Everyone knows Bitcoin in the meantime. This digital currency (cryptocurrency) currently has a gigantic high price, and that increase does not seem to end for the time being. This is because more and more people are interested in Bitcoin. But did you know that there is still a Bitcoin? This is called Bitcoin Cash.
Bitcoin Cash is a very new cryptocurrency, so the price is not nearly as high as that of Bitcoin. That gives opportunities to make money with Bitcoin Cash. In this blog I explain to you what Bitcoin Cash is exactly, and where you can buy and sell it to make money.
What is Bitcoin Cash?
Bitcoin Cash is actually a division of Bitcoin. This is because the transactions of Bitcoin were growing very fast. As a result, the network was no longer able to process these transactions so quickly that both transaction time and costs increased.
This is because each block in the blockchain of Bitcoin has a format of 1 MB, which is not that big. Verifying one transaction took about ten minutes.
This meant that about 2000 transactions could be done every 10 minutes .
However, many more transactions were made, which caused the network to become slower. Within the Bitcoin community, solutions were sought to bring the speed up again. New protocols for the network were drawn up for this purpose, with which the capacity could be increased. This protocol is called SegWit.
However, part of the community did not agree with these changes. They therefore decided to split off the Bitcoin blockchain. This created Bitcoin Cash. A block in this network has a size of 8 MB, so it immediately offered a solution to the problems that Bitcoin encountered.
The split of Bitcoin Cash is shown briefly.
What are the advantages and disadvantages of Bitcoin Cash?
Bitcoin Cash was only created on 1 August 2017 . It is therefore a whole new cryptocurrency. However, all people who owned Bitcoins before this time were given as much Bitcoin as Bitcoin Cash after the demerger. Then it really became two different currencies; so if you buy Bitcoin, you do not have Bitcoin Cash and vice versa.
Now you may wonder: what are the advantages and disadvantages of this new currency? Does it make sense to invest in it, or are you better off staying with the big Bitcoin? I now explain the main advantages and disadvantages of Bitcoin Cash.
Benefits of Bitcoin Cash
A big advantage of Bitcoin Cash is that everyone who owned Bitcoin before 1 August automatically received Bitcoin Cash .
Bitcoin Cash did not have to start from scratch, but immediately had a number of investors.
This ensured that more people were involved in Bitcoin Cash from the beginning. This gives the network more opportunities to grow. This growth, however, is still slow, which I will go into further, but Bitcoin Cash certainly has potential. It is already the second largest cryptocurrency – after Bitcoin.
Secondly, the size of the blocks in the Bitcoin Cash network is much larger than with Bitcoin – eight times as large! As a result, Bitcoin Cash will not get the problem for the time being that processing transactions takes a long time, as Bitcoin did. This block format also ensures lower transaction costs and quicker confirmation.
Many people and companies have already moved away from Bitcoin because the network simply could not handle the transactions anymore. When Bitcoin Cash gets some more publicity (which is very likely, given the growing interest in cryptocurrency), it can become a huge cryptocurrency.
Disadvantages of Bitcoin Cash
The main disadvantage of Bitcoin Cash is that it is still a new cryptocurrency. Although everyone who owned Bitcoin automatically received Bitcoin Cash, few people have really switched to Bitcoin Cash.
People are still more focused on Bitcoin, making the future of Bitcoin Cash uncertain.
As a result , the price of Bitcoin Cash also fluctuates greatly. At the moment he is hanging around € 1500, which is still high. The price of Bitcoin Cash is also increasing, if you look at the growth compared to November. Then the cryptocurrency was only worth a few hundred euros.
For the time being this is also the only drawback of Bitcoin Cash. The gigantic increase in interest in cryptocurrency creates a lot of uncertainty – no one can predict what will happen. So if you want to buy Bitcoin Cash, do so in moderation. Then you are sure that you do not take too much risk.
Where can I buy and sell Bitcoin Cash?
If you are interested in buying and / or selling Bitcoin Cash, then you have several options. I discuss the following options below:
Option 1: Buy Bitcoin Cash at an exchange
This is in theory the ‘simplest’ option. You just exchange your euros for Bitcoin Cash. All sounds well and good, but what you must Bitcoin Cash store ? You can not just have them on an account or something like that.
Bitcoin Cash is stored in a special electronic wallet: a wallet.
There are different types of wallets. First there is an online wallet . This is on the site of a provider, such as Litebit or Kraken. However, this is not very safe for large amounts, because if your account or the site is hacked, you have already lost your Bitcoin Cash.
You can also store a wallet on your own PC . This special software is separate from an external service (such as Liteibt or Kraken). Your PC can still be hacked, or get a virus, so be careful. The most secure is a hardware wallet . This is a kind of usb stick, where your Bitcoin Cash stands up. This can not be hacked, but you can lose it!
If you have a wallet, you can buy Bitcoin Cash at an exchange . Nowadays there are more and more exchanges that support the sale of Bitcoin Cash, even though it is a young currency. Some exchanges also support iDeal , making Bitcoin Cash buying very easy.
On other exchanges you first have to buy ordinary Bitcoin before you can transfer it to Bitcoin Cash. This is usually slightly more expensive, in connection with transaction costs. With iDeal there are no transaction costs, making this the best way to buy Bitcoin Cash.
What about selling Bitcoin Cash ? Very simple: this can usually also be done with an exchange. So your strategy is to buy Bitcoin Cash, wait until the price has risen, and then sell again. Yet this is not the ideal way to make money with Bitcoin Cash. That is, investing in Bitcoin Cash through a trading platform.
Option 2: Investing in Bitcoin Cash via a trading platform
Buying and selling Bitcoin Cash may seem like easy money, but it is not. First, your profit margin is only very small . You have to wait a long time before you can make a little money – and then I still assume that the price of Bitcoin Cash keeps rising.
In addition, you have to make great efforts to keep track of the development of Bitcoin Cash. You do not have one central place where all information can be found. When you have little knowledge of cryptocurrency and / or Bitcoin Cash, it can take a lot of time and energy.
It works like this: if you invest in Bitcoin Cash for a certain amount, that is only partof what is invested on your behalf. The rest comes from the trading platform. When the price of Bitcoin Cash continues to rise, and you sell your shares at a certain point in time, you can therefore make much more profit . The profit is actually settled over the total amount, while you have only invested a part.
Of course this also has a disadvantage; if the price of Bitcoin Cash goes down, that means you make a loss . Because of the leverage effect, you would also lose more than you invested. This is an important risk associated with investing in Bitcoin Cash via a trading platform.
In addition, keep in mind that the prices of cryptocurrencies, including Bitcoin Cash, are very unstable . They can fluctuate tremendously in a few hours. So in the long term, because otherwise it is not possible to earn reliable money with Bitcoin Cash.