Bitcoin Cash: A Risky Investment Move?

Bitcoin Cash (BCH) is a cryptocurrency that was created in 2017 from a fork in the original Bitcoin blockchain. It is a unique variation that is separate from the world's first and most famous cryptocurrency. Bitcoin Cash is decentralised and not backed by a bank or government, processed, validated and logged on a blockchain, and finite, with only 21 million ever to be made.

Bitcoin Cash has a market cap of $6,981,630,881 and a 24-hour trading volume of $5,059,502,787, making it one of the top 30 traded cryptocurrencies. It offers the potential for high profits, but also comes with high risks, big bubbles and crazy price swings.

Whether Bitcoin Cash is a good investment depends on your risk tolerance and financial goals. It is a volatile asset, so you must be able to withstand the pressure of investing in it.

Bitcoin Cash's extreme volatility

Bitcoin Cash (BCH) is a cryptocurrency that was created in 2017 from a "fork" in the original Bitcoin blockchain. It is a unique variation that is separate from the world's first and most famous cryptocurrency, Bitcoin (BTC). BCH is decentralised and not backed by a bank or government, processed, validated and logged on a blockchain, and finite, with only 21 million to ever be made.

Bitcoin Cash has experienced extreme volatility. In 2017-18, it went from over $1,000 to under $100 and back again in about a year. In 2020, it was trading under $300 at Christmas, above $700 a month later, and then around $480 in March 2021. In 2022, it fell to $262.50 in January, rebounded to $389.41 in March, and then fell to $160.07 in May amid the Terra Luna crash.

The price of BCH is influenced by various factors, including interest from cryptocurrency investors and sentiment across broader markets. Its extreme volatility is also due to its nature as a hard fork of Bitcoin, with a higher maximum block size. BCH has a block size of 32MB, in comparison to BTC's 1MB, which enables it to process far more transactions per second while keeping fees low.

The high risks, big bubbles, and crazy price swings associated with Bitcoin are also present with Bitcoin Cash. As with any investment in cryptocurrencies, BCH is a risky and volatile asset.

Its complex and ever-evolving technology

Bitcoin Cash (BCH) is a cryptocurrency that was created in 2017 as a hard fork of Bitcoin. It was designed to improve the scalability of Bitcoin and facilitate everyday transactions and investing.

Bitcoin Cash has a larger block size than Bitcoin, which is currently 32MB compared to Bitcoin's 1MB. This allows Bitcoin Cash to process more transactions per second, with faster transaction speeds and lower fees. The larger block size also makes it more scalable and reduces its environmental impact.

The Bitcoin Cash network is decentralised and spread among a vast number of users to keep it secure. It also has smart contract capabilities, oracle services, and a growing DeFi community.

The technology behind Bitcoin Cash is complex and ever-evolving. The Bitcoin Cash community is made up of multiple independent teams of developers, ensuring decentralisation and resistance to political and social attacks on protocol development. The future of Bitcoin Cash is secure, with ongoing research to allow massive future increases in block size.

While Bitcoin Cash shares many attributes with Bitcoin, it also has some functional differences. It is a transactional cryptocurrency, aiming to be easily used to transfer value from one person to another. It is not intended to be a store of value like Bitcoin.

The complexity and constant evolution of Bitcoin Cash's technology can be seen as both a positive and a negative. On the one hand, it ensures that the cryptocurrency remains secure and adaptable to changing needs and requirements. On the other hand, it can also make it challenging for investors to keep up with the latest developments and make informed investment decisions.

Overall, Bitcoin Cash has a strong technological foundation and a dedicated user base. However, its complex and ever-evolving nature means that investors should carefully consider their investment goals and conduct thorough research before deciding whether to invest in Bitcoin Cash.

Lack of institutional backing

Bitcoin Cash (BCH) is a cryptocurrency that was created in 2017 as a hard fork of Bitcoin. It has larger blocks than Bitcoin, allowing it to process more transactions per second at lower fees.

One of the main concerns about Bitcoin Cash as an investment is the lack of institutional backing. While some sources suggest that institutional investors are increasingly entering the crypto space and investing in Bitcoin, others claim that institutional investors are not investing in Bitcoin, and that "real money" has not bought a single Bitcoin yet.

JPMorgan data shows that investments in Grayscale's Bitcoin fund exploded by a record 18 times from $500 million to $6 billion in 2020. However, this does not necessarily indicate institutional investment, as there are no laws barring asset managers from buying Bitcoin directly. Instead, it may reflect speculative investing by disruptive technology and speculative funds.

The top funds holding Grayscale's Bitcoin Trust are mostly disruptive technology and speculative funds, in contrast to the top funds holding the world's largest gold ETF, which are mostly mutual funds and investment advisors. This suggests that institutional investment in Bitcoin may be driven more by speculation than by a long-term view of it as an alternative to gold or other traditional assets.

Furthermore, while Bitcoin Cash has some advantages over Bitcoin, such as faster transaction times and lower fees, it has not done as well as Bitcoin in terms of popularity. It also did not rise as meteorically as other altcoins during the bull market of early 2021 and was one of the few cryptos that didn't break its 2017 all-time high in the 2021 bull runs.

In conclusion, the lack of clear institutional backing for Bitcoin Cash may be a concern for potential investors, especially those looking for a more stable and long-term investment.

The risk of fraud and theft

Fraud and theft are serious issues in the world of cryptocurrencies. Bitcoin Cash is no exception to this. In fact, according to the Federal Trade Commission, between October 2020 and March 2021, there was a 12-fold increase in reports of crypto theft, with a combined value of more than $80 million.

There are many ways fraudsters and thieves can target you. Here are some of the most common scams to be aware of:

• Advance Fee Scam: Scammers will promise to multiply your Bitcoin Cash if you send them a smaller amount first. They will then disappear with your money.
• Romance or Social Media Scam: A scammer pretends to be romantically interested in you on a dating app or social media and gains your trust. They then encourage you to invest in Bitcoin Cash together, using a fraudulent platform. When you try to withdraw your money, you are told you need to pay various fees first.
• Tech Support Scam: You receive a message from someone posing as tech support for a crypto platform, telling you there is an issue with your account. They ask you to pay a fee to fix the problem.
• Phishing: You receive an email that appears to be from a crypto platform or wallet you use, asking you to log in to your account. The link takes you to a fake website designed to steal your login details.
• Imposter Scam: You are contacted by someone pretending to be a celebrity or well-known figure, who promises to multiply any Bitcoin Cash you send them. This was the case in the famous Twitter hack of 2020, where fake messages from the likes of Barack Obama and Joe Biden asked users to send Bitcoin, promising to send back double the amount.
• Pig Butchering Scam: This is when a scammer gains your trust by pretending to be a friend, potential romantic partner, or business associate. They then encourage you to invest in Bitcoin Cash together, using a fraudulent platform. When you try to withdraw your money, you are told you need to pay various fees first.
• Blackmail Scam: You receive messages from a scammer who claims to have embarrassing photos or videos of you, and threatens to make them public unless you pay them in Bitcoin Cash.
• Ransomware: A scammer hacks your computer and encrypts important files, demanding a ransom in Bitcoin Cash to restore access.

To protect yourself from fraud and theft when investing in Bitcoin Cash, always be wary of anyone contacting you out of the blue, and never give out your private keys or seed phrases. Be extremely cautious of anyone promising guaranteed returns or asking you to pay fees before you can withdraw money.

Its unregulated nature

Bitcoin Cash (BCH) is a cryptocurrency that was created in 2017 as a "hard fork" of Bitcoin. It is a decentralised payment system that allows users to make transactions without the need for a third-party intermediary. BCH has a larger block size than Bitcoin, allowing it to process more transactions per second. This makes Bitcoin Cash transactions faster and less expensive than Bitcoin.

One of the main appeals of Bitcoin Cash, and cryptocurrencies in general, is that they are unregulated. However, this unregulated nature can also be a disadvantage. Here are some reasons why the unregulated nature of Bitcoin Cash could be considered a bad investment:

No Central Authority

Bitcoin Cash, like other cryptocurrencies, exists in a deregulated marketplace with no centralised issuing authority. This means that there is no central body to regulate transactions, resolve disputes, or protect consumers. This lack of regulation can make it difficult to resolve issues that may arise, such as fraud or theft.

Volatility and Risk

The unregulated nature of Bitcoin Cash can contribute to its volatile price fluctuations. Without a central authority to stabilise the market or protect consumers, investors are exposed to higher levels of risk. As a result, investing in Bitcoin Cash can be highly speculative and risky.

Limited Adoption and Liquidity

The lack of regulation and the associated risks have led to limited adoption of Bitcoin Cash compared to other cryptocurrencies like Bitcoin. This has resulted in lower liquidity, reduced market support, and decreased overall utility. Bitcoin Cash has failed to gain significant traction and has relatively low trading volumes, making it a less attractive investment option.

Security Concerns

The decentralised nature of Bitcoin Cash can also lead to security concerns. The larger block size and faster transaction speed of BCH require less mining power to verify new blocks, making it more vulnerable to potential attacks. Additionally, the pseudo-anonymity of Bitcoin Cash transactions has led to its use in illicit activities, such as drug trafficking.

Regulatory Changes

While the unregulated nature of Bitcoin Cash may be appealing to some investors, it is important to note that the regulatory landscape for cryptocurrencies is constantly evolving. Governments and regulatory bodies are actively discussing and implementing policies related to cryptocurrency. These regulatory changes can have a significant impact on the value and usability of Bitcoin Cash, as seen in the case of China's crackdown on cryptocurrency businesses in 2019.

In conclusion, while the unregulated nature of Bitcoin Cash may provide some benefits in terms of decentralisation and transaction speed, it also comes with several drawbacks. These include increased volatility, limited adoption, security concerns, and the potential impact of future regulatory changes. Therefore, it is essential for investors to carefully consider the risks associated with the unregulated nature of Bitcoin Cash before making any investment decisions.

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