It’s a funny thing, and something I’m often asked about: how come I have no Bitcoin Cash in my portfolio? After all, being such a proponent of Bitcoin, blockchain and cryptocurrency itself, why would I not hold any of the fourth largest coin by market capitalization? On the face of it, it doesn’t seem to make sense. That coin has decent community support (smaller than most, but very passionate and vocal), solves (or, more precisely, reduces) a host of technical and scaling problems present in the original Bitcoin (also referred to now as ‘Bitcoin Core’ usually by the ‘Bitcoin Cash’ contingent) and is poised to be one of the big players going forward, assuming they will deal with the current relative low adoption level. In point of fact, it’s the only one of the top ten I don’t own, excluding Tether which I don’t count for many reasons. It is, genuinely, a good coin, as much as I am loathe to admit it.
It was a coin that was forked from the original Bitcoin blockchain, so it has pedigree, and it was engineered to increase block sizes and transaction times as a result. Well, so was Litecoin, and that’s a coin I am a big fan of. That makes even less sense.
Most people, to one extent or another, agree that Bitcoin will almost certainly stay around. For a good while anyway. It is the gateway to cryptos for now and most likely the near future, and every day that goes past where that is the case, it becomes more and more deeply entrenched in the crypto eco-system as ‘the reserve currency’ or ‘the central currency’ or ‘insert your preferred name here currency’. Experienced traders measure in Satoshi, not dollars, and all currencies are exchangeable for it, but not necessarily the other way round.
But I do think it won’t be a day-to-day currency. It’s still too slow and too expensive by the standards of other, newer currencies and my views on this haven’t really changed since I wrote about this in one of my very early articles.
In my mind, it’ll be used as semi liquid form of savings account, part speculative, part investment and part hedging. We’d used it to buy a house or car, but we wouldn’t use it to buy a coffee on the way to work. For that, I see Litecoin do the job. Faster, cheaper and – arguably – more likely in the end due to Charlie Lee’s relentless (but not there yet) efforts to get it integrated and adopted everywhere. And because it’s based on the same system, both coins will use the near mythical Lightning Network assuming it ever works as well as we hope. And we could even switch to Monero (my favourite of the privacy coins) if we wanted to buy something without leaving a trace, instantly and easily, although the options for Monero wallets are currently, well, rubbish.
That covers the basics, doesn’t it? What else do we need cryptocurrencies for? Why would we need dozens of privacy coins or hundreds of specialist currencies in the long run? The answer is, we wouldn’t. Much easier to have just a few that are widely adopted and let the rest cease to exist, except in very specialist cases and for reasons we may not even know yet, assuming there is a simple and cheap transfer process. Of course I’m not talking about tokens that CAN be used as medium of exchanging value but are primarily designed to serve another purpose, this is pure payment coins only.
So what’s the deal with Bitcoin Cash?
Well, try this on for size.
Let’s fast forward a few years. Cryptos are now accepted globally and ubiquitously. You walk into McDonalds and ask for a Fillet o’ Fish meal which comes to £11 (it’s the future, right?) You’ve already had to deal with the ‘Would you like to go large with that?’ question and now you’re faced with the ‘How would you like to pay?’ question.
“Bitcoin” you reply, dreading the next part ….
“Bitcoin Core or Bitcoin Cash?” says the assistant (assuming everything still isn’t entirely automated at this point)
Your brain is screaming “THERE IS NO SUCH THING AS BITCOIN CORE, IT’S BITCOIN OR BITCOIN CASH, FOR THE LOVE OF GOD STOP SAYING BITCOIN CORE” but outwardly, you gently indicate that you’d like to use Bitcoin today. Just Bitcoin.
And there’s the problem. If Bitcoin Cash becomes the ‘go to’ payment for day to day payments and Bitcoin, as seems quite likely, is used how I described above, we’re going to spend the rest of our lives saying ‘Bitcoin?’, ‘Bitcoin Cash?’, ‘No, I said just BITCOIN’ at every transaction. And then we’ll select the wrong ‘Bitcoin’ vs ‘Bitcoin Cash’ wallet on payment, not realizing until afterwards.
Much easier to say ‘Litecoin’ isn’t it? Kudos to you Charlie, you got it bang on and I wouldn’t be surprised if you saw that coming.
For reasons, therefore, of preserving my own sanity and that of the rest of the planet, I can’t support it, even though there’s really nothing wrong with it a medium of exchange. It’s a bit like creating a delicious new type of burger and calling it a ‘Strawberry Smoothie’ because smoothies are the big thing right now, even though that will lead to never ending confusion. It just doesn’t help.
So, dear reader, I implore you to take yourself back to that futuristic McDonalds and do the same. You’ll thank me one day. And then you can buy me a proper strawberry smoothie.