This in not an actual question on my part. It is a question I have been asked a few times by people in local.bitcoin, and I was struggling to come up with as short an answer as possible, but at the same time informative and comprehensive for new people (After all, one of the reasons I am in there is to try to educate new people).
The last time I was asked, here's what I came up with. I know its long and rough, so I'd like your help to streamline a standard response. Please contribute. What would you omit / add / rephrase to educate a person that seems to have no idea but is interested enough to ask?
OK, that’s a long story, but if you bear with me, I’ll do my best to explain. Whenever I state personal opinion rather than facts, I will enclose it in - - so treat it with skepticism.
At the beginning, there was bitcoin. Because bitcoin is open source code, anyone could duplicate its code (not the actual coins mind you), change it and create a new cryptocurrency from scratch.
Of course, not all cryptocurrencies that were created had any value, some were just for fun. But some that had good and desirable features (like anonymity, ability for smart contracts or better speed) were valued by people at different prices...
The way each coin gets its price is exactly the same as national currencies like USD and Euro get their exchange rates:
By the free market, through supply and demand. In exchanges, people can buy/sell currencies for other currencies. If a particular one is more bought than sold in comparison to another one, its price rises.
In cryptocurrency space, bitcoin was always the one that was valued the most -because its first mover advantage, which gave it a substantially larger user base-. Also, most of the infrastructure like payment processors, wallets, online exchanges etc were built primarily around it. -Another reason might be that, people that are new to this, only know about the name bitcoin and nothing more, so that's where they invest.-
At some point in 2017, the bitcoin community was divided over the course that bitcoin was taking: Given technical details, bitcoin was limited to processing a maximum of 7 transactions per second worldwide.
Some people thought that this was desirable and that the capacity should not be increased, although the transactions were steadily increasing and the limit was being reached. In that case, they argued, a fee market should naturally arise, where the transactions that paid the larger fees would be the ones that would get processed first. This was the "few transactions, high fees" camp.
Other people thought that the capacity should be increased to account for the increased demand, believing that high fees for transacting would stifle the adoption that was needed for bitcoin to succeed. This was the "Many transactions, low fees camp"
There is more technical detail in these views, this is just short history briefing. If you want, I can provide you with links to people articulating their reasons and opinions for each side.
Anyway, because there was a standstill, the original bitcoin was split in two, and people of different philosophies followed their favorite version.
The "few transactions, high fees" camp is the BTC camp.
The "many transactions, low fees" camp is the BCH camp.
Through exchanges, these two coins got their respective values of today.
One important note: For the capacity to be increased, there had to be a change in the software. So many thought that the "unchanged" software was the original bitcoin, while the "changed software" was not bitcoin. Add to that the fact that most infrastructure, especially online exchanges did not change their software, so the coin that kept being traded and used in them was the unchanged one.
-That's why most people kept treating BTC as the original bitcoin.-
-This, in my opinion, it is the only thing that currently supports the high price of BTC, the fact that it is treated as "the only bitcoin", and people new to this do not know any better.-
-If you want my perspective, there is no "real bitcoin", in the same way that when a highway splits towards two different destinations, two new roads are created, none of which is "the real highway"-
The fact remains that both coins share the same history up to the split, so whichever (if any) is "the real bitcoin" is up to your interpretation.
-It is my opinion that BCH is a far superior bitcoin, and when more people realize it and start using it, this should be reflected in its price.-
For instance, the fees in BTC are such right now, that making a transaction like we just did (of $40) -does not make much sense-, because: To send you $40 in BTC I have to pay approx. $2 in fees, so you will receive $38. But if you want to use them, you will have to pay the fees also, making your BTC worth $36, and it goes on like this...
Keep in mind, the $2 in fees is just an estimation based on current usage and that fees are independent of the value transferred, they are not a percentage. They actually depend on the size in bytes of the broadcasted transaction. The numbers I am giving you are for minimum sized (in bytes) transactions. Depending on usage and how much money people are willing to pay for their transaction to be processed, fees can be arbitrarily high. Back in December of 2017, they were as high as $40.