Survival of the fittest is what comes to mind when thinking of the future of Bitcoin price and Bitcoin cash price. Will Bitcoin Cash survive and for how long? Will Bitcoin be dethroned by Bitcoin Cash? Will miners seal the fate of Bitcoin or Bitcoin Cash? These are some of the questions investors and enthusiasts are asking nowadays.
Admittedly, it is still very early to make bold statements on price targets or if Bitcoin Cash will survive or for how long. Any assessment of the sort is more of an educated guess at best. That’s why this article will not focus on a price target for Bitcoin after the fork or for Bitcoin Cash after the fork. We will rather focus on what investors need to keep an eye to gauge and adjust quickly to future developments in the Bitcoin and Bitcoin Cash battle.
Factors impacting Bitcoin price and Bitcoin Cash price
When trying to understand what’s happening and forecast the future price of Bitcoin and Bitcoin Cash, many factors can be taken into consideration. This could easily lead to getting lost in the technical, ideological and financial details when in fact investors should focus on 2 important facets:
- Demand driven by intrinsic value
- Strength of both the code and coding community
Quick overview of the differences between Bitcoin and Bitcoin Cash
In previous articles, we wrote about the possibility of a fork happening as a Segwit outcome leading to the creation of Bitcoin cash, later on the fork happened and Bitcoin Cash became a reality. Shortly after, we covered the first days of Bitcoin Cash.
To keep it short, we will reference this concise infographic from Reddit. It sums up the differences between Bitcoin and Bitcoin Cash and provides a background to understand our rationale.
Now that the technical differences between Bitcoin and Bitcoin Cash have been covered, let’s see how these differences can impact the value for investors, miners and coders.
Demand driven by value
Intrinsic value has been the core of our forecasting methodology for forecasting Bitcoin price and forecasting Ethereum price at InvestingHaven. We will stick to our tested and true methodology this time as well to assess the possible outcomes of Bitcoin’s fork.
If you read online about the demand for Bitcoin cash or Bitcoin, it seems like miners and their profitability will be the factor to determine not only the value but the survival of Bitcoin or Bitcoin cash. While it is a very important aspect, it is definitely not the main factor. We believe demand from investors is the key factor. This is why.
Mining hash power follows profit. So the coin with the highest “reward” for mining gets the most miners. Obvious.
Now how does the mining reward mechanism function?
- Every ten minutes approximately, mining computers collect a few hundred new bitcoin transactions (a “block”) and encrypt them in the form of a hash.
- The first miner to “find” the block announces it to other miners on the network who will check the validity of the block.
- If enough miners grant their approval, the block is added to the public ledger and the miners move on to the next set of transactions on the blockchain.
- The initial miner gets 25 bitcoins as a “reward”, but only after another 99 blocks have been added to the ledger to encourage miners to keep validating transactions.
Therefore, profitability determines which coin miners will choose to mine, but to get rewarded, miners need blocks and blocks are found when there are enough transactions on the network. That explains why it took more than 10 days for the first Bitcoin cash block to be mined. Factor in the size difference (8MB for BTH versus 1MB for BTC) and you get an idea which miner will get to 99 blocks first.
So far, when comparing Bitcoin price and Bitcoin cash price, Bitcoin Cash got a boost following the mining of the first block which was the main reason behind the recent surge in price . When you dig deeper, it seems that it is difficult for this new currency to compete with Bitcoin. Although it was probably not the intent of the writer, this article from Coindesk makes it seem like Bitcoin cash is on “life support” through “emergency difficulty adjustment rule.”
So ultimately miners choice will be crucial but most important is the amount of transaction therefore the demand. Bitcoin so far has the lead. It is established as the “Gold” of Cryptocurrencies and has been legalized or currently being legalized by multiple governments. Bitcoin is also seeing the demand from more and more mainstream investors grow (Bitcoin Trust fund, options in different exchanges and soon to be offered in the state with backing from the SEC..).
Strength of the code and coding community
The other challenge facing Bitcoin Cash is how sustainable the current model of development can be? Bitcoin has a single centralized development Team whereas Bitcoin Cash has multiple independent development Teams as you can see from the infographic above.
In other words, Although both are open source projects, Bitcoin core has a single software repository/project and Bitcoin Cash depends on several software projects not centrally managed.
So although having no official development Team could be interpreted as a challenge today and for good reasons, we can’t base our prevision solely on the fact that Bitcoin has a dedicated Team. It all boils down to the vision behind each coin and how clear it is for the developers, miners and investors to see what Bitcoin or Bitcoin Cash’s future and value added is. If that vision is clear and gets properly executed be it by a single dedicated team or multiple developers driven by a shared goal, it will grant the coin the confidence of investors. So far Bitcoin seems to have the upper hand again.
In Crypto world, a successful investor needs to keep an open mind an an objective perspective. Who would have thought 2 or 3 years ago Bitcoin will be worth more than an ounce of Gold? Not many. That’s why hard data is what we need to base our conclusions on.
Transactions, difficulty adjustments to both Bitcoin and Bitcoin Cash and the vision/collaboration within the coding community of each coin are key to assess the future of Bitcoin price and Bitcoin cash price.
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