Why Cryptocurrency Beginners Should Invest In Bitcoin Instead Of Bitcoin Cash

As the cryptocurrency markets take off both in value and in mainstream media coverage, new people (early adopters) have begun to consider purchasing cryptocurrencies, sometimes guided only by holiday dinner conversations with young relatives, chatter or advertisement on Twitter and Instagram, or the advice of news broadcasters that may or may not fully understand cryptocurrency themselves. But where there is money and an amateur consumer, there are also those looking to take advantage of naivety or inexperience, so new early adopters of cryptocurrency must be alert.

Bitcoin is the unit of digital currency that is specific to, and may be transmitted by, the Bitcoin blockchain network. Furthermore, Bitcoin acts to secure the Bitcoin blockchain by aligning the financial incentives of various actors in a transaction so that trust can be assumed without the validation of identity or reputation, and without permission for a transaction being given by a banking institution or other traditional gateway. Cryptographer Adam Back, the inventor of proof-of-work system hashcash and the co-founder of Blockstream, explained the interdependent relationship between Bitcoin and the Bitcoin blockchain saying, “Bitcoin is the tokenized representation of security in the blockchain, and the blockchain is a distributed data structure that provides security.”

Just because the Bitcoin blockchain and thus Bitcoin have been technically safe and secure historically, this does not mean that other blockchains and cryptocurrencies will exhibit the same long-term reliability, security, and resiliency against attacks. It’s critical to understand what you’re buying when you acquire a cryptocurrency, as well as what technology, team, and processes that cryptocurrency (i.e. your value) is secured by, just as you would when you select your traditional banking institution.

Notably, there are those who try to obfuscate exactly what a particular cryptocurrency “is” in order to sell it to you, and in this arena, you’ll be tasked to figure it out yourself. The rules that have applied in the traditional markets don’t apply here.

Consider this scenario: Your teenage son, daughter, friend, or family member is establishing their very first bank account. They’ve heard that you’ve long banked with Bank of America, and know that you’ve found your money in your account each time you’ve check your bank balance, and that when you’ve want to process a check or send a wire, you’ve been able to. This teenager has a positive brand association with Bank of America via your good experience, though they don’t deeply understand how retail banking works and are not entirely sure why they need or how they’ll use their bank once they have an account established.

For them, asking the right questions is a challenge. So, when this new user discovers Bank of America Cash — a competitor to Bank of America (BofA) that uses the exact same historical processes as BofA, but promotes half price wires — it’s an attractive proposition. Bank of America Cash (BofCash) has an entirely different team and management structure and has already begun implementing a different standard of practice. But without asking “the right” questions and pursuing a path of independent research, your teenager may never know of any of these differences or their consequence and could still choose to open an account with BofCash. By the way, why did this new bank choose the name Bank of America Cash? Could it be that they hoped to confuse new users?

In the traditional business environment, a trademark would prevent this form of apparent intentional brand confusion (BofA versus BofCash). In the cryptocurrency arena, however, trademark generally does not apply and is not used. New users and cryptocurrency buyers beware: You must do your own research before purchase.

The confusion described above faces people newly coming into the cryptocurrency arena. Nowhere has this confusion been more pronounced than with Bcash, a cryptocurrency claiming to be “the real Bitcoin” and lobbying to be called Bitcoin Cash. How can Bcash be argued to be “the real Bitcoin”? Because Bcash launched in August 2017 using the historical Bitcoin software and transaction history, and because a couple of very early Bitcoin adopters have claimed it to be true. More importantly though, for those considering to store value in Bcash (aka BCH, or Bitcoin Cash to its marketers and community members), the Bcash blockchain includes neither key Bitcoin technology upgrades, the large and distributed developer community of Bitcoin, nor the breadth of stakeholders that comprise the Bitcoin ecosystem (including a quantity of miners that participate to secure the network) — much of what constitutes the network security for Bitcoin.

In short, Bitcoin Cash is not Bitcoin regardless of how much it might wish to be, just as Bank of America Cash would not be “the real Bank of America” if a lack of trademark rules had ever allowed BofCash to exist and claim to be BofA to those just learning about consumer banking.

Bcash is just one of many cryptocurrencies that have launched with the claim of fixing problems in Bitcoin. As the use of the Bitcoin blockchain has grown, the network has started to run into scaling issues. This issue is defined by the existence of a greater number of Bitcoin transactions that need to use the Bitcoin blockchain than the blockchain can immediately accommodate, and this issue manifests itself to users via occasionally longer wait times for transaction confirmation and higher transaction fees. What Bitcoin scaling issues do not manifest is network downtime, security vulnerability or threats to the integrity of its core promises to users.

In other words, as Bitcoin gains popularity, it faces standard growing pains that will cause some users additional friction in transacting, but that does not expose any users to the threat of lost Bitcoin. The Bitcoin blockchain is demonstrated over the course of nearly 8 years to be secure. Moreover, scaling upgrades have been made and are continually in development. These upgrades have to date prioritized the security of the network and of users’ Bitcoin.

Bcash also addresses the issue of blockchain technology scaling, as many other new cryptocurrencies attempt to do. Bitcoin Cash (Bcash) focuses on scaling the Bcash blockchain by increasing the number of transactions that can be immediately and concurrently processed by the blockchain. This is meant to decrease average wait time for transaction confirmation and to lower transaction fees in a method referred to as on-chain scaling. However, experts in digital currency have described very serious security vulnerabilities inherent in Bcash’s method to scale; further, it may have the effect of centralizing control of the network.

Bitcoin, on the other hand, has chosen a path that will also ultimately allow for a much greater number of transactions to be immediately processed on the blockchain, but in a longer-term development process and with a focus on network security and continued decentralization of control. The August 2017 SegWit upgrade puts Bitcoin on a path of both on-chain and off-chain scaling. SegWit provides on-chain scaling by separating the base transaction data from the signature data, which reduces the data transmitted in a transaction and in doing so allows higher concurrent transaction volume on the Bitcoin blockchain. Additionally, SegWit will have a profound effect on the innovation that can take place in second layer protocols — those built on top of a blockchain. Both entrepreneurs and investors are looking ahead to these new opportunities, which include the opportunity for off-chain scaling.

For cryptocurrency users and those new to the arena especially, the technical security inherent in the blockchain is critical, and security most robustly exists and has been historically demonstrated in Bitcoin.




Also read: Bitcoin.com's CTO Emil Oldenburg Betrays Bitcoin: “I’ve Switched to Bitcoin Cash”