Which should you buy – bitcoin or bitcoin cash?

Bitcoin © Getty Images
High fees and slow transactions made bitcoin unsuitable as a means of exchange

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Today we consider the relative merits of bitcoin and its offshoot, bitcoin cash.

Within the crypto community, opinion is, to put it mildly, divided.

Should you own one ahead of the other? Both? Or neither?

You should definitely own a little bit of cryptocurrency

Let me start by answering one part of that question straight away. If you are an investor, you absolutely should own some cryptocurrency in your portfolio, even if only a small amount. The transformative potential of the technology is too great not to have some exposure to it.

If you haven’t already got some crypto, get some, even if it’s only a tenner’s worth (read my step by step instructions on how to do that here). Start small, as I always say, educate yourself, get used to the tech and, once you’re familiar, if you still think this thing has legs, increase your exposure.

It’s important you make the decision whether to increase your exposure yourself (not based on what somebody somewhere said) and that you make that call from an informed position.

I rather suspect you have plenty of time to get educated. My macro view is that, for the time being, the sector is in a period of consolidation. After the enormous gains of last year, it needs a period of digestion. This is normal and natural. Use this consolidation period (assuming I’m right that it is consolidating) to your advantage and get educated, if you are not already.

Right. Onwards.

When Satoshi Nakamoto announced his invention, bitcoin, to the world on an out-of-the-way mailing list for cryptographers, the very first thing he said was: “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”

It’s important to distinguish, here, between cash and money. In the physical world, we are using cash less and less. That’s not to say we do not need it: the recent breakdown of the Visa network showed the dangers of relying on third parties for transactions.

Cash involves no third party. There is no dependence on anyone else, no intermediary. It is paid directly from A to B. We use it for small transactions, which are too expensive to process (a pint of milk from the corner shop). We use it for quick transactions (throwing money to a busker). We use it for private transactions (things you don’t want your spouse to know about) and, yes, we use it for illegal transactions (paying the cleaner or buying AK47s).

The birth of bitcoin cash

The idea of bitcoin was to be a system of cash for the internet: an online payment system, which involved no third parties.

But the developers of bitcoin cash felt bitcoin had strayed from that original goal. Transaction fees were too high for small payments. Transaction times too slow for quick payments. The criticism was valid.

Bitcoin has morphed into a speculative asset, more like digital gold than cash.  Gold has its uses as a store of value. It once provided the backbone of the global monetary system. But its use in payments was always limited. People preferred to hoard gold and pay with copper, nickel, silver or paper. Bitcoin’s role in the crypto eco-structure is similar.

Interestingly, Nick Szabo, who developed a precursor to bitcoin called bitgold, once told me his aim with it was “To become a reserve, high-powered currency”. (You can read more about that conversation in my book). Bitcoin has fulfilled that goal. But, for payments, it was failing.

And so bitcoin cash was forked out of bitcoin (see it as a spin-out). Everyone who owned bitcoin on 1 August, 2017 got some bitcoin cash. Bitcoin cash has since proved to be better for payments. The transaction times are quicker. The fees are lower.

However, a multitude of other cryptocoins are perhaps as just as good as bitcoin cash for online cash payments: Dash, Monero, Zcash, Stellar, to name some of the better-known.

Bitcoin diehards argue that bitcoin cash has unscrupulously tried to steal bitcoin’s limelight. They say that people are misled into buying it thinking it is bitcoin. One of the key bitcoin cash developers, Craig Wright, has – falsely, they declare – claimed to be Satoshi Nakamoto.

I once met Wright. He’s supremely bright, but he is also awkward and he rubs people up the wrong way. He has rubbed up much of the bitcoin community the wrong way. This has only added to the friction.

Certainly, the politics of the fork could have been handled better (though I have to say I have some sympathy with why they have not).

No matter. We are investors. We keep our politics out of our investment choices. Which one is the better investment now?

Bitcoin, bitcoin cash – or both?

Bitcoin is the backbone of crypto. Though there are better coins, bitcoin has a network effect like no other. You should own some.

But – and I know I am going to upset a lot of people by saying this – at current prices I think bitcoin cash is actually the better investment.

Whereas in the bitcoin community there is quite a bit of in-fighting amongst developers, bitcoin cash seems to be more united. I went to meet some of the developers to discuss my financial gameshow, when I was looking for sponsors.

Within about three minutes of talking to me, they were trying to get me to arrange for bitcoin cash to be a means of payment for the entire Edinburgh Festival, and offering to build the infrastructure. Given that this is the most ticketed event in the world after the Olympics and the World Cup, this is no small undertaking.

I was deeply impressed with the ambition of the enterprise. They are really pushing this thing. In the coming weeks there are big deals for payments with major international merchants to be announced. They are building an enormous and ambitious payment infrastructure across all six continents. Owning the coin is like owning shares in the network, a network which is rapidly growing and well marketed. They want bitcoin cash to be used as widely as possible as a means of payment: to make sure it is actually used.

(Full disclosure, we have shaken hands on a deal to sponsor my show, though nothing has yet been announced, so I am almost certainly biased. On the other hand, I wouldn’t have a bunch of bozos sponsoring my product).

When the fork happened last August, bitcoin was sitting around $2,800. Bitcoin cash began life around $250. At its highs bitcoin went to $20,000. Bitcoin cash hit $4,000. Today bitcoin sits around $7,500. Bitcoin cash is $1,100. Bitcoin cash has outperformed.

Bitcoin cash is more volatile and the downside risk is greater, but if you ask me which of the two is more likely to go up ten times from current prices, I’d have to say bitcoin cash.

One way of looking at it is to see bitcoin cash as silver to bitcoin’s gold. The bitcoin cash people won’t like me saying that. They want it to supersede bitcoin – and there’s a very outside chance it might.

I like bitcoin. Gosh, I wrote a book about it. I like bitcoin cash. My view is that you should own both. And if you want to get started with both, head on over to bitcoin.com. My guide to getting started with bitcoin is here (though it was written before the fork). Remember – start small and don’t speculate significant capital until you know what you are doing.

Of course, all research into bitcoin should begin with what is surely the definitive book.

And if you are free this Sunday and in London, I’m doing another try-out of my Financial Gameshow at the Backyard in Bethnal Green. You could actually win yourself some bitcoin cash as well as some silver.

Entry is free. Did I say free? Yes, I did.

  • ABlivit

    Neither thanks. I find that Euros work just fine for me when I’m Ireland or Spain and fancy a coffee/beer. Treating a currency as an investment is truly a mugs’ game.

    • Sara Rancaño Rivas

      I view gold as an investment, gold will come good when these financial markets. Just look at these banks blow, now many if not all are in serious trouble.

    • Tomasisko⚡️

      Libraries and post mail worked “just fine” and yet everyone started to use internet and email. Think forward.

      • ABlivit

        I do. I just don’t want to ‘invest’ real money in something which is so volatile, difficult/impossible to use and reminds me so much of pyramid selling.

        • Tomasisko⚡️

          Bitcoin now is where the internet was in 1995. Difficult to use for most of us. Bitcoin and blockchain technology is still evolving. It will get easier to use in the near future. And with mass adoption the volatility will eventually vanish.

    • Zyo

      It work fine until it doesn’t ask that for Greek that have limited access to their own money. Ask that to Venezuela that have hyper-inflation, ask that to anyone doing internal commerce where sending money in another country is very expensive and sometime even prohibited. If none of that fit you, other see a needs.

  • Sara Rancaño Rivas

    Funny how all these articles you are trying to sell you something like a new book. Who takes Bitcoin or any crypto? It´s OK if you wish to buy some fentanyol from China. “History never repeats itself but there is often a reflection”. I just think all this crypto (blockchain) is just another version of the .com bubble . Bitcoin, is neither money or currency, it´s just too volatile, with such volitility it must only be regarded as a betting (Ponzi) scam.

    I´ll quite happily stick to physical gold!

    • Peter Edwards

      ” I just think all this crypto (blockchain) is just another version of the .com bubble”
      May be so but the .com Bubble made possible Google, Amazon, Facebook etc

    • Tomasisko⚡️

      More and more businesses accept Bitcoin every day (hundreds of thousand all across the world). I would like to see you pay for a burger or a car with gold.

      And if you look at the charts, dotcom bubble was incomparably bigger. https://www.reddit.com/r/CryptoCurrency/comments/7irww4/bitcoin_bubble_vs_dotcom_bubble_market_cap/

  • TheInternetToughGuy
  • Tomasisko⚡️

    Bitcoin Cash BCH (Bcash) is fake, a scam. Dont fall for that. It is not decentralised and it is driven by group of four people. Three of them are well known scammers in crypto community – Roger Ver, Calvin Ayre and Craig “Faketoshi” Wright. Media talk about Bcash because these scammers have bought them (CNBC’s Fast Money, bitcoindotcom, @bitcoin twitter acc, /r/btc subreddit – all under control of the scammers mentioned above). Be careful out there. There is only one Bitcoin – BTC.

    • John André Durcan

      Amen to this comment. If this journalist did just an ounce of actual journalism he would have posted this vital info. But instead he’s like the rest hoping to double his crypto gains with the BTC holdings he had at the fork.

    • David

      Thank you for demonstrating the extent of argument that Bitcoin Core (BTC) supporters have against Bitcoin Cash (BCH). When you have no arguments, you resort to name-calling – we were taught that in elementary school.
      For anyone interested watch this video that explains the extent of arguments from both sides of BTC vs BCH camps. https://www.youtube.com/watch?v=QbvtAlmfYQI
      Also checkout this article to see why people use the term ‘bcash’ https://medium.com/@jonaldfyookball/why-some-people-call-bitcoin-cash-bcash-this-will-be-shocking-to-new-readers-956558da12fb
      Thank you for starting off this conversation.

      • Tomasisko⚡️

        Bitcoin Core (BTCC) is completely different coin – a fork of Bclashic. What the hell are you talking about? Your lack of fundamental knowledge is astonishing.

    • David

      The Bitcoin (BTC) developers (mostly employees of Blockstream) believe Bitcoin was broken from the beginning and that Satoshi was wrong with his original design. And these developers think they know better, so they have crippled Bitcoin (BTC) by taking away instant-confirmation capabilities, taking away opcodes that could have been used to build smart contracts years before Ethereum, crippled data_carrier_size once they saw people were building applications on top of Bitcoin and discouraged such activities.
      Well, Bitcoin (BCH) restored instant-confirmation transactions, added back the opcodes (so look for smart contracts on BCH soon), more than quintupled data_carrier_size (so now we are seeing uncensorable twitter apps like https://memo.cash), and we have 32x the transaction bandwidth of BTC. BCH is absolutely closer to the Bitcoin that Satoshi had in mind when they wrote the Bitcoin whitepaper.
      Also all major Bitcoin (BTC) public forums are heavily censored while Bitcoin (BCH) forums are not.
      Use the coin that meets your needs. Period. But don’t call them scams – cause neither is a scam.

      Signs of a scam coin is one where the coins are pre-mined. Or a percentage automatically go to a private account, or if you need permission to mine.

    • itsdsmurrell

      Nonsense. Bitcoin Cash is Bitcoin for me.

      • Tomasisko⚡️

        Bcash (BCH) that was created on August 1st, 2017. Bitcoin (BTC) was created by Satoshi Nakamoto in 2009 and its chain has originated from the genesis block therefore it is the real Bitcoin.

        • richardamullens

          Moron, Bitcoin had Segregated Witness added – so it is no longer Bitcoin.

          • Tomasisko⚡️

            it was a soft fork you moron

            • richardamullens

              It is still a change. One of many implemented by Blockstream to subvert Bitcoin.

              • Tomasisko⚡️

                lol your lack of technical knowledge is astonishing. there was no chain split when segwit was added.

                • richardamullens

                  History will prove you wrong when BTC falls further into disuse and people choose BCH to transact.

                  • Tomasisko⚡️

                    People have already chosen. No one uses Bcash. Even Doge has more transactions.

    • richardamullens

      That may be your opinion, but it is a stupid one.

      Bitcoin Cash works. I have used it for transactions. The developers are taking steps to improve Bitcoin Cash. Bitcoin Cash was enabled for use in Openbazaar after the slow transactions and high fees of Bitcoin (Core) inhibited its use on the platform.

      In my opinion, this article presents a fair and unbiased description of Bitcoin and Bitcoin Cash.

  • Neither. Ripples XRP is the best investment for sure. XRP is been adopted globally by banks to transfer money and free up nostro Vostro accounts. XRP will hit $10 by end of year. Do your research.

  • Calvin Ayre

    Bitcoin Cash is the only Bitcoin as its the only branch of the chain Bitcoin chain that works as a currency as envisioned in the original white paper. Other than the fact that
    the author misses the point that stored value comes from utility this article is good. Segwit Technology branch BTC (inaccurately called bitcoin by some) has no utility and is therefor dead man walking…it is likely to disappear entirely over the next few years.

    • John André Durcan

      Sucked into the conspiracy world of BCH. If you had any technical knowledge at all you’d know that segwit is an enabler of layer 2 tech such as lightning and that BCH cannot possibly serve as cash to billions of people. It’s a fallacy and you’ve been hoodwinked by a bunch of scammers who want to maximise/double their profits of their BTC holdings. Or maybe you do…

  • Calvin Ayre

    Its not too late to sell all your useless Segwit coin BTC for the everything utility coin Bitcoin BCH. Just do it and join the social revolution to bring economic freedom to the unbanked of the world.

    • Tomasisko⚡️

      This guy is one of those scammers I was referring to. He is trying to trick newcomers into buying this fake – Bcash (BCH) that was created on August 1st, 2017. Bitcoin (BTC) was created by Satoshi Nakamoto in 2009 and its chain has originated from the genesis block therefore it is the real Bitcoin. Any other coins claiming to be real Bitcoin are simply fakes. Be careful and always do your own research.

      • richardamullens

        Bitcoin (BTC) is now an abomination created by and for the banks. Bitcoin Cash (BCH) is the original idea created for the people. The banks (AXA and others) financed the Bitcoin developers who did their bidding and neutered Bitcoin.

  • arabianmoney

    Buying cryptos is for morons, the crash happened at the end of December! Bubbles do not re-inflate… they die and investors lose their shirts and anything else they invest…

    • Sara Rancaño Rivas

      Tell that to the central banks!!!!

    • richardamullens

      Look at the history of the bitcoin price. There have been 3 or 4 ‘bubbles’ – each larger than the previous. Remember one thing – History repeats itself.

      • arabianmoney

        Yes big bubbles eventually crash and burn. This is the burning phase. But when you get a price spike like last year in anything then it won’t be repeated for a very long time, if ever, and you should put your money elsewhere. It’s obvious, that kind of overconfidence will not be quickly repeated. Besides the cryptos are scams anyway.

        • richardamullens

          Just wait and see. I believe you will have to eat your words – and so do a lot of other people as they would otherwise try to get their money out and crash the currency.

  • Tomasisko⚡️

    Bcash (BCH) sock puppets showing up and spreading lies in the comments. Be careful people.

  • Joe

    I found the aricle interesting so decided to try a little investment (£100) in Bitcoin Cash.
    What a difficult process! After errors in mis-identification of my debit card by Coinbase, I tried an alternative bank, without success. I now have four cancelled orders, but after reading the comment below about Bitcoin Cash being a scam, maybe I’ll leave it for another six months before committing my meagre funds.

    • richardamullens

      It’s not a scam, but yes it is not easy to purchase. Those who bought Bitcoin before August 1st 2017 have Bitcoin cash already. Otherwise I suggest that you use the Kraken exchange.

      • Joe

        Thanks, Richard.
        I’ll take a look at Kraken.

    • SatoshiNakamotoo

      it is not a scam be careful. The crypto world is very rude and BTC trolls coordinate an army of fake accounts spreading lies about Bitcoin Cash all over social media and sites like these

      • Joe

        Thanks for your comment. The trouble with contradictory opinions is that I have no way of knowing who is being truthful, who is being mischievous and who is trying to ruin public trust, or even steal my money.
        I don’t use social media or twitter, although I’m aware of the abuse directed at those who express any contrary views, but I didn’t really expect it on Dominic Frisby’s column in Moneyweek! How naive am I?

  • Radka Čermáková

    I like Bitcoin and Ripple. I buy them at ccshopu.info.

    • richardamullens

      It is ccshop.info
      I’ve not tried it but you are being overcharged for the privilege.
      I use kraken.com

  • chris quinn

    Both Bitcoin and Litecoin are at an advanced stage in implementing Lightning Network that will greatly reduce transaction times and fees. This potentially makes both viable as real currencies that can be easily used to buy and sell over the internet. Once this is a reality who will need Bitcoin Cash?

    • richardamullens

      At the moment it is vapourware. What you say, may or may not happen.

  • richardamullens

    It makes sense to buy some cryptocurrency – no more than you can afford to lose though. My recommendation is Bitcoin Cash because the developers and those who have purchased or mined it are using it and are intent on implementing commerce solutions for it.

    So create an account on kraken dot com, transfer some euros to it from your bank account, buy a little BCH to start with and when you are happy that you understand what is going on, put in some bids to purchase more if the price moves down by 10% and offer to sell a little if the price rises 20%. Sell 50% if the price doubles.

    Then transfer some from the exchange to a wallet because it is not truly yours if the exchange holds it. You can download a wallet from wallet dot bitcoin dot com or you can use the electron wallet.

    Now set up the e-commerce site openbazaar (openbazaar dot org) and sell items for BCH or buy items for BCH.

    There’s no need for a verified ID or address for small amounts at kraken