Bitcoin Cash (BCH) was launched as a fork of Bitcoin in 2017. Bitcoin Cash is essentially an altcoin that came into the market as an extension of the original cryptocurrency. It’s traded on many exchanges today and is considered an acceptable payment network.

As Bitcoin’s popularity rose, a group of miners, investors, and developers realized that there was a need for improvement in the blockchain system of Bitcoin. The blockchain refers to the growing number of blocks which are linked with each other and record all the data of transactions. Every block carries information about the previous one and forms a connection that is similar to a chain. With the growth of Bitcoin, people started to observe that the blockchain needed to expand as well. The 1MB storage capacity of each block was becoming too small and users had to pay a high transaction fee for payments and transfers. This led to the creation of the hard fork, Bitcoin Cash, in June 2017. The Bitcoin mining hardware manufacturer, Bitmain, presented it as a solution with larger, 8MB block sizes. After its launch, the cryptocurrency began to trade at $240 and reached a peak value of $4,355 in December of the same year. With the surge in 2021 in the cryptocurrency market, Bitcoin Cash has strengthened its position and continues to attract attention from traders and investors.

How Does Bitcoin Cash Work?

In order to get an in-depth understanding of the way Bitcoin Cash operates, you need to know about the problem it was created to solve. When Bitcoin users began to face issues due to the limit of the blocks, there were two groups created among them on the possible way forward. One favored the small block size while others argued in support of larger blocks which could increase the number of transactions. Due to disagreements, those who wanted bigger blocks promoted the development of Bitcoin Cash that functions on a block size of 8Mb to 32 Mb. It works in a similar way to Bitcoin and uses a peer-to-peer network to process an average of 116 transactions per second.

What is the Difference between Bitcoin and Bitcoin Cash?

Since Bitcoin Cash originated as a hard fork of Bitcoin, it is easy to confuse the two cryptocurrencies. While they operate in almost the same manner, there are a few key differences between them. If you observe closely, you will discover that Bitcoin Cash (BCH) contains a few key factors which set it apart from Bitcoin (BTC). The first one being that Bitcoin Cash allows faster transactions and has a higher speed due to the larger blocks. Secondly, it comes with a separate cryptographic hash function or algorithm which means that there is no chance of a connection between the blockchains of BTC and BCH. This algorithm also comes with an emergency adjustment feature which has added to the stability of the cryptocurrency. With this, Bitcoin Cash can function normally even if there is a high increase of miners on the network.

How is Bitcoin Cash Mined?

The mining of Bitcoin Cash is quite similar to the other proof-of-work cryptocurrencies. Whenever a BCH transaction occurs, whether it is through a crypto exchange, a merchant, or peer-to-peer transfers, miners have to verify these transactions on the network through the proof-of-work mechanism. This verification is a series of complex mathematical problems that must be solved (cryptography),  and when they solve and verify transactions, they earn a reward in the form of Bitcoin Cash tokens. Initially, the BCH network was designed to increase the level of difficulty for miners after the mining of 2016 blocks. This has changed slightly as miners began to move towards other cryptocurrencies that had better options for miners.

How is BCH Stored?

To begin mining or trading Bitcoin Cash, you need a wallet to store it. While the transactions and your history are found on the blockchain network, the digital wallet is created for ownership. With its unique private keys and addresses, you can show that you own the mined coins. This wallet essentially consists of two sets of numbers and letters that are set randomly. Out of these, one arrangement is public for other users to view and send or receive the cryptocurrency. The other is a highly confidential key (private keys) that is assigned to you. With this, the owner of the wallet can access and transfer funds.

There are different types of wallets that you will find such as software wallets, mobile wallets, and hardware wallets. Cryptocurrency users can choose any wallet that supports Bitcoin Cash. Those registered with an exchange are assigned a hot wallet by the exchange. The mobile wallets can be easily carried anywhere via smartphones and are usually created for no additional charge. With the software wallets, the owner has control over their activities and can manage their transactions from any computer. While software and mobile wallets are quick, easy, and convenient to use, they are riskier than a hardware-based (cold storage) solution.

The hardware wallet, which allows individuals to store their private key on an external device that looks similar to a USB key, happens to be the safest option for keeping an account of Bitcoin Cash or any other cryptocurrency.

How to Buy BCH?

There are essentially three ways you can buy cryptocurrencies such as BCH; (1) through a reputable exchange, (2) cryptocurrency ATM, or a (3) decentralized (peer-to-peer) exchange. They are all quite accessible but can have certain limitations depending on the experience or knowledge of the user. Those who prefer to buy coins through an exchange on the internet can do so with their credit or debit cards. However, the transaction charges might be higher than other methods. Many exchanges today also offer other payment options such as bank transfers.

Bitcoin Cash is also found at certain crypto ATMs which allow people to directly make purchases from the ATM. Whichever option you choose to buy BCH and perform transactions you will require a crypto wallet before buying so that the BCH can be transferred to you. With digital exchanges, users can purchase tokens for Bitcoin Cash through Fiat currencies or trade on peer-to-peer networks as well.

How to Trade and Invest in BCH?

With the rising popularity of cryptocurrencies and the skyrocketing values in the market, Bitcoin Cash has been on the top of the list of many aspiring traders and investors. Those who are looking to benefit from the growing value in the market are actively searching for ways to trade BHC and invest in the cryptocurrency. Given the current trends and predictions, there is little doubt about the lucrative returns that people will earn from their trades or investments.

The most popular way to trade and invest in BCH is through a crypto exchange, such as Binance. You will need to register for an account, complete some verification steps and then deposit funds into your account. You can deposit fiat currencies or cryptocurrencies. With your account funded, you can then start trading.

People can apply various trading methods to profit from Bitcoin Cash. These include making short-term trades on volatility where users can buy during a dip in the price and cash out as it hits a high. Other popular short-term strategies are scalping or arbitrage. While most users can benefit from the volatile cryptocurrency markets, the other two strategies might require more experience and technical knowledge.

For most people who don’t want to actively trade constantly and simply want to buy and hold, with a long-term view, then hod’ling is the way to go. The idea here is to wait for the value of BCH to increase over time and to sell at a later stage when the price has increased.

Pros and Cons of Bitcoin Cash

Pros

• Lower Transaction Fees – Bitcoin Cash has comparatively lower charges on transactions than Bitcoin or Ethereum.
• Large Block Sizes – With the increased size of blocks, there is higher speed and flexibility for the people on the network.
• Easy Acquisition – Since BCH is highly popular, it can be bought and traded on most crypto exchanges.
• It is decentralized – This is one of the biggest advantages of cryptocurrencies. The lack of government control or banks makes Bitcoin Cash appealing to many people across the globe.
• High Efficiency – BCH is scalable and fast which makes the Bitcoin Cash network efficient.

Cons

• Slow Adoption. Despite the fame of the cryptocurrency, its adoption in comparison to other cryptos among investors is quite slow.
• Slightly Controversial. With divided supporters and groups, Bitcoin Cash has attracted its fair share of controversies. In 2018, there was a further split in the blockchain with another hard fork called, Bitcoin SV, being created.
• Less Liquidity. When compared to Bitcoin, BCH has lower liquidity.

Future Outlook for Bitcoin Cash

Bitcoin Cash’s value is expected to rise over time, but when and to what level remains a mystery. As the world shifts towards the use of digital currencies and various organizations look to accept payments in cryptocurrencies, there might be some positive news for Bitcoin Cash. The asset which started as the next best option for Bitcoin and was almost considered its secondary version struggled to gain its position in the market due to opposition from BTC support groups. However, the markets are experiencing ups and downs by the day, with investor confidence rising as the values increase. This means that the future for Bitcoin Cash could be quite bright in the coming years.