Bitcoin vs. Bitcoin Cash: Can Both Survive?

You could be forgiven for thinking Bitcoin Cash was dead; the currency had slumped to about $600 before a sudden revival last week caused the price to soar to $2,600 while simultaneously knocking Bitcoin down a few notches.

As a brief recap, Bitcoin recorded a new all-time high of about $7,800 on Wednesday, November 8 followed by a downward trend, which saw Bitcoin fall by nearly 30 percent to under $5,630 by Sunday, November 12. The root of this was that the Bitcoin community couldn’t reach a consensus to proceed with the proposed SegWit2x hard fork. However, it didn’t take long for Bitcoin to return to its previous values and seek new highs.

The discussions of a hard fork finds its root in the one megabyte block size limit that the original developer of Bitcoin, Satoshi Nakamoto, set to make the digital currency more secure. Given the limit of only 21 million Bitcoins, Satoshi most likely didn’t envisage that Bitcoin will be as huge and valuable as it is today. That’s certainly understandable since nothing like it had ever existed.

However, now that the digital currency has become more popular than Satoshi probably envisaged, the currency is dealing with the modesty of its original design. Bitcoin’s lack of capacity has led to the growing amount of time it takes to process Bitcoin transactions. Those who would like to have their transactions confirmed in a timely manner have to pay relatively more transaction fee as an incentive for transaction validators (miners) to prioritize their transactions.

According to a website that tracks Bitcoin fees, the current “fastest and cheapest transaction fee is currently 770 satoshis/byte.” For reference, a comment on BitcoinTalk pointed out that the recommended fee (same as the fastest and cheapest fee) as of January 2017 was 120 satoshis. That’s over 500 percent increase in the recommended transaction fee since the beginning of the year.
This is contrary to the promise of speed and affordability that has been publicized as one of the advantages that Bitcoin offers over the traditional ways of conducting financial transactions.

The aim of the shelved SegWit2x hard fork was to solve these challenges by increasing the amount of transaction data that each block can handle to two megabytes. Once this fork was cancelled, some investors grew weary and pulled out of Bitcoin and moved into Bitcoin Cash, a digital currency that resulted from a Bitcoin hard fork in August.

Bitcoin Cash recorded an all-time high of over $2,500 when Bitcoin was falling on November 12. Considering that the scaling limitations inherent in the Bitcoin system still lie unfixed, coupled with the social buzz around Bitcoin Cash, investors are likely to be worried about what the future holds for Bitcoin. Here are some thoughts from industry experts.