A Tale Of Two Cryptos: Bitcoin And Bitcoin Cash

Summary

Bitcoin and Bitcoin Cash are confronting scale issues in different ways, with Bitcoin focusing on maintaining decentralization and Bitcoin Cash focused on maintaining usability of the currency.

Both Bitcoin and Bitcoin Cash are making reasonable decisions.

I would not purchase either currency at their current price, as I expect a pullback and better opportunities later.

Warren Buffett and the creator of Dogecoin have doubts about current cryptocurrency valuations.

In this article, I lay out the different philosophies behind Bitcoin ("BTC"; COIN, OTCQX:GBTC) and Bitcoin Cash ("BCH"). Both cryptocurrencies have made logical choices based on their own core values.

BTC's primary value is decentralization. Decentralization is easier to lose than to regain, and decentralization may be threatened by larger block sizes increasing computing demands on nodes.

BCH's primary value is functionality. BCH has much lower transaction fees than BTC, and no transaction delays. This is due to larger block sizes, and the fact that BTC is a larger currency with more transactions. BCH proponents also tout the ability of BCH to be used for payments. I do not think we're there yet, although it would be nice to have.

Warnings of bubbles continue. Both the founder of Dogecoin and Warren Buffett have sounded warnings signals that values are too high. I will track Warren Buffett's prediction that cryptocurrencies will fall over the next five years.

I would not purchase either BTC or BCH at their current prices. I expect a market correction - call it whatever you will - in the next year. Cryptocurrencies are "hot" now, but technology has not caught up to their current market caps. I do not expect them to maintain their value the entire time while it does. Even if you believe in cryptocurrencies - and I do - I believe there will be better purchasing opportunities later, after a correction.

Source: https://seekingalpha.com