Bitcoin Cash: Is this Altcoin Overvalued or Undervalued Compared to Bitcoin?
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Bitcoin Cash: Is this Altcoin Overvalued or Undervalued Compared to Bitcoin?

February 13, 2021      Godfrey

There are a few thousand cryptocurrencies out there besides Bitcoin (BTC), and only a few like Bitcoin Cash (BCH) can boast a very close relationship with the former coin. Every new cryptocurrency has its own uniqueness with a specific financial challenge it hoped to address. While many have offered custom made solutions to revolutionize banking and the financial ecosystem, only a few are attaining the right valuation they deserve.

There are a lot of factors that limit the valuation and broad acceptance of a particular digital currency project, and amongst them are competition from related projects. This is arguably the case between Bitcoin Cash and Bitcoin, with both coins continually being compared with each other.

Bitcoin Cash: A Chip from the Old Block

Bitcoin Cash is best tagged as a chip from Bitcoin, which in this case can be referred to as the old block. The history of Bitcoin Cash can be traced back to 2017 when the Bitcoin project and its community were divided in two over concerns about Bitcoin’s scalability. The result was a hard fork that created Bitcoin Cash, a new cryptocurrency considered by supporters to be the legitimate continuation of the Bitcoin project as peer-to-peer electronic cash. All Bitcoin holders at the time of the fork which corresponds to block number 478,558 also automatically became owners of Bitcoin Cash.

The evolution of Bitcoin Cash has fulfilled its purpose of introducing a higher level of scalability for transactions with block size upgraded to 8Mb as against the 1Mb for Bitcoin. Scalability, however, is not the only advantage the new Bitcoin Cash network has over Bitcoin, lower transaction fees are also associated with transactions conducted on the Bitcoin Cash network.

An observer with the Twitter handle @DavidShares recently noted:

“Bitcoin Cash (BCH) has the lowest fee price among the other popular coins right now. It can handle more transactions on-chain, securely, fast, reliably, and all for a cheaper cost per transaction.”

While there are more obscure altcoins that may challenge Bitcoin Cash to this feat, it arguably offers more utility amongst the top-ranked cryptocurrencies. A slight challenge to the Bitcoin Cash protocol is the issue with the larger block size associated, with the possibility for the security to be compromised more easily relative to the Bitcoin network.

Why then Does BCH Have a Low Valuation

The talk about valuation is relative in this regard, while Bitcoin Cash is currently ranked as the 11th largest cryptocurrency by market capitalization, it has enjoyed a relatively higher rank in times past. The cryptocurrency ecosystem is evolving, and new projects are being introduced on a daily basis. When such new projects show a great promise per the value offerings, it is bound to garner investor’s sentiment, which can pump high their valuation.

The determinant of the price of an asset today goes beyond just the technical capabilities, with decentralized finance taking the center stage today, hardly any cryptocurrency besides Bitcoin will be accorded much relevance if it does not offer a certain level of direct solution to the woes of the current global financial ecosystem.

As Bitcoin Cash was hard forked from Bitcoin, a new variant of the Bitcoin cryptocurrency dubbed Bitcoin S.V. (SV is the acronym for Satoshi Vision) has also been hard-forked from Bitcoin Cash. Bitcoin SV has less prominence compared to Bitcoin Cash, a similar fate compared to what the former is facing with Bitcoin today.

The valuation of Bitcoin Cash is lower in relation to Bitcoin, while this may be tagged unfair to the altcoin, Bitcoin has garnered for itself an unbeatable reputation as the first digital currency to be created.

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Godfrey is passionate about Blockchain technology and is both an active researcher and writer in the space. He has written for several Blockchain and crypto news site and relishes educating the public about the emerging tech. Besides being a diligent daily News writer, Godfrey has expertise in and covers contents related to technical analysis, Central Bank Digital Currencies (CBDCs), DeFi and opinion pieces. He believes that with constant awareness, everyone will be exposed to the potentials inherent in Blockchain and it's associated innovations.