Recently, I have been thinking a lot about cryptocurrencies. As Satoshi Nakamoto said, "Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own."
When you cut off one head, 2 more will grow in its place. And the BTC vs Bitcoin Cash fork is exactly what happened on 1st Aug 2017. The good news is that Bitcoin Cash has survived and proved its anti-fragility properties. Bitcoin Cash continues its goal as "A Peer-to-Peer Electronic Cash System", as specified in the original Bitcoin whitepaper. Betting against Bitcoin Cash is like betting against Bitcoin in the early years.
In fact, Bitcoin Cash had made such huge progress in the last 2 years, thanks to the extremely talented developers, that the value proposition of Bitcoin Cash has grown multifold. I have no doubt that the prices of cryptocurrencies are heavily manipulated, with no exception to Bitcoin Cash. If some malicious actors wanted to sabotage Bitcoin Cash, they will suppress the prices so that people feel disheartened by it. Evidence of constant trolling, seemingly paid propaganda campaigns, harassments against the Bitcoin Cash community has added weight to this suspicion. And that is why, I have decided to write this article about the risk/reward and share my opinions about Bitcoin Cash.
Let's get right to it. In my opinion, here are the 3 biggest risk factors concerning Bitcoin Cash.
1) Tether Implosion - With the New York AG case hanging over Bitfinex/Tethers, I expect unusually high volatility as the bad guys tries to milk as much money (liquidating longs/shorts) as they can while the court case is still ongoing. However, I expect New York AG to win the case eventually, and the massive loss of confidence in the space will affect the entire crypto space very badly.
2) Hostile Regulatory Climate - Some governments may try to ban cryptocurrencies outright, such as India. Ironically, these countries will be the ones shooting themselves in the foot because the crypto innovations and money will prosper in the more welcoming countries. Given that the crypto space is easily influenced by such news, there may be price dumps in the short term due to such regulatory actions.
3) Malicious Actors Infiltrating BCH Community - Just because it had happened before doesn't mean it won't happen again. Splitting the community is one of the ways to hurt the value proposition of a cryptocurrency. Afterall, it's the community that gives the cryptocurrency its value.
I'm a big fan of Warren Buffett when it comes to value investing. He likes to say, he wished the prices were lower so that he could buy them cheaper. Value investors are always on the lookout for undervalued stocks, buy low sell high. The last few days, I had scooped up as many undervalued Bitcoin Cash as I could, and it felt incredibly liberating. It felt truly awesome knowing that you, and only you, has total control over this new p2p magic Internet money. With BTC, you need to worry about unspendable funds due to insufficient fees. With fiat money, you need to worry about hyperinflation due to corrupt government. With Bitcoin Cash, you never have such worries with your own money.
In my opinion, here are the things going for Bitcoin Cash.
1) Bitcoin Cash has much better fundamentals (Privacy - CashShuffle, Tokens - SLP/Wormhole/etc, Cash Accounts, Utility - Medium of Exchange, Oracles - Sports Betting, etc) than BTC. In other words, this means both the floor and ceiling price for Bitcoin Cash will be much higher than BTC. It may take some time to catch up, but it seems inevitable given Bitcoin Cash's current progress and trajectory. If BTC could reach $20k, then Bitcoin Cash's ceiling could well be multiple times that. This means Bitcoin Cash has a much more attractive risk/reward ratio compared to obselete coins like BTC. In my opinion, BTC is for short term gambling/speculation while Bitcoin Cash is more fundamentals based investment.
2) Bitcoin Cash's Halving is coming within a few months, around 8th April 2020. This means less supply which, based on historic data, usually leads to growing prices.
3) The global money supply is around $75 trillion dollars. With Bitcoin Cash's marketcap of $5 billion dollars currently, and its goals as a medium of exchange, $75 trillion will give us plenty of room to grow into. Even if we consider shadow banking, which Bitcoin Cash is well suited for, that's around $50 trillion dollars. That's a lot of room to grow into so again, the risk/reward ratio is too attractive for me to pass up.
4) Bitcoin Cash is my insurance policy. Most people didn't know that the average lifespan of a fiat currency is only 27 years nor do they know fiat currency such as US dollars had lost over 90% of its purchasing power in mere decades. If it could happen to once properous countries such as Venezuela or Greece or Argentina or even powerful nations such as America, it could happen to any country. Of if there is a war, how am I going to carry the gold bar across the border without getting robbed by the borders officers? Bitcoin Cash is my insurance policy to be able to seek refuge in a safe country and protect my loved ones from poverty when such precarious situations happens.
5) I think Bitcoin Cash is still in the very early adopters period. It's exactly like Bitcoin back in 2010 where only a small group of folks know what's up. Back then, when you talk about Bitcoin to people, they had all these wrong impressions due to their lack of understanding about it. Likewise, when you talk about Bitcoin Cash now even in the crypto space alone, you can see people with wrong impressions due to their lack of understanding about it. Some see this as a problem, I see this as an opportunity to be ahead of the crowd and accumulate more Bitcoin Cash!
One of the things I learnt from people like Jack Ma is that if you do what everyone else is doing, you're going to get what everyone else is getting, average results. Value investors educate themselves and are ahead of the curve. So I am not even mad at the propaganda against Bitcoin Cash, because it helps value investors like myself get as much Bitcoin Cash at as low a price point as possible ahead of the pack. Thanks to those trolls costantly spreading lies and propaganda against Bitcoin Cash, because if not for them, I would have left so much more money on the table while buying those same amount of Bitcoin Cash.
6) The Bitcoin Cash community is awesome. What can I say, so many incredibly smart and passionate folks making a difference in shaping the future of money. I think it's worth repeating that what gives cryptocurrency its value is because of its community. If I am going to put my money on something, one of the driving factors is definitely the awesome community.
7) Let's do some Math about BTC. Miners need to sell their BTC to pay for electricity. 6 (blocks/hour) * 24 (hours) * 12.5 (block reward) * $12000 * 30 (days/month) is equal to $648 million dollars per month required just to sustain the BTC price. Do you really believe there is $648 million dollars each month or about $8 billion dollars a year of new money coming into BTC? Really? I am not sure anyone with so much money is that stupid to buy BTC. And even so, it merely sustains the BTC price at $12000. If the price goes up to $20k, you need more than 1 billion dollars of new money coming in every single month! On the other hand, Bitcoin Cash just needs $16 million dollars per month to grow, which looks much more sustainable to me.
BTC Maximalists loves shouting how BTC will get to a million dollars, as if repeating over and over what they hope to be true, will make it come true. Sheeps follow these lies without thinking for themselves. They seems to believe that by repeating a lie or name calling (bcash) long enough, it will become reality. I leave you this quote from Michael Burry (The Big Short), "People want an authority to tell them how to value things, but they choose this authority not based on facts or results. They choose it because it feels authoritative and familiar."
With Bitcoin Cash, there is no authority nor maximalists telling you what you can or cannot do. I see Bitcoin Cash as the people's money and having Bitcoin Cash gives me the feeling of solidarity with commoners around the world. Everytime I read about how badly some governments treated their own citizens, it makes me buy more Bitcoin Cash with a passion. Unlike other cryptocurrencies such as BTC which depends on lies and propaganda to sustain its price, Bitcoin Cash survives based on merits and fundamentals and putting power back into the peoples hands. I hold Bitcoin Cash with a happy clear conscience and sleep well at night. Bitcoin Cash is betting against dumb money (aka lambo/moon bois) and soon enough, we will know just how dumb that money really is.
Sorry about the wall of text. It was an accumulation of days of thoughts and self reflection.