The Bitcoin Cash network was launched on August 1, 2017 out of a desire to increase Bitcoin’s block size limit and lower on-chain transaction fees. While Bitcoin Cash did not gain enough support to “become Bitcoin,” the spinoff network continues to exist as an altcoin.





Of course, Bitcoin Cash is not the only cryptocurrency network that has decided to focus on low, on-chain transaction fees. And while some proponents of Bitcoin Cash were talking about overtaking Bitcoin roughly a year ago due to a hypothetical mining death spiral scenario, it’s now clear that isn’t coming anytime soon. In fact, Bitcoin Cash hasn’t been able to gain much more traction than Dogecoin or a variety of other altcoins on the market.







Bitcoin Cash Has Less Activity Than Dogecoin





Three other altcoins that have been promoted as useful for low-value online transactions over the years are Dash, Dogecoin, and Litecoin. If you look at the data from the past month, Bitcoin Cash has seen fewer on-chain payments than these other altcoins (ignoring the transactions from around the time of the Bitcoin SV split).





In fact, Dogecoin has been processing roughly four times as many payments as Bitcoin Cash in December.









The data doesn’t look any better when it comes to active addresses.









And even though Bitcoin Cash was created as an offshoot of Bitcoin with a focus on cheaper payments, the original Bitcoin blockchain is still processing ten to twenty times as many payments per day as the Bitcoin Cash chain. Plus, these numbers don’t account for things like batching and the Lightning Network, which means the Bitcoin network’s daily payment numbers are actually understated in the chart below.









Putting all of this data together, it’s clear that Bitcoin Cash has so far been unable to overtake the already-existing options in the public blockchain space when it comes to low-fee payments.





Step One is Store of Value





So, why haven’t people moved to the Bitcoin Cash chain for payments? The simplest answer has to do with liquidity. Not many people view Bitcoin Cash as a reliable store of value (relative to Bitcoin), which makes it less useful as a medium of exchange. In other words: users don’t seem to feel that the lower fees are worth the effort of switching from using the Bitcoin they already have.





Bitpesa CEO Elizabeth Rossiello discussed this liquidity issue in an interview last year.





Bitcoin Cash, Dash, and Litecoin have had similar levels of liquidity since the Bitcoin SV split, so it doesn’t really matter which token is used. In fact, Bitcoin Cash was a more volatile asset than those two alternatives and Dogecoin for large chunks of 2018, which might make it less attractive as a payments coin.









Right now, most cryptocurrencies are in the process of establishing themselves as stores of value. After all, it’s impossible to route value through a network that has no value in it in the first place.





Bitcoin is extremely difficult to compete with in this area because it has been around the longest and has the largest network of users. And although Bitcoin is still quite volatile in its own right, the fact that it has been able to exist for ten years has made it the gold standard of cryptocurrencies. This concept is known as the Lindy effect.





If Bitcoin continues to be seen as a trustworthy long-term store of value, it will also become more attractive as a medium of exchange and perhaps someday even act as a global unit of account. Bitcoin Cash may allow for faster and cheaper transfers, but without users interested in storing value as Bitcoin Cash, it doesn’t stand much chance of overtaking Bitcoin in the foreseeable future.







