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Could Bitcoin Cash be insurance against Bitcoin?

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Written by   292
6 months ago

If we observe the price of Bitcoin Cash against Bitcoin, you'll realize the price has been going down for a while and that against BTC, BCH has not held its ground, which is also what Bitcoiners call a failure. For Bitcoinners, the fact that BCH has lost over the price is what they say is the market taking its decision for them. BCH needs to take over this. That doesn't mean the battle is over. It only means that the battleground has shifted.

If you have used Bitcoin Cash in the past, you would have noticed that the transaction cost is very cheap, at least in USD terms. In satoshi terms, not so much.

A regular transaction could cost around 200 satoshis, which is just a fraction of a penny in dollars. If Bitcoin Cash were to be as valuable as Bitcoin, the costs would be as expensive as Bitcoin's transaction fees. It would even be much more costly because BTC uses Segregated Witness to save on the space or the weight transaction have in kilobytes. But at least with BCH, we could say what developers will make a sub-satoshis adjustment.

What if even being a cheap peer-to-peer currency is not enough for Bitcoin Cash to take over Bitcoin? At that point, I will say that Bitcoin Cash will be in the same position Ethereum Classic is, where those holding ETH Classic are holding that token in the hopes that they can take over if ETH fails. The exact position will be for Bitcoin Cash. Bitcoin Cash could become that insurance in case Bitcoin goes terrible and the network fails, and not other reasons. Those buying today hoping that Bitcoin will die as a currency will see their investment prosper if that condition is met.

And this is what I called Bitcoin Cash insurance against Bitcoin because that insurance will only serve once Bitcoin fails. Now the question will be how likely that could be.

Yes, Bitcoin is relying on Lightning Network for peer-to-peer transactions so that it can become the currency that the white paper describes. Users can choose between custodian services and self-custody applications like Nayuta Core and Zap Wallet mobile. And I must admit that running your non-routing node and the self-custodian channel has become much more accessible. Now you can find services that open liquidity to you for a fee. Yet, Lightning Network has one major flaw if on-chain costs go up too much, many small channels will become unusable because the liquidity inside the LN channels is not enough to pay the closing channel fee.

So Bitcoin Cash could become the insurance that you may need once transaction fees go up above and beyond people's expectations. Many think that if ETH 2.0 fails, ETH classic could have a real chance of making it. The same situation is for Bitcoin Cash. If transaction cost becomes an issue, BCH will be ready to take BTC's place as the number one currency.

Don't let anyone fool you. Bitcoin Cash has a chance to make it to first place because not even one billion people use Bitcoin today.

Once more and more users start flocking to cryptocurrency, they may find out that BTC doesn't cover their needs and that Lightning Network is not something that may work for them. Especially if opening and closing channels become a real pain, I mean having to open channels with at least $10000 liquidity and some $2000 transaction fees. People will start to make the change and realize things once transaction costs go beyond $50, which is when your insurance will pay off.

Those that hold Bitcoin today should keep the same amount in BCH just in case they need a switch network because fees become a problem. Those that hold BCH have insurance against the crippling of the Bitcoin network by Blockstream and the 1Mb government agents and sympathizers.

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Written by   292
6 months ago
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Currently many people are mining this BTCs but don't know about the future. Many say this is going to be the second Bitcoin. I want to know your opinion.

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