and the time it takes for coins to go from one person to another can rise steeply. The Bitcoin cash fork was to create a new crypto-coin mostly like Bitcoin that would suffer from this.
As a factor of the immaturity of the Cryptocurrency industry nothing happens without an uproar and the launch of Bitcoin Cash was no exception what happened next however was at the time unique.
As a fork of this kind takes another coins existing blockchain, all the owners of coin in the old chain get the same coin in the new coin. That meant that Bitcoin owners automatically go coins in Bitcoin Cash. Most imagined this would be the same as a spin-off of a company. Companies spin out new listed companies all the time.
So image a stock, one that has a bank and an insurance company as its businesses. The company decides to fork itself into two companies. Shareholders will get new share in a new company that has the Bank injected in it and will keep the share in the old one. The share price falls in the old company as much as the new share trades at. That way no or little money is magicked out of thin air from the get go.
We may have learntby nowthis is not how Cryto works. When the fork came out Bitcoin did not fall and Bitcoin Cash went through the roof rising from the low hundreds to shoot quickly over $1000. It was free money for Bitcoin holders who could get their hands on their Bitcoin Cash by navigating the technical issues which were mighty. I sold mine on day 1 in the $800s marvelling at the windfall and the reverse logic of Blockchain.
You can makeall sorts of argument for why this money from nowhere event occurred but the simplest is, it took place in one of the biggest market bull runs in recent history, the Bitcoin bubble. We could drill down into that but who needs an autopsy.
Now Bitcoin Cash has forked itself with two opposing parties throwing millions of dollars to try to establish their masterplan for Bitcoin Cash as the future or at least main future of that blockchain.
It is very colourfully reminiscent of tech in the 1980s where upstart company CEO’s couldn’t resist insulting each other on their way to bankruptcy or zillionaire status.
This though isa distraction. How do wemake money fromjthis is abear market for Cypto, the so called ‘Crypto Winter.’
First and foremost you need to decide if Bitcoin etc is going to $0 or $Hero.
If you don’t know don’t play.
Personally I’m sold on Blockchain and virtual currencies opening a new chapter for global economics, so Im just plotting my course to try an optimise my upside while minimising my downside.
If you want evidence as to why blockchain is not a flash in the pan, consider the incredible mainstream interest in Bitcoin and its ilk in comparison to your average $200 billion stock. US stocks, at least for now, have a $25 trillion market cap yet Bitcoin trumps both Nasdaq and NYSE on Google search. This audience is what makes markets and Crypto is a monster.
So what to do with Bitcoin Cash?
In a nutshell wait for the dust to clear then buy some coins in the main winning fork. Its likely to be Bitcoin CashABC but the other fork Bitcoin CashSV could win out but don’t bother caring. Let the dust settle and when everyone’s forgotten about the mess grab some.
Its not a clever strategy, but it should turn out smart. Crypto is a primitive market strewn with the most massive inefficiencies. As such you don’t need to deal in market nuances in the same was as you must in stocks.
Crypto is in a bear market, Bitcoin Cash forks fighting for dominance will hurt Bitcoin Cashes value. Once these two are out of the way the coin will flourish and that will mean a price rise.
The thing to remember is markets crash in W’s. So buy the last leg, not the first crash down or the dead cat bounce, but the aftermath when everyone is crying over their losses.
When you read the headline Bitcoin Cash is dead, and the more mainstream the media headline the better, wait a few days, then start to buy. The same will go for Bitcoin too.
…but let it settle, markets take much longer to recover than fall.