What is Bitcoin Cash?
If bitcoin is Breaking Bad, bitcoin cash is Better Call Saul: a top-notch spin-off that is not without first season foibles, but has plenty of people justifiably excited. Bitcoin forked on August 1, 2017: rather than creating a new cryptocurrency and blockchain, it produced a duplicate of its existing blockchain with an identical history.
Thus, instead of starting from Year Dot (and block 0), past transactions on bitcoin cash’s new blockchain are identical to its predecessors’. The short version is: if you owned bitcoin before the fork you now have an identical amount of bitcoin cash sitting in your wallet (assuming your platform supports the new altcoin).
The main advantage of bitcoin cash is that the block limit compared to bitcoin has been raised to 8MB, creating ample capacity for everyone’s transactions, low fees and quick confirmations. This is just like bitcoin: but leaner and speedier.
Can I Mine Bitcoin Cash?
Many assumed that limited mining support for the new cryptocurrency would cause a problem after the fork. To everyone’s surprise, mining bitcoin cash was 10 per cent more profitable than mining the legacy chain at the end of August.
The largest public pool is currently ViaBTC, so we recommend any intrepid miners begin there. It’s super easy: all you need is to give your phone number or email address, create a username and password, get on the mining pool and get stuck in! It’s early days, but it looks like bitcoin cash could be an appealing prospect for miners with the means to get to the dig-site early.
Value of Bitcoin Cash
Bitcoin cash has got off to a strong start: doubling its market price from $300 to about $600 in its first month (and trading at highs of $700), launching in third position on the cryptocurrency market in terms of market cap, and holding strong. With bitcoin cash set to become the new big thing, some are even predicting it will replace bitcoin (if so, that’ll be a long way off).
However, the price of the altcoin has proved volatile. Before going live, bitcoin cash suffered from low liquidity, and many exchanges still haven’t declared whether they are going to support the cryptocurrency. Others, that have committed to supporting bitcoin cash, haven’t said when they will support trading; meaning some users are left twiddling their thumbs, unable to touch the bitcoin cash newly sitting their wallets. Fortunately, CEX.IO, Kraken, Poloniex and ViaBTC are all trading in bitcoin cash.
There is a bottleneck in the market right now, and it is possible that the price of bitcoin cash is being artificially inflated by the number of clients that have yet to declare their intentions, which will mean a relatively low circulation until things get moving. However, early signs are promising ‒ this new altcoin is off to a great start, and certainly doesn’t seem to be going anywhere.
How to Buy Bitcoin Cash Online - Step-by-Step Guide
If you already have a wallet full of bitcoin at any exchange that supports (or intends to support) bitcoin cash, then you automatically have an equal amount of the new altcoin! Easiest purchase you never made ‒ loads better than U2’s latest album showing up in your iTunes! Lots of exchanges are scurrying to adapt to the bitcoin fork, and do not currently allow you to purchase or withdraw bitcoin cash. Fortunately, popular exchanges like CEX.IO, Kraken and Bittrex allow you to do just that. Using CEX.IO as an example…
- Visit CEX.IO and create an account, providing user details. The exchange will require a full name, date of birth, address and phone number. For higher account limits, you might need to provide ID and proof of residence.
- For extra security, you can create a two-factor authorisation ‒ especially for a new cryptocurrency, where transactions are comparatively vulnerable, this is strongly recommended.
- You can deposit cash from a linked bank account to your CEX.IO account, then make an order for bitcoin cash on the exchange.
- As with all bank transfers delays are possible, but once everything is verified and cleared you will be able to withdraw bitcoin cash to your wallet.
- You can also purchase bitcoin cash at CEX.IO using debit or credit card, by exactly the same method as a bank transfer. More on that below.
How to Trade bitcoin cash
There are relatively few exchanges that currently support trading for bitcoin cash. Fortunately, the strong initial performance of the cryptocurrency means that more and more websites are coming on board. Kraken actually began trading bitcoin cash the day it went live, before customers were even credited! To trade bitcoin cash on the website…
- Go to Kraken.com, and create an account. You will need to enter basic details like a name, email address, date of birth and phone number. Kraken uses a tiered system for account management. For higher value traders, government approved identification and utility bills might be requested to proceed.
- Once you’re all set up, click on the Funding tab and deposit crypto or fiat currency (things are a little trickier for Ether transactions, as you will be asked to copy and paste a command line into your Ethereum console). These will be your funds for trading.
- For quick trades, click the ‘New Order’ button. If you want to trade your bitcoin cash, click ‘sell’ and select BTC from the dropdown menu to the right of the field along with the price at which you are willing to sell – this will happen automatically when the market meets your asking price.
- More advanced traders can click on the ‘New Charting and Trading Tools’ tab, which will display a more advanced chart.
- One cool feature with Kraken is it will always show you your total portfolio in fiat.
- Transactions with new cryptocurrencies might be a little on the slow side, but be patient and the bitcoin cash will soon appear in your wallet.
Can I Trade Bitcoin Cash at Coinbase?
Customers holding bitcoin only have access to their new currency if their bitcoin were held in an exchange that has committed to supporting bitcoin cash after the fork ‒ or if they have control of their private keys. Alarmingly for people with bitcoin stored in Coinbase, the exchange stated before the fork that it did not intend to support bitcoin cash, and advised customers to withdraw their bitcoin before August 1st.
Following a backlash, Coinbase released a statement promising that bitcoin balances at the time of the fork have an equal quantity of bitcoin cash, safely stored at Coinbase. The company has also promised to have full support for bitcoin cash by January 1, 2018, after which time customers will be able to withdraw the cryptocurrency. However, trading support remains an open question.
Why did Bitcoin Fork?
It all comes down to scaling. The spiralling number of blocks in the blockchain sparked something of a civil war amongst miners, a faction of whom demanded an increased limit on the bitcoin block size limit, which was originally capped at 1-megabyte. This equated to around 3 transactions a second. After reaching capacity, fees shot up and bitcoin became less reliable, meaning some users could not get transactions confirmed after days of waiting, which harmed bitcoin’s market share. Bitcoin was approaching a glass ceiling.
The move to a hard fork began with the Bitcoin Improvement Proposal (BIP) 91, which was backed by 97 per cent of miners. Rather than touch the 1-megabyte ceiling, it doubled the maximum number of transactions of the bitcoin network with a workaround called Segregated Witness (‘SegWit’), which shaves off transaction data to free up space.
The faction pushing for the hard-coded 1-megabyte cap to be lifted argued this merely delayed the problem, and would diminish the value of the bitcoin network by pushing transactions off the grid. Nevertheless, SegWit was accepted as a viable compromise. Additionally, the proposal for a fork reflects the desire to evolve bitcoin to a true payment network that can be readily utilised for purchase and exchange ‒ closer to digital cash than virtual gold.
What Is Special About Bitcoin Cash?
Putting aside all the hype over the hard fork and the months of negotiation that preceded it, bitcoin cash is not the first bitcoin fork ‒ far from it. Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited and Litecoin are all derivatives of the Bitcoin Core reference client. The difference is threefold. Firstly, bitcoin cash is a lot more valuable than these other cryptocurrencies; secondly, it comes with a bunch of new features, and thirdly, the provision of equal bitcoin cash to holders of bitcoin is being spun as ‘free money’ (if only).
As mentioned, bitcoin cash has already developed into a leading cryptocurrency, and comes with several advantages over bitcoin. Aside from the relief provided by the block size limit, the cryptocurrency offers replay and wipe-out protection, and minimises disruption if two chains persist. It also boasts a new SigHash type for signing transactions, offering input value signing to improve wallet security, and eliminates the quadratic hashing problem. The trade-off is that bitcoin cash is currently worth a fraction of the price of bitcoin.
Future of Bitcoin Cash Trading
The conflict within bitcoin that sparked the fork, coupled with apocalyptic press coverage suggesting bitcoin was going to spark a market calamity, meant that expectations for this new cryptocurrency were understandably fraught. The very public argument amongst miners brought the value of bitcoin down to a meagre $1938 in July, before the SegWit compromise was struck. Moreover, the new, incompatible version of the bitcoin blockchain ledger led some to suspect that bitcoin cash would undermine bitcoin: by all accounts, it was set to be a painful birth.
Now that the dust has begun to settle, how do things look?
There is still hesitancy. Users breathed a huge sigh of relief when Coinbase came around and agreed to support the new altcoin. However, a number of exchanges, including Exodus and Bitstamp, have maintained their position against supporting bitcoin.
However, the strong market cap for bitcoin cash ‒ coupled with support from notable exchanges like Kraken ‒ suggests that bitcoin is more resilient to forks than expected. There might be room in this town for more than one version of bitcoin. Some have even suggested bitcoin cash will push up the value of bitcoin, as users scramble to buy the altcoin to trade for more bitcoin.
Certainly, the market cap for bitcoin cash has defied all expectations, and while it is still early days, there is plenty of grounds for optimism. For users holding bitcoin anyway, it certainly doesn’t hurt to end up with two caches of strong cryptocurrencies for the price of one!
How to Buy Bitcoin Cash with Credit Card
A number of exchanges, including CEX.IO, allow users to purchase bitcoin cash with credit cards. Indeed, on CEX.IO, credit cards are the only accepted payment method for deposits below a daily limit of $300 and a monthly limit of $1000.
Adding to your balance using a credit card is exactly the same as doing so with a bank transfer, but a small fee will be added (the commission at CEX.IO is 3.5 per cent). The flipside is that purchases are quicker, and you don’t have to endure lengthy waiting periods.
How to Buy Bitcoin Cash with PayPal
At present, there are no exchanges that allow users to trade in bitcoin cash, that also support PayPal. However, following its reversal on supporting the new altcoin, users on Coinbase (which permits PayPal for users in the USA) have a stash of bitcoin cash in their wallets that they will be able to withdraw from January 1st, 2017.
If you are a US citizen, you can link your PayPal account to the platform. This requires you to verify your PayPal account with Coinbase, which must be manually added as a payment method. However, this is only for pay-outs ‒ cash from cryptocurrency sales will simply be transferred to your PayPal balance rather your bank account. The service is still in beta, but the company has plans to roll it out to users from other countries.
Before long, it will hopefully be possible to withdraw fiat made trading bitcoin cash to your linked PayPal account.
Cryptocurrency Guide list
Enjoyed this Bitcoin guide? Then see our other cryptocurrency guides:
- How to buy and trade Bancor
- How to buy and trade Bitcoin
- How to buy and trade Bitcoin Cash
- How to buy and trade Dash
- How to buy and trade Dogecoin
- How to buy and trade EOS
- How to buy and trade Ethereum
- How to buy and trade Ethereum Classic
- How to buy and trade Factom
- How to buy and trade GameCredits
- How to buy and trade Gnosis
- How to buy and trade Golem
- How to buy and trade IOTA
- How to buy and trade Litecoin
- How to buy and trade MaidSafe Coin
- How to buy and trade Monero
- How to buy and trade NEM
- How to buy and trade NEO
- How to buy and trade Peercoin
- How to buy and trade Potcoin
- How to buy and trade Ripple
- How to buy and trade Steem
- How to buy and trade Storjcoin X
- How to buy and trade Stratis
- How to buy and trade Tezos
- How to buy and trade Waves
- How to buy and trade Wings
- How to buy and trade Zcash