AT A GLANCE
- Bitcoin Cash is synonymous with fiat currencies because it processes several transactions daily.
- Bitcoin Cash continues to thrive on the performance of parent crypto Bitcoin in bullish days and bearish seasons.
Bitcoin Cash is five years old. But in that short time frame since its launch on 1st August 2017, a lot of changes have happened in the cryptocurrency space. Bitcoin Cash has established itself as one of the most active blockchain networks due to it being an improvement of Bitcoin’s, while its native asset, BCH, is now a top 30 digital asset in terms of market capitalization. In addition to this, BCH is one of the most traded crypto tokens with more than $5 billion in trading volume recorded in the last 24 hours up to the time of writing.
To mark its fourth birthday, Trading Education has examined six reasons why Bitcoin Cash has intrinsic value.
Since intrinsic value measures essential attributes of a currency and not the trading price of an asset, we are going to look at factors such as Speed/Scalability, Scarcity, Correlation to Bitcoin, Divisibility, Durability, and Transportability/Counterfeitability.
1. Speed and Scalability
It is widely known across the new financial technology (FinTech) space that the primary obstacle in the way of the mass adoption of blockchain technology is scalability. Since scalability is linked with processing speed, there have been several ideas on how this could be improved.
This ultimately led to the creation of Bitcoin Cash through the Bitcoin Improvement Proposal (BIP) 91 which attempted to address the limitations of Bitcoin in terms of the daily processing of millions of transactions.
For quicker transaction validation, the data size of blocks was increased. This saw Bitcoin Cash’s blockchain process more transactions within a short period.
As of 15th September 2021, the average time between blocks is 10 minutes 50 seconds.
This made Bitcoin Cash a major player when the medium of exchange (utility) of digital currencies came to the discussion table. How fast is Bitcoin cash in processing transactions? Bitcoin Cash processes approximately 116 transactions per second (TPS).
As a result, the cryptocurrency was involved in 145,199 transactions (8,409,098 BCH) worth $4,982,209,088 on 12th October 2021.
With one of the lowest transaction fees in the space, $0.0049, it is no surprise that BCH is used as a payment method by several online merchants.
Popular among these are non-profit organizations such as Heifer International Humanity Road, Save the Children and Khan Academy. You can also use BCH to pay for goods and services on PayPal’s Crypto Checkout. Others include the biggest meal delivery service in Germany LIFERANDO, Takeaway.com, and thousands of businesses such as Coinify, BitPay, and CoinPayments.
In advanced financial and economic studies, one of the major attributes used to measure the value of a digital currency is utility. When we consider the extensive mileage BCH continues to gain through its partnerships, we can conclude that it has provided a safer, faster, and cheaper way for millions of people to go about their daily financial transactions.
Such faith in Bitcoin Cash as a transactional currency plays a key role in the valuation of the digital currency.
Check Out: How To Make (or Lose) Money with Bitcoin Cash?
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
2. Scarcity
Bitcoin Cash, like its predecessor Bitcoin, was capped at 21,000,000 (21 million coins). At the time of writing, the circulating supply of BCH stands at 18,951,356.25. This means that 90% of BCHs have been mined with 10% of the tokens up for grabs.
In the short, medium, and long term, there wouldn’t be any additions to the current supply of BCH. This means that BCH will become scarce someday. But why is scarcity important in the valuation of Bitcoin Cash? Scarcity is one of the essential factors that influence the demand and supply of goods and commodities. The scarcity of Bitcoin Cash plays an important role in affecting its price. If BCH becomes scarce someday, the greater demand for the digital asset will surely see it command a relatively higher price than its currently trading for.
What’s more, because its supply is fixed, it will be extremely difficult for the value of BCH to plummet into extinction zones as other cryptocurrencies have done. This is because it may not hold any physical value, but it has the necessary metrics to serve as a basis that defines its overall market valuation.
This explains why millions of individual traders and investors continue to buy small amounts of Bitcoin Cash from cryptocurrency exchanges that list it. Other investors with large sums to spare are also throwing millions of dollars into the digital token.
A great example of this can be attributed to the largest digital assets management firm Grayscale creating a Trust for Bitcoin Cash. The Grayscale Bitcoin Cash Trust was created on 1st March 2018 and has $204,294,967 ($204 million) in assets under management.
Such individual interest and institutional investments with an eye on the long term means that Bitcoin Cash is also seen as a store of value.
Although BTC and BCH are capped at 21 million, Bitcoin’s circulating supply of 18,924,943 is 26,414 more than Bitcoin Cash. This means that the last BCH may be mined faster than BTC. If there is positive crypto market sentiment throughout 2022 and beyond, the real valuation of Bitcoin Cash could reach milestones unforeseen by market analysts and experts.
3. Correlation to Bitcoin
After appearing on cryptocurrency exchanges on 1st August 2017, Bitcoin Cash followed the bubble in cryptocurrencies towards the end of that year. Led by Bitcoin which crossed $20,000 for the first time in December, BCH reached an all-time high of $4,355.62 on 20th December 2017.
BCH followed BTC during the bearish season of 2018 where it shed more than 90% of its all-time high, regaining 19% of its value by the year’s end of 2019, and in the crypto boom of 2021 which has seen the digital coin reach a year high of $1,635.15.
Although Bitcoin Cash continues to follow BTC, it has started to find some form of independence when it comes to its trading patterns. In the early days of May, BTC dropped in price while BCH made huge gains for numerous traders and investors who were able to lock in gains at the right time.
With Bitcoin considered a haven and hedge against inflation, Bitcoin Cash could continuously benefit from the demand for Bitcoin and other altcoins and reach new price milestones in the process.
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4. Divisibility
For money to have intrinsic value, divisibility plays a great role.
Money must be divided into small units so that it can be used in the exchange of goods of varying values. Divisibility is the primary reason why precious metals such as nickel, copper, silver, and gold throughout history have been employed as money by several countries globally.
Like all cryptocurrencies, you do not necessarily have to purchase 1 BCH. Bitcoin Cash was forked out of Bitcoin. As a result, it can be divided into 8 decimal points. At the time of writing, BCH was trading at $356. Buying $100 worth of BCH resulted in 0.2808988.
If you don’t have money to purchase a full Bitcoin Cash token, you can still own a significant part of 1 coin. Aside from that, you can use the corresponding value of a piece of BCH in dollar terms to buy goods and services from various online stores that consider the coin as a payment method.
Without divisibility, the intrinsic value of all forms of money will be lost. So long as BCH plays an integral role in digital cash flow, it will continue to remain relevant in the financial metrics of the global economy.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
5. Transportability/Counterfeitability
One of the attributes that make money successful is its ability to be moved easily from one location to another when it’s needed to complete an exchange.
Bitcoin Cash (BCH) can be stored in numerous online wallets such as Skrill/PayPal and other supporting digital wallets such as Ledger Nano X Wallet, TREZOR Model T-Wallet, Ledger Nano S Wallet, Atomic Wallet, TREZOR One Wallet, KeepKey Wallet, Sugi Wallet, Coinbase Wallet, Jaxx Liberty Wallet, and Exodus Wallet.
Once you find yourself in a situation where you forgot about your card and do not have a fiat currency, you can use one of these methods to make payments for whatever item you ordered. In an instant, Bitcoin Cash will be transported from one wallet (you as a sender) to another wallet (client as a receiver) and the order will be completed.
In addition to this, Bitcoin Cash cannot be created by other parties. Counterfeit money has detrimental effects on society. Some of the effects are a reduction in the value of real money, an increase in prices of commodities due to an increment in the supply of money, and a decrease in the acceptability of that type of currency as money.
Bitcoin Cash is not like Dogecoin (DOGE) or Ether (ETH) which continues to see a small number of coins added to its total supply periodically. It has a fixed supply and no attempts have been made by individuals or organized hackers to add more coins to the maximum capped supply of 21 million BCH tokens.
Since Bitcoin Cash is protected by the proof-of-work algorithm (POW), it will be impossible for hackers to gain a 51% attack and compromise the network. Therefore, there is no fear of double spending or recreation of more BCHs that will see the coin lose value like what has happened to Dogecoin (DOGE) over the last four months (May, June, July, and August).
The attributes of transportability and BCHs ability to withstand counterfeits have been invaluable in its market capitalization over the last 4 years.
Read Also: Will Bitcoin Cash Make Me Rich in 10 Years?
6. Durability
Durability plays an essential role in the function of money as a store of value and medium of exchange. When millions of people are willing to accept a particular currency or item as payment for one good with an eye of using the same item or currency to trade at a later time for some other good, we can term it as durable.
Bitcoin Cash in its 5 years of existence has not been mired in the numerous hacking incidents involving some cryptocurrency exchanges and some popular coins such as Ether (ETH), Dogecoin (DOGE), and other privacy coins such as Monero (XMR) and Dash (DASH).
Moreover, Bitcoin Cash is not a physical currency so has an infinitesimal chance of being missing, torn, or destroyed. You store your BCHs on the wallets earlier mentioned under the transportability/counterfeitability attributes. Therefore, the only way you can lose your BCHs is not on the Bitcoin Cash blockchain but the wallet that holds your coins. Depending on a hacking incident that compromises your account or a loss of private keys on your path, you will always have access to your tokens in the short, medium, and long term.
As earlier mentioned, Bitcoin Cash plays an instrumental role in the day-to-day activities of millions of people. It also serves as a financial instrument for long-term investors.
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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
FAQs
What Is The Market Value Of Bitcoin Cash?
The market value of Bitcoin Cash at the time of writing is $6,760,647,495.
Bitcoin Cash continues to see huge investor interest with an average trading volume of $5 billion in January 2022. If the analysis and price forecasts by experts move from possibilities into certainties, the market value of Bitcoin Cash could reach the market values of Ethereum (ETH) in the short term and the zones of Bitcoin in the long term.
Is There Any Real Value In Bitcoin Cash?
Physical Bitcoin does exist but physical Bitcoin Cash tokens do not. Without a physical representation, there is a real value in Bitcoin Cash. Like fiat currency, the value lies in the faith (confidence) that the users have in the coin as a transactional currency as well as a store of value. This is the primary reason why it continues to be involved in thousands of transactions which results in millions of dollars as well as being traded on various cryptocurrency exchanges as a high-volume digital asset.
Also, BTC meets the basic characteristics of a successful currency (durability, counterfeitability, divisibility, scarcity, utility, and transportability).
Is It Worth Buying Bitcoin Cash?
You can buy Bitcoin Cash because it is highly undervalued. Its current valuation does not reflect the number of people who patronize the digital token or its possibilities in the market.
In the long term, it could trade for at least 2X, 5X, or 10 times its current valuation (less than $700). Whatever happens, you should factor in risks versus rewards before investing in Bitcoin Cash.
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