The past weekend starting on Friday 10th of November, might just go down in history as the first time a private entity attempted to a pump and dump of the world’s biggest new cryptocurrency.
No one missed it and it caught almost everybody off-guard. First, there was a run from Bitcoin which saw the BTC price crash by $1,000. Then suddenly, Bitcoin Cash, the new altcoin derived from the Bitcoin network in August, suddenly exploded in value. The result? An even bigger run from Bitcoin to Bitcoin Cash. What is more, this was one which at one point saw more cryptocurrency miners mining Bitcoin Cash than any other cryptocurrency.
The Biggest Bitcoin News This Week – Should You Switch to BCH
With the Bitcoin network suffering severe lags as many miners switched to mining Bitcoin Cash as it became more profitable, every day Bitcoin investors started to be bitten by the money bug.
On the face of it, the idea was (and still is) simple. If Bitcoin Cash can jump over 100% in value so quickly, shouldn’t people exchange their Bitcoin for Bitcoin Cash and profit as a result?
Quickly capitalizing on this sentiment, Bitmain co-founder Jihan Wu, immediately went to lengths to reiterate why Bitcoin Cash was a much safer long-term investment than the original Bitcoin. Larger block sizes, he and other BCH advocates began reiterating, allow for faster transaction processing and lower fees that the original Bitcoin network simply can’t compete with.
So, should you move your Bitcoin holdings to Bitcoin Cash? At the moment, no. This is because the increasing value of Bitcoin Cash isn’t actually being driven by investor confidence in the currency.
Everything that is Wrong with Bitcoin Cash
People considering moving Bitcoin to Bitcoin Cash in order to potentially make huge returns need to remember one thing above all else. The Bitcoin price has gained momentum over the years due to the fact that the currency is completely decentralized. It can’t be interfered with by external agent provocateurs. Bitcoin Cash, however, is centralized. What is more, it is the essential brainchild of one man, (the aforementioned Bitmain co-founder Jihan Wu) and the only reason the price recently skyrocketed is due to the fact that Bitcoin Cash periodically becomes more profitable to mine than Bitcoin itself.
The Big Bitcoin Cash Pump & Dump Scam
Throughout Saturday 11th November, mining Bitcoin Cash was 4 x more profitable than mining Bitcoin. This being the case, miners and investors in the know pulled capital from Bitcoin, invested in Bitcoin Cash, and increased the Bitcoin Cash price phenomenally. Later on the evening of Sunday 12th of November, however, Bitcoin once again became more profitable to mine and as a result, miners and investors moved back to the Bitcoin network, devaluing Bitcoin Cash in the process, as they used their new profits and the lower Bitcoin price to start buying back Bitcoin lower than what they had sold it at the day previously.
Given the above, the recent rise in the value of Bitcoin Cash hasn’t proved that Bitcoin Cash is a viable cryptocurrency in its own right. If anything, everyday investors now need to keep as far away from Bitcoin Cash as possible now that the world has seen just how easily one small group of people can attempt to subvert the very integrity of the cryptocurrency markets overall.