Bitcoin Cash was one of the first ‘forks’ of Bitcoin. It was created when developers couldn’t agree on the future of how to scale the cryptocurrency.
This guide will cover the steps you need to understand Bitcoin Cash and how you can invest in 2021.
What is Bitcoin Cash?
Bitcoin Cash is known as a Bitcoin fork. It was created in August 2017 after developers couldn’t agree on how they would scale Bitcoin in the future. The main disagreement was the block size, which impacts the number of transactions that could be processed per second (also known as throughput). In other words, the larger the block size, the more transactions could be included with each block and therefore throughput would be higher.
When Bitcoin was first founded, it limited the size of each block to 1MB. As Bitcoin grew in popularity, the limited size of each block resulted in higher transaction fees and settlement times taking longer. This created problems for small-value purchases as fees were too high, transactions were taking too long and consequently lost their utility as a medium of exchange. This meant Bitcoins applications and usefulness in the real world were decreased, with fiat money having a huge advantage.
With Bitcoin being a quasi-political process, individuals involved started to disagree on how Bitcoin should proceed in the future. One group believed that they should stick to 1MB block sizes, stating that it would be beneficial to focus on larger transactions. On the other hand, the second group wanted to allow more transactions per block. This would help keep transactions fast, reliable and most importantly, it would keep fees low. It would also be easier for the average investor to use and would avoid the monopolisation of the coin.
Unfortunately, the two groups couldn’t agree on a solution and instead the two versions of Bitcoin were formed. Bitcoin Cash (BCH) was formed and increased the block size whilst the original Bitcoin (BTC) remained the same. Despite the change in block size, the functionality and use of Bitcoin remained the same for both coins.
Bitcoin Cash remains a popular cryptocurrency used around the world. As of August 2021, it has a market cap of $12,227,420,960 with 19 million tokens in circulation. It has a maximum supply of 21 million and a fully diluted market cap of $12,227,420,960. One BCH costs $650.06 and reached highs of $3267 in May 2021.
One of the advantages of Bitcoin Cash is that it’s very useful for transactions. Transactions have lower fees and are faster. This means it has a greater chance of being adopted as a regular payment.
Although Bitcoin Cash in theory is easier to use, many more investors still trade and own Bitcoin. Bitcoin remains the largest cryptocurrency in the world by far and continues to dominate the market.
Another issue is that Bitcoin Cash isn’t as secure as Bitcoin. With Bitcoin being mined by more individuals, it’s significantly less decentralized. This means it has fewer points of failure and fewer risks.
How does Bitcoin Cash work?
There are actually few differences in the way Bitcoin Cash and Bitcoin work. Both currencies have a market cap of 21 million, use nodes to validate their transactions and use a PoW consensus algorithm. However, BCH operates significantly faster and has lower transaction fees due to its block size. This makes it a better alternative for smaller transactions such as paying a gym instructor or buying a present online.
Bitcoin Cash supports smart contracts and apps such as CashFushion and CashShuffle. Individuals who own BCH can use CashShuffle before making a transaction. CashShuffle makes transactions private and harder to trace, which is ideal for investors who want to remain anonymous.
Bitcoin Cash can also be integrated with PayPal, which means it can be used with over 26 million merchants. When making a payment, PayPal will automatically convert Bitcoin Cash at the point of sale into fiat currency. This means you pay with BCH and the merchant receives payment in their chosen fiat currency.
How to Buy Bitcoin Cash online
You can buy Bitcoin cash on most major exchanges. These include Coinbase, Binance and Kraken. Start by signing up or logging into your account.
Load your wallet with the fiat currency of your choice. Most exchanges will allow you to use fiat currencies, though some may only accept crypto. Make sure you check this beforehand.
Search for BCH and select the amount you want to buy. Select “Buy” and check your wallet to make sure the transaction has gone through.
How to Trade Bitcoin Cashonline
Trading Bitcoin Cash is relatively simple. Start by making sure you own Bitcoin Cash. If you don’t follow the instructions above.
Sign up to an exchange that will allow you to trade. The most popular option for this is Binance, though Coinbase and Kraken are also good options.
Choose the coin you want to trade your BCH for and select the amount you want to buy. Click “Trade” to complete the transaction. Go to your wallet and make sure your currency has been converted.