Deriving from the Bitcoin model, Bitcoin Cash (BCH) was developed as a response to the original currency’s scalability issues. Our guide gives you the lowdown on Bitcoin Cash and how to buy it.
Where to buy Bitcoin Cash
Read on to find out more about Bitcoin Cash in 2020 or skip ahead to our step-by-step buyers guide if you’re up to speed and ready to invest.
What is Bitcoin Cash?
Effectively the result of an acrimonious split in the Bitcoin community, Bitcoin Cash (BCH, formerly BTH) emerged in 2017 as a hard fork of the original coin.
In a nutshell, this division was caused by a fundamental disagreement about how Bitcoin should address the issue of scalability. While one faction favoured increasing the block size of the Bitcoin blockchain to solve problems associated with congestion, others fiercely opposed the idea, preferring the possibility off-chain scaling.
When a group who favoured the former approach decided to abandon the original protocol and increase the block size limit from 1 MB to 8 MB, a hard fork became necessary and Bitcoin Cash was born. At the end of its first day, BCH was already the third biggest cryptocurrency (based on market capitalisation) after Bitcoin and Ethereum.
How does Bitcoin Cash work?
As described above, the principle difference between BCH and BTC is the size of their respective blocksize limits. While Bitcoin remains capped at 1MB, Bitcoin Cash has an 8 MB limit. This allows for a higher volume of transactions to be processed and results in cheaper transaction fees. In theory, this makes Bitcoin Cash better suited to everyday transactional use than its predecessor.
How to buy Bitcoin Cash online – step-by-step guide
Step 1. Get a suitable wallet
A wallet allows you to store your BCH securely. It’s a good idea to have one ready before you buy Bitcoin – it’s a far safer way to store cryptocurrency than leaving it on the exchange. There are plenty of good options, including:
- Ledger Nani X: Ledger Nano X is a hardware wallet, which means you can store your BCH (along with 30 other cryptocurrencies) offline on a super-secure wireless device.
- Exodus: Combining smart, feature-packed functionality with a stylish, intuitive interface, Exodus is a desktop wallet that should suit both newbies and experienced users.
- Coinomi Wallet: If you want a BCH compatible wallet that will work on your phone, look no further than the Coinomi Wallet. This multi-coin wallet supports iOS, Andriod phones and there’s also a Mac/Windows/Linux desktop client.
Step 2. Find a Bitcoin Cash exchange
There are plenty of exchanges on offer if you want to buy and sell Bitcoin. Each has advantages and disadvantages, so it’s a good idea to do a bit of research. To get you started, here are two of our favourite Bitcoin Cash exchanges:
- Binance: Widely considered to be the best, most dependable place to buy BCH, Binance is the world’s biggest crypto exchange. It offers a huge crypto marketplace and fees that compare favourably with its main competitors, plus a well-designed mobile app.
- Bittrex: Boasting a slick, easy to navigate interface and speedy transaction times, this US-based exchange supports over 200 currencies and direct BCH purchases using major fiat currencies. A Bittrex mobile app has recently been launched.
Step 3. Withdraw your BCH
In the interests of securing your BCH, it’s a good idea to move your currency out of the exchange and into your wallet as soon as possible. To withdraw BCH to your wallet you’ll need to generate an address then paste it in the relevant field of your exchange account.
How to trade Bitcoin Cash – step-by-step guide
If you’re only interested in trading BCH you needn’t worry about getting a suitable wallet because trading involves taking a position on a currency rather than acquiring it. This means you can potentially make a profit from BCH without the hassle and security risk of owning it.
Step 1. Find a broker
If a broker offers crypto trading, it’s bound to offer Bitcoin Cash, which is one of the most widely traded cryptocurrencies on the planet. Plus500 and eToro are two of the most popular BCH trading platforms.
Step 2. Deposit money
Most trading platforms will allow you to deposit Fiat money (USD, GBP, EUR etc.). It’s worth noting that trading platforms offer leveraged trading, which means you don’t have to put down the full value of a trade. Instead you can pay a deposit, known as a ‘margin’. This means you can potentially make bigger profits and, of course, bigger losses.
Step 3. Decide how you’d like to trade
There are two methods to trade cryptocurrencies: CFDs (contracts for difference) and Spread Betting. Both methods essentially entail speculating on the price movements of your chosen currency. If you aren’t sure which option to go for, we recommend researching the differences between spreads and CFDs.
Step 4. Start trading
If you’re a complete novice we recommend starting with a demo account and familiarising yourself with the process and the platform. Cryptocurrency trading is extremely volatile, which means you can make and lose money very quickly. Bitcoin Cash is prone to fluctuation, which makes it an intriguing prospect for traders who look to exploit volatility.
As a Bitcoin Cash trader you’re speculating on the currency’s price movements by taking a short (sell) or long (buy) position. If you think Litecoin will fall in value you should take a short position, if you think it will rise in value you should take a long position.
You may choose to incorporate leverage into your trading strategy. Leveraged trading allows you to put up a fraction of the trade’s value as a deposit or ‘margin’. This can be risky, though, so make sure you have a stop loss in place for damage limitation.