One year after the hard fork that created it, Bitcoin Cash is in some ways mimicking the digital currency it was spawned from. Bitcoin Cash’s price at $693 Monday morning has slid by about $1,000 in the past three months, according to CoinMarketCap.com. And it’s well under the $4,091 peak it achieved five days before Christmas. Likewise, Bitcoin’s price stood at $6,964 Monday morning, down by about $2,500 since early May. And it’s still struggling to come anywhere near the nosebleed peak near $20,000 it reached at mid-December.
That Bitcoin Cash is, within its own price band, following the fortunes of its parent isn’t surprising. Bitcoin Cash emerged on Aug. 1 last year as the result of a so-called hard fork in Bitcoin’s code that created an offshoot blockchain, or distributed ledger, to support the new coin. Bitcoin developers and miners, the entities that process Bitcoin transactions into the blocks that make up the digital currency’s blockchain, had wrestled for the previous two years over issues stemming from Bitcoin’s limited capacity, a problem brought on by the cryptocurrency’s transaction growth. Capacity restraints have slowed transaction confirmations and driven up fees for users. Bitcoin Cash, by contrast, is supported by blocks with eight times the capacity of Bitcoin’s chain.
But Bitcoin Cash wasted no time winning acceptance among traders. It quickly ranked fourth among all cryptocurrencies by market capitalization, or the total value of all coins in circulation. At just under $12 billion, it still holds that position, well ahead of fifth-ranked EOS, at $6.3 billion. Bitcoin, by way of comparison, easily commands the number-one slot at $119.7 billion.
Its greater processing capacity appears to be keeping transaction fees down. These fees, which users pay to get their trades entered in the blockchain, are currently well under a penny, judging by the median fee tracked by BitInfoCharts.com. At its highest, the median fee reached 14 cents back in January. By contrast, Bitcoin has struggled with wild swings in fees. Its median fee stands at 8 cents currently, but peaked at $31 just before Christmas. Volatility in both value and fees have discouraged merchants from accepting Bitcoin, and some merchants and processors that once accepted it have dropped it in recent months, notably the online processor Stripe. The prospects among merchants for the much younger Bitcoin Cash, by contrast, remain a work in progress.