What Is Bitcoin Cash (BCH) Cryptocurrency?
Bitcoin cash is a decentralized peer-to-peer (P2P) payment network and digital currency. The digital asset is a derivative of Bitcoin and allows more transactions in an individual block when compared to the latter. This feature enables the cryptocurrency to lower transaction fees.
Its creation occurred through a hard fork spilt from the Bitcoin blockchain that took place to resolve the transaction speed issues related to Bitcoin. The design of this cryptocurrency makes it a cost-effective payment system. Moreover, it has the support of an open-source blockchain platform. This digital asset and Bitcoin utilize the same consensus mechanism and blockchain network.
Table of contents
- Bitcoin Cash refers to a cryptocurrency that is decentralized and has a peer-to-peer payment mechanism. It uses the same blockchain as Bitcoin and has the same founder, Satoshi Nakamoto.
- This digital currency provides more transaction volume while ensuring lower fees and transaction times than Bitcoin. Moreover, this cryptocurrency is available for trading on most of the major cryptocurrency exchanges, unlike a lot of its competitors right now.
- This cryptocurrency is pseudonymous, transparent, immutable and open to all. Moreover, its supply cannot exceed a certain figure — 21 million.
- Branding trouble, environmental impact, and weaker security are some of its disadvantages.
Bitcoin Cash (BCH) Cryptocurrency Explained
Bitcoin cash refers to a decentralized digital asset that features a P2P payment mechanism. Launched in August 2017 with the aim to be utilized as a cost-effective payment system, it has lower transaction times than Bitcoin. Since its creation resulted from a hard fork split from Bitcoin, its founder is Satoshi Nakamoto as well. This digital asset allows more transactions in an individual block when compared to Bitcoin. This theoretically minimizes transaction times and fees.
Let us look at a few key features of this cryptocurrency to understand it better.
- It is open to anyone; people can contribute to this digital cryptocurrency or access it for free.
- Like other blockchains, the BCH blockchain monitors all transactions. The blocks get updated at fixed intervals, minimizing the chances of fraud, and making it convenient for anyone to check the ownership history.
- In the case of this cryptocurrency, the public wallet addresses have no direct connection with personally identifying data.
- It features a distributed ledger, which is not stored in a centralized location.
- BCH transactions are irreversible after they get recorded on the blockchain.
- It is a faster, more affordable and reliable alternative to payment networks, such as Mastercard and Visa. As a result, it offers an effective way to carry out transactions without having concerns regarding cross-border transactions or locations.
How To Mine?
One can follow these steps to mine this cryptocurrency:
- Select a crypto wallet to store and manage the coins securely. Some crucial factors to consider when choosing a wallet are interface, fee customization, backup features, and private keys. A few popular wallets are KeepKey, Trezor, Ledger Nano S, and Electron Cash.
- Select and install mining software for controlling the hardware parameters. Make sure the software is compatible with the hardware. Some popular mining software for this cryptocurrency are Hashflare, CCG mining, BFGMiner, and NiceHash.
- Obtain the necessary mining hardware. Note that one will require application-specific integrated circuits (ASIC) specialized mining hardware.
- Next, configure the software settings and then connect the obtained hardware to the internet and power supply.
- Create a profile in the selected mining software and ensure to connect the hardware’s internet protocol address. Note that persons can control the power their hardware is able to generate via the software.
- Lastly, become a part of a mining pool. Note that the miner who can solve the complex math problem and completes the verification of the transactions is the first to get the rewards.
How To Trade?
Persons can follow the steps below to make a Bitcoin Cash investment:
- Visit the official online platform of any trustworthy cryptocurrency exchange that enables one to transact cryptocurrencies in a hassle-free manner.
- Open an account on the platform.
- Log in and choose the relevant option to get to know about the different ways in which one can buy cryptocurrency.
- Transfer funds from a preferred bank account to the new cryptocurrency account. One can utilize third-party channels for this step if the platform allows it.
- Lastly, check the payment details and fees before confirming the order at the market price.
Note that typically, a photo ID is necessary for Anti-Money Laundering (AML) verification and Know Your Customer (KYC) verification. Hence, registering on any cryptocurrency exchange to make Bitcoin Cash investment anonymously is generally not possible.
Let us look at a few Bitcoin Cash examples to understand the concept better.
Suppose David has an account on a popular cryptocurrency exchange and trades cryptocurrencies regularly. He was tracking Bitcoin Cash’s price for a long time. After conducting a technical analysis, he observed that there was a chance to generate significant short-term profits by trading the cryptocurrency. So, he purchased 100 coins at $190 per coin and stored them in his crypto wallet. Over a period of 14 days, Bitcoin Cash’s price jumped to $110. At this price, David sold the 100 coins, generating earnings worth $1,000.
On June 26, 2023, Bitcoin Cash reached a price of $228.72, marking a remarkable 150% increase since May. This impressive jump in value was significantly influenced by crypto news related to important entities with their BTC exchange-traded funds (ETF) applications. Consequently, the news played a crucial role in driving the rally.
When Bitcoin price jumped 7% after the victory of Greyscale on August 29, the price of BCH increased by roughly 20%. One more rally materialized as Franklin Templeton decided to file for a spot BTC ETF. Despite the bearish scenario in the bearishness in the cryptocurrency market, analysts think that BCH could soar following BTC ETF approval.
Pros And Cons
Let us look at the benefits and limitations of this cryptocurrency.
- This digital asset involves a cheap payment system. Its transaction fee on average is below $0.01.
- The cryptocurrency has large blocks, providing the blockchain network with more scalability while increasing transaction volume and reducing user fees.
- Unlike its lesser-known peers, this cryptocurrency is available on most of the major cryptocurrency exchanges. Hence, it is easily accessible.
- It features a decentralized currency-like system, which no single entity controls.
- This cryptocurrency has a relatively low adoption rate.
- The digital asset is less secure than Bitcoin owing to its faster transaction processing time at a lower cost and the requirement for lower mining power for the verification of new blocks.
- This cryptocurrency utilizes a proof of work (PoW) mechanism, which involves miners running computers for the purpose of solving every cryptographic equation to process transactions. This utilizes significant energy. Hence, the environmental cost associated with this digital asset is high.
- This cryptocurrency faces branding trouble because its name is similar to Bitcoin. Because of the name, BCH finds it challenging to distinguish itself from Bitcoin, which results in the former’s lower popularity.
Bitcoin Cash vs Bitcoin vs Litecoin
Choosing between Bitcoin Cash, Litecoin, and Bitcoin can be difficult for anyone new to the world of cryptocurrency owing to their different meaning and purpose. Moreover, these cryptocurrencies have distinct characteristics, which are crucial for one to know to decide which one can help them achieve their investment objectives. So let us look at their critical differences.
|The average transaction confirmation time is faster than Bitcoin.
|Its average transaction confirmation is slower than BCH.
|Its average transaction confirmation time is faster than both Bitcoin Cash and Bitcoin.
|The market cap is lower than Bitcoin and Litecoin
|Bitcoin’s market cap is higher than LTC and BCH.
|Litecoin has a higher market cap than BCH.
|Its ticker symbol is BCH
|The ticker symbol is BTC.
|Litecoin’s ticker symbol is LTC.
|Its maximum limit in terms of overall supply is 21 million coins.
|Bitcoin’s maximum supply is 21 million coins.
|The total supply cannot exceed 84 million tokens.
|BCH has a lower transaction fee than BTC and LTC.
|BTC transaction fees is more than LTC and BCH.
|BTC transaction fees are more than LTC and BCH.
Frequently Asked Questions (FAQs)
Whether the price of this cryptocurrency can reach $1,000 depends on various factors, such as the following:
– Acceptance of digital currencies
– The popularity of the various other cryptocurrencies available in the market
– Economic scenario
– Changes in government-imposed rules and regulations
Although it has a lot of potential to increase in value and generate returns for investors, one must invest in this cryptocurrency cautiously as the market is highly volatile.
The time taken to confirm BCH transactions depends on the following factors:
– Network congestion
– Mining power dedicated to processing BCH blocks
– Transaction fees
On average BCH transactions generally take roughly 10-20 minutes to get the first confirmation.
Individuals must remember that this cryptocurrency is traceable.
According to CoinMarketCap, the circulating supply of this digital asset is 19,513,788 coins at the time of writing.
This article has been a guide to what is Bitcoin Cash (BCH). We compare it with Bitcoin and Litecoin, explain how to mine and trade it, its examples, and pros & cons. You may also find some useful articles here –