Entrances and Exits: The long case for Bitcoin Cash

Traders love sentiment, especially the negative kind. And boy is sentiment negative on Bitcoin Cash (BCH or BCC depending on the exchange), the grassroots offshoot of Bitcoin that forked a few days ago on August 1. On that day those 'lucky' BTC holders found themselves with an identical balance of BCH.

In the initial euphoria where 1 BTC - a Bitcoin from the core chain - could buy you a shade over 2 BCH. Now I write this you can now get 16 and change, a precipitous 80%+ fall. Of course plenty of people are calling game over as we start the first play.

Here's the narrative I'm hearing: BCH supply was artificially limited due to lack of support for the the new coin on most wallets and exchanges. So all those who would dump their 'free' BCH for even more BTC were artificially restrained. As more folks have found ways to free up their BCH the price has tanked on heavy volume as BTC has broken through $3000 to all time highs.

But - so the narrative continues - most BCH are still stuck in limbo itching for an exit. As each hardware wallet, software wallet, bitcoin exchange and custodial service patches a fix to free them, BCH are going to be dumped to oblivion.

Well, I'm a buyer of BCH at these prices, so bear with me while I talk my book a bit.

Stop Hating, Start Participating

[Twinkle, Twinkle] (

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First I am not a segwit hater (sorry friends on r/btc) and I'm comfortably long BTC for the long haul (until the facts change). I trust the core developers to be smart and believe in what they're doing for the whole ecosystem. I've met some of them and I like them.

Second I'm not calling a bottom in BCH. I don't do that (even if I sometimes think it).

It's the Ecosystem, Stupid!

Here's the crux. What makes bitcoin so valuable compared to the myriad altcoins is the ecosystem. Here's my favorite infographic. That was two years ago . The ecosystem is so much richer now.

BCH will inherit so much of this from BTC, and that is what will give it immense value over the altcoins.

Let's get specific.

Exits are also entrances

Many altcoins have to get by with a single software wallet, one or two exchanges. Few get support from hardware wallets and custodial services like Xapo. While many pundits see each supported platform as a further opportunity to dump BCH for BTC, what you've got is an enviable array of places to buy / sell / keep your Bitcoin Cash.

These products and services have to support BCH or fail their BTC customers who can't access all their assets. It would be genius if it wasn't just an accident of how forks work.

Mining power galore

Look how BTC hash rates are trouncing BCH by two orders of magnitude. Then look how BCH is similarly trouncing every other coin. Even at 1% of BTC hashrate there's plenty of security in 140 petahashes per second (picking the low) and look how it suddenly jumped up 3x to 500 petahashes per second in just a day (Aug 5 to Aug 6).

All that hyperoptimized BTC ASIC mining hardware is a switch flip from being used to mine BCH. True, it's a bit of a double edged sword. It could make a 50% attack easier too from a rogue mining pool, but these are pros. I'll bet that none of them want to ruin their reputation by being that guy.

The kitchen sink

If you're a merchant who accepts Bitcoin Core, how hard would it be to accept Bitcoin Cash? Not very. Blocks look the same (more or less). You've got the wallet support. Plus many, if not most, of your BTC customers will have some BCH.

The same goes for any other integration. Sites and tools that do block analysis, or trading tools, or cold storage protocols - you change a line here, an ip there and blammo - done! Maybe the business value is not huge yet, but the cost just isn't that high. And as some offer support, others will be dragged along into it.

Branding and Distribution

BCH is already a mainstream media concern. The average Joe Random has heard of Bitcoin. If they've heard of a second cryptocurrency it's as likely to be Bitcoin Cash than Etherium, Litecoin, or anything else. I mean it's got 'Bitcoin' in the name.

Then back to the distribution. Every BTC holder is a player in BCH whether they love it, hate it, or whatever. I guess they can ignore it but at some point they'll have to notice some money on the table.

Free Insurance

So ecosystem for me is the biggie. But there's another reason to love BCH. For all the good intentions and smarts of the core developers, they may screw it up. Look what happened with [The DAO] (http://bit.ly/2hBQjKq). All sorts of things could not go as planned with Segwit or Lighting Networks.

Bitcoin Cash has the same 8 years of hardening in use that BTC has, and is more conservative. Again, this is not a political statement, it's just an object truth (that you might contest).

Summary

So in short, I like the odds of BCH surviving and thriving on the back of a BTC, which itself will most likely also thrive.

There is plenty of talent, hashing power, and fiat currencies burning holes in portfolio managers' pockets to serve them both. There is beyond plenty of passion on both sides to make their coin succeed. I hope that as a community we're tired of the long civil war and ready to focus on building and improving this amazing technology.

And if you disagree, well, maybe I just bought your Bitcoin Cash.