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What is Bitcoin Cash? — a short guide
Bitcoin Cash is a cryptocurrency that’s very similar to Bitcoin, Litecoin, and many others that are on the market. It’s a form of digital money you can use to buy goodies online or make it a part of your investment portfolio.
Like most other cryptocurrencies, Bitcoin Cash is decentralized, which means it’s not managed by any authority like a central bank. It’s a form of payment that cuts out the middleman, which should speed up transactions and reduce the high fees charged by financial institutions like banks and PayPal.
Bitcoin Cash offers complete anonymity when making and receiving payments. Although each transaction is recorded and displayed on a publicly disclosed blockchain, you don’t have to share your personal info such as a full name, address, and so forth when doing business with the cryptocurrency.
Read next: What is a blockchain? – Gary Explains
It’s created through a process called mining, which involves solving complex math puzzles that can require specialized computer equipment. The first miner to solve it is rewarded with some of the Bitcoin Cash created. The same process applies to the creation of most other cryptocurrencies including Bitcoin, Ethereum, and Dash.
What makes it different from Bitcoin?
Bitcoin has had a problem built into it since its inception – scalability. It has a small 1 MB block size limit, which makes it extremely slow. It’s the largest cryptocurrency in the world but is said to only be able to handle seven transactions per second. For comparison, Visa can handle 24,000 transactions in the same time.
Additionally, Bitcoin transactions also take 10 minutes to process and have become expensive because of high demand — typically more expensive than doing business through banks. According to BitInfoCharts, the average transaction fee currently stands at around $1.5 but was as high as $55 back in December 2017.
These are the two problems — scalability and high fees — that Bitcoin Cash is trying to solve. The cryptocurrency was created by a group of influential miners, developers, and investors on August 1, 2017, when they initiated what is known as a hard fork in the Bitcoin blockchain.
The major difference between Bitcoin and Bitcoin Cash is that the latter has a block size limit of 8 MB — eight times larger than its biggest rival. This speeds up transactions as well as reduces fees. These come in at around $0.1 per transaction, making Bitcoin Cash a way more affordable option than Bitcoin.
Aside from the block size limit, Bitcoin Cash and Bitcoin are more or less the same. One isn’t better than the other — they are just different. Both are created in the same way and can be used for making transactions online or investment purposes. Demand for cryptocurrencies is more than big enough at the moment for both to co-exist on the market, along with many other competitors.
Where can you buy, store, and spend Bitcoin Cash?
Buying Bitcoin Cash is a breeze. You can get it from many online exchanges including Bitstamp, Coinbase, and Kraken — see full list here.
But before you buy it, you have to know where to store the cryptocurrency. There are a few different options available, with one of them being hardware wallets like the Ledger Nano S and Trezor. You can also opt for a desktop wallet such as Jaxx, Exodus, and Electron Cash. Visit Bitcoin Cash’s website to see more providers.
Bitcoin Cash isn’t accepted by as many companies as Bitcoin, but there are still many places online where you can spend it. You can buy all sorts of products and services with the cryptocurrency such as hosting, accommodation, and much more. To check out a list of merchants that accept Bitcoin Cash, visit acceptbitcoin.cash.
Should you invest in Bitcoin Cash?
Although there are many ways you can spend Bitcoin Cash online, most people buy it for investment purposes. Bitcoin Cash is currently the fourth largest cryptocurrency in the world by market cap behind Ripple, Ethereum, and Bitcoin.
So far, it has proven to be a good investment. Bitcoin Cash went for around $250 at launch and quickly started gaining value. It reached its peak in December when you could get one for $4,300, according to the price chart provided by CoinMarketCap. However, its price went down significantly since and currently stand at around $920.
If you invested $1,000 in Bitcoin Cash in August 2017 when one went for $250, you would have $3,680 today.
Let’s put things into perspective by crunching some numbers. If you invested $1,000 in Bitcoin Cash in August 2017 when you could get one for $250, you would have $3,680 today. But if you’d be smart enough to sell it when its price hit an all-time high — which is hard to — you’d have $17,200. That’s a fantastic ROI (return on investment), especially when compared to savings accounts offered by banks. However, it’s lower than what you’d get with a few other cryptocurrencies like Litecoin.
In which direction the price of Bitcoin Cash will go in the future is anyone’s guess right now. Just because it’s proven to be a great investment for some — especially those who bought it at launch — doesn’t mean the same will be true in the future. An important thing to keep in mind is that cryptocurrencies are extremely volatile, which means their price can go up or down substantially in a short period of time. This makes them way less stable than fiat currencies like dollars and euros.
To give you an example, the price of Bitcoin Cash went down from $4,300 on December 20 to around $2,000 on December 22. That means the cryptocurrency lost approximately 54 percent of its value in just two days! With that in mind, make sure you don’t invest more money into Bitcoin Cash and any other cryptocurrency than you can afford to lose.
What about the other cryptocurrencies?
Now you know more about Bitcoin Cash, but what about some of the other popular cryptocurrencies out there? To learn even more, check out the following guides:
Also feel free to let us know what you think of Bitcoin Cash by posting a comment down below.