The trajectory of cryptocurrencies is often shaped not just by technology, but by economic incentives, network effects, and security dynamics. One of the most telling case studies in this space is Bitcoin Cash (BCH)—a fork of Bitcoin that emerged in August 2017 with the promise of faster and cheaper transactions through larger block sizes. Yet, over time, it has steadily drifted toward irrelevance. This article explores how the evolution of compute power, market valuation, and network security has led to the marginalization of BCH.
The Origins of Bitcoin Cash
Bitcoin Cash was created as a result of a long-standing debate within the Bitcoin community over scalability. Its primary innovation was increasing the block size from 1 MB to 8 MB (later expanded further), aiming to allow more transactions per block and reduce fees during peak usage.
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At the time, Bitcoin (BTC) transaction fees had surged—reaching as high as $50 per transaction in late 2017 due to network congestion. Proponents of BCH argued that on-chain scaling was the solution. However, BTC supporters favored off-chain solutions like the Lightning Network, prioritizing decentralization and security over immediate throughput.
While both chains use the same SHA-256 cryptographic algorithm, allowing ASIC miners to switch between them, this shared mining ecosystem introduced a critical vulnerability—one that would come to define BCH’s decline.
The Miner Incentive Dilemma
Mining profitability drives hash rate allocation. Miners naturally direct their computational power toward whichever chain offers higher returns at any given moment. In theory, this means the hash rate ratio between BCH and BTC should mirror their market value ratio.
However, this creates a dangerous feedback loop:
- When BCH’s price drops → mining rewards decrease → miners leave → hash rate falls
- Lower hash rate → increased risk of 51% attacks → loss of confidence → price drops further
This dynamic became painfully evident in November 2018, when BCH underwent a contentious hard fork between two factions: BCH-ABC and BCH-SV. During this period, the network’s hash rate plummeted, making it vulnerable to temporary takeovers.
An attacker with relatively modest resources—estimated at just a few million dollars over ten days—was able to reorganize the chain, reverse transactions, and disrupt normal operations. The resulting instability caused over $1 billion in economic damage, undermining merchant trust and user confidence.
"As long as there's an asymmetry between attack cost and potential gain, attacks will happen. It's a mathematical certainty."
— Wang Chuan
This principle mirrors vulnerabilities seen in other systems—from financial short-selling to geopolitical takeovers.
The Downward Spiral: Value, Security, and Adoption
Let’s examine the data:
- In November 2017, BCH/BTC reached a peak ratio of over 40%
- By late 2018, it had fallen to around 8%
- On December 5, 2018, after the hard fork, it dropped further to 0.035%
To put this into perspective:
- At 8%, BCH’s relative value was comparable to Australia’s population vs. the U.S.
- At 0.035%, it shrank to the size of Cuba relative to the U.S.
- If it falls to 0.019%, it would be like Libya vs. America—a nation so small that a young military officer (like Gaddafi) could seize control with minimal force
- At 0.012%, it would mirror Panama vs. the U.S., where a superpower can occupy an entire country in hours
These analogies illustrate a deeper truth: smaller networks are inherently more vulnerable. Without sufficient economic stake and mining commitment, they cannot resist coordinated attacks.
Erosion of Developer and User Confidence
Beyond hash rate issues, BCH has suffered from repeated protocol instability. In just 18 months, it experienced three major hard forks, each introducing new rules and splitting the community.
This constant churn has serious consequences:
- Wallet developers struggle to maintain compatibility
- Exchanges hesitate to support new variants
- New users are confused by competing chains like BCH-ABC and BCH-SV
For a beginner investor, the landscape is overwhelming. Most only recognize Bitcoin (BTC). When faced with uncertainty, they naturally gravitate toward the most established option—fueling BTC’s dominance while leaving alternatives behind.
And here lies a core principle:
Long-term price trends reflect the buying pressure from new, committed investors.
With marginal demand overwhelmingly favoring BTC, the valuation gap is likely to widen—not narrow.
The Feedback Loop of Decline
A vicious cycle now governs BCH’s fate:
- ↓ Market value →
- ↓ Mining profitability →
- ↓ Hash rate →
- ↑ Risk of attacks →
- ↓ Merchant and user trust →
- ↓ Adoption →
- ↓ Market value...
Each stage reinforces the next. Without a fundamental shift—such as massive external investment or technological leap—this trend is nearly impossible to reverse.
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Core Keywords Integration
Throughout this analysis, several key themes emerge:
- Bitcoin Cash (BCH): Once seen as a scalable alternative to BTC, now struggling for relevance.
- Compute power (hash rate): A critical determinant of network security and resilience.
- Network security: Directly tied to economic incentives and mining concentration.
- Hard fork: A mechanism that, when mismanaged, can fracture communities and destabilize ecosystems.
- Market valuation: Reflects not just current price, but future confidence and adoption potential.
- 51% attack: A real threat for smaller chains sharing mining algorithms with larger ones.
- Blockchain scalability: The root issue that sparked the BTC vs. BCH debate.
- Cryptocurrency adoption: Driven by simplicity, trust, and network effects.
These factors collectively explain why BCH failed to capture lasting value despite its technical ambitions.
Frequently Asked Questions
Q: Why did Bitcoin Cash fail to compete with Bitcoin?
A: Despite its larger block size, BCH lacked Bitcoin’s network effects, developer activity, and user trust. Repeated hard forks and security vulnerabilities further weakened its position.
Q: Can a cryptocurrency with low hash rate be secure?
A: Not reliably. A low hash rate makes a chain susceptible to 51% attacks, where an attacker can rewrite transaction history. Security requires significant economic investment in mining.
Q: Is it safe to use BCH for payments today?
A: Due to past instability and limited merchant support, BCH is far less reliable than BTC for payments. Many wallets and services no longer support it.
Q: Could BCH recover if its price rises?
A: A short-term price spike might attract miners temporarily, but without sustained demand and ecosystem development, long-term recovery is unlikely.
Q: Why does shared mining with BTC hurt BCH?
A: Miners switch to whichever coin is more profitable. This means BCH loses protection during downturns, creating windows of vulnerability.
Q: What lesson does BCH offer for other altcoins?
A: Technical improvements alone aren’t enough. Security, stability, and broad adoption are essential for survival in a competitive crypto landscape.
Final Thoughts
The story of Bitcoin Cash is not just about block size debates—it’s a cautionary tale about what happens when economic incentives, security models, and user behavior are misaligned.
As Lebanese economist Saifedean Ammous wrote in The Bitcoin Standard:
“The lesson of history is that if others are accumulating harder money than you, you cannot remain unaffected.”
Bitcoin’s resilience stems from its ability to balance decentralization, security, and scarcity. BCH prioritized one aspect—throughput—at the expense of the others. In doing so, it became increasingly fragile.
In the long run, networks don’t just compete on speed or cost—they compete on survivability.
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And so far, only one has proven it can endure.