The official Bitcoin Cash website describes the cryptocurrency as “peer-to-peer electronic money for the internet. It is fully decentralized, with no central bank, and does not require any trusted third party to operate.”
What should you know to start with?
Hard forks on Bitcoin and other cryptocurrencies are not uncommon, however, a common consensus is usually reached on which blockchain block to use. Where no consensus has been reached and both blocks remain peer-to-peer, a new token or coin is created. In this case, it was Bitcoin Cash.
The hard fork occurred because there was no agreement on how best to increase the block size limit. One group of influential miners, developers, and investors advocated for a protocol called SegWit2x, which was to be implemented on the Bitcoin network in August 2017. Those who disagreed with this protocol were involved in the creation of Bitcoin Cash. Its supporters believed that it was more like the original vision of Satoshi Nakamoto, the unknown creator (or creators) of Bitcoin, who also secretly implemented the 1 MB limit. However, Nakamoto also said, “we can make changes later if we need them,” as he predicted that with increased internet speeds and reduced storage costs, blockchain could be scaled up without negatively impacting the concept of a decentralized currency.
Since its inception, Bitcoin Cash has become one of the most successful offshoots of Bitcoin. Roger Ver, a leading Bitcoin investor, is a proponent of the new cryptocurrency, describing it as “real Bitcoin”. Commonly referred to as the “Bitcoin Jesus,” Ver was a Bitcoin proponent as early as 2011, which he considered a means of promoting economic freedom. Since then, it has supported Bitcoin Cash by favoring lower costs and faster transaction times.
What are the differences between Bitcoin and Bitcoin Cash?
As we already know, Bitcoin Cash was created as a result of a hard fork with Bitcoin. This means that despite their many commonalities, there are also a number of key differences between the two cryptocurrencies.
- BLOCK SIZE
One of Bitcoin’s problems was that as its popularity grew, transactions were slower and slower. This was the result of the limit on the size of each block, which was 1MB. The SegWit2x protocol was intended to raise this limit to 2MB. In comparison, Bitcoin Cash does not have the SegWit protocol and originally had a block size of 8MB in 2017, allowing for much faster transaction execution. In May 2018, this limit was further increased to 32MB and could be increased further if the block performance limit is reached.
Interestingly, the long-awaited Segwit2x was not implemented as planned, which led to a significant increase in Bitcoin Cash at the expense of Bitcoin.
- ALGORITHM
Bitcoin Cash has a different coding algorithm than Bitcoin. This means that replay attacks are no longer possible. If Bitcoin Cash splits in the future, there is a plan in place to protect against these types of attacks and against wipeouts. In this way, it is believed that if a new fork occurs, both chains can coexist with minimal disruption for everyone involved.
- EDA ALGORITHM
Bitcoin cash uses a new algorithm that helps keep the blockchain functioning properly when the number of “miners” changes dramatically. This provides much more stability for the cryptocurrency.
How to trade on Bitcoin Cash
When you buy Bitcoin Cash, the price is usually quoted in relation to the US dollar (USD). In other words, you sell USD to buy one unit of Bitcoin Cash. If the price of Bitcoin Cash rises, you will be able to sell it for a profit because it is now worth more dollars than it was when you bought it. If the price falls and you decide to sell, then you will make a loss.
When you buy Bitcoin Cash, the price is usually quoted in relation to the US dollar (USD). In other words, you sell USD to buy one unit of Bitcoin Cash. If the price of Bitcoin Cash rises, you will be able to sell it for a profit because it is now worth more dollars than it was when you bought it. If the price falls and you decide to sell, then you will make a loss.
CFDs are leveraged instruments. This means that you only need to deposit a certain percentage of the total trade value to open a position. You won’t have to commit all of your capital to a single transaction at once when buying Bitcoin Cash, but instead you only need to use margin, which gives you exposure to larger transaction values. Leverage gives you the opportunity to multiply your profits, but it also has an impact on losses, as profits and losses are calculated from the nominal value of the transaction.