Bitcoin’s main forks – Bitcoin Cash ABC (BCH) and Bitcoin Cash SV (BSV) – have several elements of a medium of exchange asset, but they still don’t experience the same adoption level.
Bitcoin Forks Are Rarely Used as Means of Exchange
On Monday, July 29, crypto analysis firm Coinmetrics published a report that compares Bitcoin with its main forks, BCH and BSV. The latter ones came out to solve the deviation of Bitcoin’s primary use case. The largest cryptocurrency by market cap has become a store of value, while it was designed to be used as peer-to-peer (P2P) electronic cash.
Both BCH and BSV increased the block size to incorporate more transactions into a single block, which eventually led to lower fees. While these features permit more flexibility, neither of the two forks has enjoyed the same popularity and adoption as Bitcoin. Moreover, BTC is more often as a means of exchange, despite the transaction time and fees.
Bitcoin’s realized cap is almost $100 billion. On the other side, the realized cap of BCH and BSV is below $10 billion and about $1 billion, respectively. For those unfamiliar, realized cap is a market cap-like metric that excludes coins that might be lost.
Thus, Bitcoin’s size is more than ten times bigger than BCH and one hundred times bigger than BSV.
Both forks have an average transaction fee of zero USD as of today. BTC’s fee declined to $0.03 early this year, though it has maintained between $1 and $3 over the last months.
Despite everything, the fees don’t help much. Moreover, almost zero fees have a negative side, as they will leave miners with smaller rewards when block reward issuance drops.
In addition, BSV and BCH have also deviated from their purpose of acting as a medium of exchange, as more transactions are used to store data on blockchain for various purposes. Often, there is no related economic transaction whatsoever. On BSV’s network, 94% of OP_RETURN transactions derive from a single weather app called WeatherSV. The Bitcoin SV fork actually removed the size limit on OP_RETURN messages.
Thus, the share of BSV transactions with OP_RETURN is increasing day by day.
The same is true about Bitcoin Cash ABC:
In conclusion, despite the lower fees and greater block size, BCH and BSV cannot compete with BTC at the moment. The forks don’t even use that extra block space most of the times. BCH and BSV often act as a data storage instrument rather than a medium of exchange.
Do you think BCH or BSV will be able to take a significant market share of Bitcoin? Share your thoughts in the comments section!
Images via Shutterstock, coinmetrics.substack.com