10 - 15/Feb/2021
What is BCHA and why is it so cheap?
The above question was asked recently in the BCHA/ecash telegram channel, and I thought I would offer up an answer for people who are just discovering this project.
For those who don't know, BCHA is the name of a cryptocurrency that launched on November 15, 2020 when it forked away from Bitcoin Cash (BCH), which itself is a fork of Bitcoin (BTC).
When Bitcoin Cash was created on August 1, 2017, it was due to a fundamental difference between those who wanted to keep the block size limit at 1 MB (BTC) versus those who wanted to raise the block size limit and pursue on-chain scaling (BCH). Led by Bitcoin ABC, Bitcoin Cash was launched with the promise of delivering a peer-to-peer electronic cash system as originally described in the Bitcoin whitepaper.
The recent split between BCH and BCHA was also due to a fundamental difference, but rather than being about block size limits, this split was about how to fund protocol development going forward. Bitcoin ABC and its supporters believe that protocol developers should be funded through a portion of the coinbase rewards that had previously only gone to miners. The idea was that this new coinbase rule would align the incentives of both the miners and the developers who are tasked with solving the bottlenecks that currently limit Bitcoin's ability to scale. Unfortunately for Bitcoin ABC, the vast majority of Bitcoin Cash holders and miners disagreed with this approach. They believed that funding of protocol development should be done only through donations or sponsorships as opposed to allocating a portion of the miner reward to ensure a steady revenue stream for the developers.
Who ends up being right will be revealed in the years to come, but at this moment in time, this contentious split has led to what I believe to be an enormous opportunity. Because many prominent BCH holders consider BCHA to be a dead project and nothing more than one man's ego trip, they have spent the last three months dumping their airdropped BCHA for cheap. Add to that the BCHA chain having to endure various mining attacks that attempted to undermine the project's future and you get a glimpse into the factors that have caused the price of BCHA to fall so low.
Currently BCHA is valued less than Bitcoin Gold, a project that suffered from several 51% attacks last year with virtually no work being done on development. BCHA is also valued at 3% of BCH despite the fact that both projects have the same 21M coin cap, the same underlying technology, except that while BCHA is led by Bitcoin ABC, the very team that created and maintained the BCH network for the past three years, BCH is a coin with no roadmap or leadership. In fact they have already announced that the May upgrade will not include any consensus changes.
I believe that BCH will do fine this bull run. But I think BCHA has the potential to do even better. I know that many who bought BCHA early are asking themselves why the price has gone sideways for the most part while the rest of crypto has pumped significantly during that same period. The simple answer is that there have been too much selling and not enough buying. The BCH whales have been dumping an extraordinary amount of BCHA coins onto the market. Just yesterday I watched as someone put up 23,000 coins for sale on Coinex at a price of .03 BCH each. The good news is those coins were bought up in under 3 hours. Earlier that day I saw another 20,000 coins for sale at $18.40 on the BUSD pair on Binance and those coins were bought up in two large purchases within seconds of each other. My point is that there are people who believe in BCHA. People like me who have been obsessively following the Bitcoin Cash project since it's inception, and will now be obsessively following the BCHA project going forward. Imagine what's going to happen when there's an actual website with an exciting new rebrand that's finally launched.
I don't know if the dumping will continue. I don't know how much more BCHA Roger and friends have to sell. What I do know is that the number of cheap BCHA available on Binance and Coinex has been steadily declining since the end of last year. For example, as of 12/29/20 I noted there were 108,324 BCHA available for $30 or less and 0.1 BCH or less on Coinex and Binance. As of today, only 30,131 BCHA are available at those same prices. Of course someone could put up another huge sell wall at any moment, but we all know they can't keep it up forever. As CryptoPanda15 on twitter put it: "If 1 BCH = 33 BCHA and whales have more than 1 million BCH combined, that's 33 million BCHA. Oh wait..."
Oh wait indeed. I don't know what the future holds. Anything can happen. But I can assure you Bitcoin ABC isn't trying to scam anyone. They are not in this to make a quick profit. They are dedicated to the mission of creating electronic cash for the world. The beauty is that you don't even have to take my word for it. Just look at their funding address for the new coinbase rule and you will see that not a single BCHA has moved.
The new coinbase rule ensures they have every incentive to make BCHA as valuable as possible. And while BCH whales dump their coins either because they want to see BCHA fail, or because they believe it will fail, BCHA supporters like me will happily take those coins off their hands because I believe that investing in something you love will always beat shorting something you hate.