It has been just over one year now since Bitcoin Cash was forked from the Bitcoin ‘core’ blockchain. The majority of Bitcoin devotees and early adopters touted Bitcoin Cash as the ‘true Bitcoin’, but now, new research suggests otherwise.
According to research by blockchain analytics firm Chainalysis reported on 20th August 2018 by Bloomberg, Bitcoin Cash is hardly being used for commerce at all. The firm reviewed payments received by the 17 largest crypto merchant processing services (such as BitPay) from Bitcoin Cash’s inception in August 2017 to May 2018, and found that in 2018, BCH payments totalled $10.5 million in March, $6.2 million in April, and $3.8 million in May.
In contrast, Bitcoin payments for these three months were $80.2 million, $69.9 million, and $59.9 million respectively. In other words, although payments for both cryptocurrencies showed declines, percentage declines in Bitcoin Cash payments were much larger.
Kim Grauer, a senior economist at Chainalysis, told Bloomberg that the low adoption of Bitcoin Cash could be the result of a majority BCH ownership by a small concentration of off-exchange addresses, stating:
There are fewer users of Bitcoin Cash, fewer holders. About 56 percent of Bitcoin Cash is controlled by 67 wallets not located on exchanges. Of those, two wallets hold between 10,000 and 100,000 Bitcoin Cash. And chances are, the wealthiest holders are the ones sending a lot of the traffic to merchant services.
BCH market dominance has also steadily slipped, following the steep run-up and correction at the end of 2017 to the present day. Bitcoin’s dominance, meanwhile, has shown its resilience, recovering from it’s all-time low of 32 percent to 53 percent at the time of writing.
Bitcoin Cash has also taken a larger hit in terms of market cap than Bitcoin. Bitcoin Cash took off straight away, topping out at $3,700 after being listed on Coinbase at the end of 2017, but it has since fallen to a low of $534 — a loss of more than 86 percent compared to a 68 percent loss in Bitcoin’s market cap.
The situation with Bitcoin Cash can be connected to the overall market state of the current year, when all cryptocurrencies in the market are suffering.
Cointelegraph reports that more bad news came in early August for Bitcoin Cash, when a ‘Bitcoin Core’ developer pointed out a consensus vulnerability in the Bitcoin Cash code that could have potentially done massive irreversible damage to the BCH blockchain.
However, despite the decline in use, data from Coinmarketcap shows that Bitcoin Cash is still the fourth largest cryptocurrency, with a market capitalization of over $9 billion. At the time of going to press, Bitcoin Cash is down almost 9 percent and is trading at around $522.
Do you think Bitcoin Cash will recover from its current slump? Keep the conversation going in the comments section.