On August 1st, 2017, Bitcoin Cash (BCH) was born as a result of a fork in the ledger of the digital currency, ending (for now) the long debate over the scaling of Bitcoin’s block size. Bitcoin Cash is the newest “altcoin” on the block (pun intended) of cryptos and can be considered an offshoot of Bitcoin since it’s supported by a smaller community. Bitcoin cash has been marketed as the digital currency alternative to bitcoin and the answer for bitcoin’s current scaling issues. Despite a lack of support during its early days, with its price remaining below that of $1,000, recent weeks has seen it reach new all-time highs. Since last week (BCH) has risen from $1200 to $1,750 and is trading at $1,675, according to CoinMarketCap.
But why is this happening and will it continue to rise?
A look at the exchange data indicates that the rally is being fuelled by Korean desks. Trading volumes in BCH/KRW pair offered by Bithumb, one of the largest cryptocurrency exchanges in South Korea, have gone up by 42 percent in the last 24 hours and currently has the highest volume at $1,296,300,000 ranking as number one market according to CoinMarketCap.This may be due to the fact that the Financial Supervisory Service (FSS) Governor Choe Heung-sik said Thursday that the watchdog is not considering digital tokens, such as Bitcoin, as legitimate currency and thus has no plan to supervise transactions of the cryptocurrency. Choe, as head of FSS, told reporters that the government believes that digital tokens do not function as a payment tool and remain as subjects of speculation. Hence, the FSS does not recognize cryptocurrency trading as financial products or service.
“Though we are monitoring the practice of cryptocurrency trading, we don’t have plans right now to directly supervise exchanges. Supervision will come only after the legal recognition of digital tokens as a legitimate currency.” – Choe Heung-sik
However, this may explain the recent rise in price, but what about the long run?
Bitcoin’s high prices may have drawn users like a moth to a flame but many are likely not tech savvy. There is a high degree of confusion among these users and a lot of them can’t probably tell the two Bitcoins apart from each other. More users may be creating more confusion, but nevertheless, this helps the long-term adoption. Тherefore a rise in price, in the long run, can be expected according to Metcalfe’s law. As stated by Tom Lee, the co-founder of FundStrat “If you build a very simple model valuing bitcoin as the square function number of users times the average transaction value, 94% of the bitcoin movement over the past four years is explained by that equation.”
Adding to the confusion there’s the joint effort from two of the community’s biggest news sites, Bitcoin.com and CoinGeek.com to promote Bitcoin cash (BCH) as The Real Bitcoin, and the “old” Bitcoin as “The Segwit Chain”.The Calvin Ayre Media Group (which includes CoinGeek.com) intends to work with Roger Ver and his Bitcoin.com group to educate the world on why the Bitcoin public blockchain (BCH) is the only one that can do it all. The position that Bitcoin Cash is Bitcoin is based on its adherence to the design goals and intended purpose that Bitcoin was created to fulfill. An argument can be made that a rise in the price of BCH in the long run can be influenced by the fact that one of the oldest and the first nationally licensed Bitcoin exchanges Bitstamp (a designation that applied across all 28 European Union countries), announced it will launch trading of Bitcoin Cash, a new currency that many Bitcoin supporters view as a rival.
Bitstamp CEO Nejc Kodric compared the battle between the two sides to the cola wars. “Coca-Cola invented the sweet, dark, bubbly drink, then Pepsi copied everything 90-95% from Coca-Cola, and they marketed the recipe with bigger bottles — actually, similar to Bitcoin and Bitcoin Cash at the moment — and they did an aggressive marketing campaign to promote Pepsi, and a bunch of people went to the Pepsi camp and said it was a better drink. Maybe a similar thing is happening here. We’ll have two cryptocurrencies similar to the technology having vocal, strong and sometimes aggressive supporters. We’re in the business of allowing users to trade whatever they want. We’re not taking any side.”