The Long-Term Bullish Case for Bitcoin Cash (BCH)

A few years ago, some members of the original Bitcoin community were frustrated by the leading cryptocurrency’s scalability issues. These members wanted to increase the block size from 1 MB to 8MB in order to facilitate faster transactions. After a long dispute, this section of the Bitcoin community decided to create their own cryptocurrency. Thus, on August 1, 2017, Bitcoin Cash (BCH) was born.

Bitcoin Cash aims to bring sound money to the world by fulfilling Satoshi Nakamoto’s vision of a peer-to-peer electronic cash. To achieve this goal, BCH must offer a reliable decentralized infrastructure that provides cost-effective and instantaneous transactions. More importantly, Bitcoin Cash should be highly fungible. In other words, coins must have the same value regardless of their transaction history.

Two years into the project and the Bitcoin fork appears to be fulfilling its goals. This is our long-term bullish cash for Bitcoin Cash.

Bitcoin Cash Aims to Outpace All Cryptocurrencies with Extremely High Throughput

Bitcoin Cash is competing against several cryptocurrencies in the instant payment solutions space. Its top competitors are Ripple (XRP/USD) and Litecoin (LTC/USD). Between the two, Ripple appears to be the stronger competitor. The Standard can handle 1,500 transactions per second (TPS) and guarantees that payments are settled in four seconds.

XRP scalability
XRP’s scalability is one of its most impressive properties | Source: Ripple

Fortunately, Ripple is positioning itself as a cross-border payment solution for banks and financial institutions. Hence, it is not a direct competitor of Bitcoin Cash.

Thus, Litecoin (LTC/USD) appears to be the biggest threat to Bitcoin Cash. Its founder, Charlie Lee, considers Litecoin as the silver to Bitcoin’s gold because its primary goal is to serve as a reliable payment solution for the average Joe. To achieve this purpose, the Litecoin network can handle 56 TPS with an average speed of 30 minutes to settle payments.

These numbers pale in comparison to Bitcoin Cash’s performance.

The fourth-largest cryptocurrency in terms of market capitalization can process over 100 (TPS) with a plan to supercharge that number into a whopping 5,000,000 TPS. On top of that, transactions can be settled in as little as three seconds.

Bitcoin Cash roadmap
The roadmap to get to Mankind Scale of 50 transactions per day for 10 billion people | Source: BitcoinCash

So far, BCH appears to be on the right track. A recent stress test reveals that the network can process up to 3,000 TPS.

Therefore, the BCH network has the infrastructure and a solid plan in place to scale for mass adoption. It’s goal of 5,000,000 TPS will outperform any payment solution that is currently in existence.

Average Transaction Fees Are Lowest in the Payment Solutions Arena

In addition to Bitcoin Cash’s impressive scalability, the cryptocurrency plans to attract users by charging ultra-low fees. Looking at the transaction fees of other cryptocurrencies positioning as electronic cash, BCH is far cheaper than its competitors.

The average transaction fee for Bitcoin (BTC/USD) stands at $1.004. For Litecoin, it is $0.038. Dash (DASH/USD) comes second at $0.0097. Bitcoin Cash charges the lowest fee among the group at $0.0028.

Low transaction fees
Bitcoin Cash offers the lowest transaction fees | Source: BitInfoCharts

With a strong plan to scale on top of affordable transaction fees, the case for Bitcoin Cash as a viable alternative to cash is becoming stronger. The cryptocurrency becomes even more attractive with the development of its privacy features.

Bitcoin Cash Increases Fungibility with the Development of CashShuffle

Fungibility is an essential quality of sound money. A coin is considered fungible if its units hold the same value regardless of their transaction history.
For instance, Bitcoin and Litecoin are not fungible. An in-depth chain analysis can reveal the transaction history of these two cryptocurrencies. If a third-party entity discovers that some coins were used by unscrupulous individuals for illegal activity, such as the purchase of illicit firearms, these coins may be blacklisted by the government and their value might suffer as a result.

Bitcoin Cash has an edge with other coins because it now has privacy capabilities in CashShuffle. The mixing program obscures transactions and makes it difficult for other entities to track a coin’s transaction history. This increases Bitcoin Cash’s overall fungibility.

Bitcoin Cash users were pleased with the development of this new feature. So much so that the use of the mixing program has grown significantly since April of this year.

CashShuffle
Use of CashShuffle has grown significantly week after week | Source: CashShuffleStats

Bottom Line

Bitcoin Cash is in a strong position to lead all cryptocurrencies in the electronic cash department. It has a solid plan in place to exponentially outperform all payment solutions in existence. On top of that, the Bitcoin Cash charges the lowest transaction fees compared to Bitcoin, Litecoin, and Dash. Lastly, Bitcoin Cash has rolled out a new privacy functionality that increases its overall fungibility.

These three qualities make the first Bitcoin fork a strong candidate for widespread adoption. This is our long-term bullish case for Bitcoin Cash.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.