How To Invest In Bitcoin Cash: A Guide

Bitcoin Cash (BCH) is a cryptocurrency that was created as a result of a hard fork in the Bitcoin blockchain. This occurred on 1 August 2017, when a group of developers decided to increase Bitcoin's block size limit from 1MB to 8MB, in response to increasing transaction fees and network congestion. Bitcoin Cash's block size was initially 8MB, but it has since increased to 32MB, allowing for faster and cheaper transactions than Bitcoin.

Bitcoin Cash has grown to become one of the top 15 coins on the market, with a market capitalisation of around $7.1 billion as of May 2024. It can be purchased on major cryptocurrency exchanges like Coinbase and Kraken, as well as platforms like PayPal.

While Bitcoin Cash has its advantages, it has faced challenges such as low adoption rates, centralisation concerns, and a lack of distinctiveness. As of 2023, it is still far behind Bitcoin in terms of use and has struggled to gain traction as a legitimate alternative.

Bitcoin Cash vs Bitcoin: which is the better investment?

Bitcoin Cash (BCH) and Bitcoin (BTC) are two different cryptocurrencies with distinct features and investment prospects. Here is a detailed comparison to help you understand which is the better investment option.

History and Creation

Bitcoin was launched in 2009 and is the first and most popular cryptocurrency in the world. It was created as a decentralised digital currency outside the control of governing bodies or third parties. On the other hand, Bitcoin Cash is a newer cryptocurrency that was created in 2017 due to a philosophical difference within the Bitcoin community. Some developers wanted Bitcoin to be a store of value, while others wanted to encourage its use as a medium of exchange. This disagreement led to a hard fork in the blockchain, resulting in the creation of Bitcoin Cash.

Price and Investment Prospects

Bitcoin has a much higher price, currently trading at around $15,000 per coin, while Bitcoin Cash is only about $250 per coin. Bitcoin has had a head start and has experienced several bear markets, making a strong comeback each time. Bitcoin Cash, on the other hand, has only experienced one bear market and has failed to reach the same level of adoption and market penetration as Bitcoin. It is also important to note that institutional buyers are generally more accepting of Bitcoin than Bitcoin Cash.

Transaction Speed and Fees

Bitcoin Cash has faster transaction speeds and lower fees compared to Bitcoin. This is because Bitcoin Cash blocks are eight times bigger than Bitcoin blocks (8MB vs 1MB), allowing for more transactions to be processed at a lower cost. However, Bitcoin is working on second-layer technology to improve its transaction speed and fees.

Supply and Distribution

Both Bitcoin and Bitcoin Cash have a fixed supply of 21 million coins and a similar distribution. Anyone who owned Bitcoin at the time of the Bitcoin Cash hard fork received an equal amount of Bitcoin Cash.

Use Cases and Target Market

Both coins have the same use case and target the same investor audience. Bitcoin Cash was created to speed up transactions on the Bitcoin network, but it has failed to overtake Bitcoin as the leading version. As a result, it may never be widely adopted and could fall on its face as a cryptocurrency experiment.

While both Bitcoin and Bitcoin Cash have their advantages, Bitcoin is considered the better investment option. It has a much larger market capitalisation, higher price, and greater adoption than Bitcoin Cash. Additionally, institutional investors prefer Bitcoin, and companies like Square, Inc. have chosen to invest in and support BTC over BCH. However, Bitcoin Cash could still be a good investment option due to its faster transaction speeds and lower fees, but it faces an uphill battle to overtake Bitcoin.

How to invest in Bitcoin Cash

Bitcoin Cash (BCH) is a cryptocurrency that was created in 2017 as an alternative to Bitcoin (BTC). It was formed out of a hard fork, which is a process of splitting a blockchain to create a token with new features. In this case, the fork was due to a disagreement in the Bitcoin community about scaling the cryptocurrency.

Step 1: Get a Cryptocurrency Wallet

Just like any other cryptocurrency, BCH tokens are stored in digital wallets, which are protected by a private key. There are several types of wallets to choose from, including software wallets, hardware wallets, paper wallets, and mobile wallets. It's important to choose a wallet that supports BCH storage and meets your unique requirements as an investor.

Step 2: Choose a Platform to Buy Bitcoin Cash

There are several platforms where you can buy Bitcoin Cash, including cryptocurrency exchanges, peer-to-peer (P2P) platforms, and direct purchases from individuals. Cryptocurrency exchanges, such as Coinbase and Kraken, are the most popular option as they allow you to buy BCH with just a few clicks in exchange for fiat currency or other cryptocurrencies. However, it's important to consider factors such as fee structure, volume, reputation, and security when choosing an exchange.

Step 3: Create an Account and Verify Your Identity

Once you've chosen a platform, you'll need to create an account and verify your identity. This typically involves providing a valid ID, proof of address, and other supporting documents. The verification process may vary depending on the platform and your jurisdiction.

Step 4: Add a Payment Method

After your account is set up, you'll need to add a payment method. This can include a bank account, debit card, credit card, or payment app, depending on the platform and your location. Some platforms may also allow you to use third-party payment services, such as Cash App.

Step 5: Place Your Order

Once your payment method is set up, you can place your order for Bitcoin Cash. Simply select BCH from the list of assets, enter the amount you want to spend, and finalize your purchase. The platform will then convert your local currency into the equivalent amount of Bitcoin Cash.

Step 6: Secure Your Bitcoin Cash

After purchasing your Bitcoin Cash, it's important to secure it in a wallet. Mobile and web-based wallets are great for frequent transactions, while hardware wallets are best suited for secure, long-term storage. Choose a wallet that meets your individual preferences for security and ease of use.

Bitcoin Cash's advantages and disadvantages

Bitcoin Cash (BCH) is a cryptocurrency that was created in 2017 as a result of a "hard fork" from Bitcoin. This occurred when developers disagreed on the route Bitcoin should take to address emerging issues with its blockchain.

Advantages

• Lower fees: Bitcoin Cash has lower transaction fees compared to Bitcoin, typically less than $0.20 per transaction.
• Faster transactions: BCH has faster transfer times, allowing users to send and receive funds more quickly than with Bitcoin.
• More transactions per second: Bitcoin Cash can handle more transactions per second, making it more scalable and user-friendly.
• Strong development team: The Bitcoin Cash development team is quick to implement solutions that improve the blockchain's scalability and usability.
• Strong support: BCH has received strong support from early Bitcoin adopter Roger Ver and other prominent figures in the cryptocurrency community.

Disadvantages

• Competition with Bitcoin: The name "Bitcoin Cash" puts it in direct competition with the more established and popular Bitcoin network.
• Lower investor confidence: Bitcoin Cash does not have the same level of investor confidence as Bitcoin due to its newer status and lower market penetration.
• Mining profitability: Mining Bitcoin Cash is relatively similar to mining Bitcoin, but the profits are much lower, making it less attractive to miners.
• Fewer trading pairs: BCH has fewer trading pairs than BTC, making it less tradeable on cryptocurrency exchanges.
• Security concerns: There are some security concerns around Bitcoin Cash due to its smaller network size, which could make it more vulnerable to attacks.
• Lack of distinctiveness: Bitcoin Cash faces challenges in standing out among the many other cryptocurrencies that offer similar or better features.

Bitcoin Cash's history and its differences from Bitcoin

Bitcoin Cash (BCH) is a cryptocurrency that was created in 2017 as a result of a "hard fork" of the Bitcoin blockchain. This occurred when a group of developers, miners, and other stakeholders disagreed with the direction Bitcoin was taking, particularly regarding its ability to scale effectively.

Bitcoin Cash was designed to bring decentralisation back to cryptocurrency and to address Bitcoin's scalability issues, which had led to increased transaction fees and confirmation times. The key difference between the two cryptocurrencies is the block size limit. Bitcoin Cash allows for larger blocks (initially 8 MB, now 32 MB) compared to Bitcoin's 1 MB limit, enabling more transactions to be processed per block and resulting in faster transaction speeds and lower fees for Bitcoin Cash.

Another difference is the use of Segregated Witness (SegWit). Bitcoin implemented SegWit to improve scalability, but Bitcoin Cash opted for larger blocks instead. Bitcoin Cash also has a different development community, with a focus on scaling solutions and user adoption, and it has introduced technological advancements such as CashFusion and Schnorr signatures to improve privacy and security.

In terms of adoption and use cases, Bitcoin is the more widely recognised and accepted cryptocurrency, often seen as "digital gold" and used as a hedge against market volatility. Bitcoin Cash, on the other hand, is marketed for its utility in everyday transactions and is used in peer-to-peer transactions and as a means of payment by merchants and businesses.

How does Bitcoin Cash work?

Bitcoin Cash (BCH) is a cryptocurrency that was created and launched to bring decentralisation back to cryptocurrency. It is the result of a 2017 "hard fork" of Bitcoin, which occurs when an existing blockchain splits into two.

Bitcoin Cash uses cryptocurrency mining to validate transactions and release new coins, and it has the same 21 million coin limit as Bitcoin. It uses a proof-of-work consensus mechanism, meaning that miners must prove they've expended computing power to validate transactions. They do this by solving complex mathematical equations. The first miner to do so can confirm a block of transactions and add it to the blockchain. In return for their efforts, miners receive a block reward of BCH coins for every block they add. The block reward is cut in half every 210,000 blocks to reduce the supply over time.

Bitcoin Cash allows a greater number of transactions in a single block than Bitcoin, reducing fees and transaction times. Bitcoin Cash's block size limit was originally 8MB and has since grown to 32MB, far larger than Bitcoin's maximum block size. This has a significant impact on the speed and cost of transfers on each network. Bitcoin Cash can process 116 transactions per second on average, while Bitcoin can only process about seven. Transaction fees with Bitcoin Cash are less than $0.01, while transaction fees with Bitcoin generally range from about $1 to $5.

Bitcoin Cash is designed to be used as a cheap payment system, much like Bitcoin was originally intended to be. Transaction fees are generally lower, and confirmation times are significantly less than Bitcoin's, generally within seconds.

Frequently asked questions