Bitcoin Cash cryptocurrency guide advises where to buy and how to buy Bitcoin Cash. This guide also contains the markets, value, trading, investing, buying, selling, transactions, blockchain, mining, technology, advantages, risks, history, legislation, regulation, security, payment, networks and many other interesting facts about Bitcoin Cash as well its status in the world of cryptocurrencies.
Bitcoin Cash, Thursday, 2018-02-22
- 1 What Is Bitcoin Cash?
- 2 Beginner's Guide to Bitcoin Cash
- 3 Where and How to Buy Bitcoin Cash?
- 4 Bitcoin Cash Markets
- 5 Where to Spend or Use Bitcoin Cash?
- 6 How Does Bitcoin Cash Work?
- 7 Bitcoin Cash Regulation
- 8 Is Bitcoin Cash Secure?
- 9 History of Bitcoin Cash
- 10 Bitcoin Cash Videos and Tutorials
- 11 See Also
What Is Bitcoin Cash?
In 2009, Satoshi Nakamoto became the first person/persons to pioneer use of blockchain technology. After releasing Bitcoin, he simply fired the beginning of a race that seemingly appears to have no end in sight. Over 1300 cryptocurrencies had entered the market by the close of 2017. One of the most valuable, best performing, and promising cryptocurrencies was Bitcoin Cash (BCH). Therefore, what exactly is Bitcoin Cash?
Bitcoin Cash is a decentralized peer-to-peer cryptocurrency that was developed from the Bitcoin Core. Bitcoin Cash was formed as a hard fork of Bitcoin. In some cases, you will get the cryptocurrency being referred simply as an upgraded/ peeled/ or forked version of Bitcoin core software released in August of 2017. The fork increased the block size limit in Bitcoin Cash to 8 MB (megabytes) from 1 MB in the original Bitcoin. This means that miners on the Bitcoin Cash can process more transactions and payments every second. The ultimate effect is faster, smoother, and indeed cheaper transactions.
At this moment, people who are new to cryptocurrencies and especially to Bitcoin Cash have a plethora of questions. If I have Bitcoin, why really bother with Bitcoin Cash? How exactly was Bitcoin cash effected? Which is better between Bitcoin and Bitcoin cash? To understand all of these issues, questions, and concerns, let us go back to the beginning and take a look at Bitcoin and how it operates. This will help us demonstrate why and how Bitcoin Cash came about.
The Bitcoin scalability problems that heralded the idea of Bitcoin Cash
While Bitcoin is no doubt the biggest and most valuable cryptocurrency, it comes with a number of problems as well. The Bitcoin system uses mining to create new blocks through the proof-of-work protocol. A new block, a unit comprising of latest transactions, is added every 10 minutes with the miner who confirms it getting 12.5 BTC in reward. The most notable problem for Bitcoin was scalability.
As more people join the Bitcoin network, the monthly transactions continue to grow at an even faster rate. However, the current block size of 1 MB only allows the system to handle 4.4 transactions per second. This is the biggest problem. How would Bitcoin compare to other payment networks such as Visa that can process thousands of transactions per second? A change was nigh!
What the small Bitcoin block size meant was that transactions would easily clog the network forcing users to wait for longer. This would compromise the original idea of having prompt transactions. One of the suggestions to address the Bitcoin scalability problem was raising the transaction fee to incentivize miners. However, this would drive users from Bitcoin to other networks. But some people asked; why not simply increase the block size?
Well, an ingenious solution! Isn’t it? But, it is not as simple as it sounds. It would have yielded numerous issues as well as conflicts between the original core (requiring 1 MB) and the new core (requiring more MBs). Arguments against the increase in block size also pointed at the risk of centralization, split in Bitcoin community, and loss of incentive to miners. Another solution had to be sought.
The Bitcoin hard fork and birth of Bitcoin Cash
With the idea of increasing blocks was finally considered unviable, the Bitcoin community mulled over the ideas of a soft or hard fork. A fork is a divergence in perspective of the state of a specific blockchain. In that light, a soft fork of the Bitcoin meant updating the software in a backward compatible manner. What does this mean? Think of a situation where you have an MS Excel 2007 version on your computer but wants to open a document in MS Excel 2010. This is still possible because MS Excel is backward compatible.
Unlike the soft fork, a hard fork is not backward compatible. When implemented, you cannot go back whatsoever. If you fail to get the latest version of a hard fork, you are simply out of the network. Consider hard fork as a total transformation of a software with crucial changes but maintaining important characteristics of the main version.
The Bitcoin community settled for a User Activated Hard Fork (UAHF). This meant splitting the Bitcoin Core Version to create a new cryptocurrency. The new version, Bitcoin Cash uses the Bitcoin Network, works like Bitcoin, but differs in design and size. Bitcoin Cash also features a larger block size of 8 MB compared to original Bitcoin that has 1 MB.
Beginner's Guide to Bitcoin Cash
Between 2016 and 2017, cryptocurrencies were perhaps the most sought-after topics. But this is only an indication of the fast-growing trend of blockchain popularity. When cryptocurrencies entered the financial sector around 2009, many people considered them with great suspicion. Both governments and individuals saw them as disruptive and often opted for alternatives. However, 2016 and 2017 saw a sudden explosion of cryptocurrencies as people started appreciating their value, application, and freedom.
One such cryptocurrency is Bitcoin Cash. By the close of 2017, this was the youngest major cryptocurrency in the industry with only 5 months in existence. The cryptocurrency was founded by the Bitcoin Community that wanted to rectify issues that were persistent and limiting the potential of Bitcoin. One such issue was scalability.
Bitcoin Cash is designed to have a bigger block size of 8 MB compared to the original Bitcoin’s 1 MB. This means that Bitcoin Cash can handle more transactions, faster, and with greater efficiency. The interest in this cryptocurrency has grown so fast that even those in other cryptocurrencies are offloading to join Bitcoin Cash.
Why Bitcoin Cash? Is it a worthy investment?
In this guide, we dig deeper into the Bitcoin Cash network to establish every component that is contributing to this popularity. We take a complete flashback to establish how the need for a hard fork came about and how it was implemented. This is not all.
We delve even deeper to establish the nature of the technology used in Bitcoin Cash, how to buy, how to trade, and inherent value of the cryptocurrency. Whether you want to invest in BCH or simply want to use it for sending payments, this is the ultimate guide. Keep reading to get all the answers to questions you might have about Bitcoin Cash.
Where and How to Buy Bitcoin Cash?
Bitcoin Cash is among the leading cryptocurrencies in the market. This has attracted a lot of interest from people who want to get a share of the fast-growing cryptocurrency. While you can mine Bitcoin Cash on the main blockchain network and direct the coins to your wallet, an easier and faster way is to simply buy. However, how do you go about it?
- Acquire an appropriate Bitcoin Cash wallet: This is the first step when buying Bitcoin Cash. The wallet is the place where all the Bitcoin Cash coins will go.
- Identify an appropriate market and buy the BCH. These are the platforms that allow people with interest in Bitcoin Cash to buy and own the coins.
The main platforms you can buy Bitcoin Cash from
Many platforms have joined the cryptocurrency industry to help users purchase Bitcoin Cash and other cryptocurrencies with ease. Remember that most of these platforms are profit based and will charge a fee for using their systems. Therefore, you need to factor the charges when picking the right platform.
1) Cryptocurrency exchanges
- These are like the conventional forex markets though they deal with cryptocurrencies as opposed to fiat currencies. The price of BCH in the exchanges is driven by demand and supply. Great examples of Bitcoin Cash exchanges include Poloniex, Cryptopia, Changelly, and CEX.io.
2) Cryptocurrency Brokers
- The brokerage firms, like the exchanges, are registered entities in their jurisdictions. This means that they operate within the established local laws. Note that the price of BCH in the brokerage firms closely follows that in the exchanges but it is adjusted upwards to factor the respective company’s profit. Some great brokerage firms include CoinMama, Coin Access, and BitPanda.
3) Cryptocurrency ATMs
- The cryptocurrency ATMs are designed to run like the standard banking automated teller machines. You simply walk in and purchase the crypto coins of choice using fiat currencies. However, these ATMs are limited to a few cities and users can only use them to by Bitcoins. After buying BCT, you can go ahead to convert to BCH.
Bitcoin Cash Wallet
When you decide to join the cryptocurrency world, one thing you MUST have is a cryptocurrency wallet. A Bitcoin Cash wallet is the location where all your BCH will be held. It also helps you to trade, receive BCH and manage the coins.
Note! Though a Bitcoin Cash Wallet is mainly tagged as a location for storing crypto coins, the description is indeed a misconception. In reality, Bitcoin Cash coins are neither printed/minted nor available physically. They only reside in the Bitcoin Cash network. What the Bitcoin Cash wallet stores are the private keys and public keys.
The private keys are special codes only known to you and the wallet. The codes are the only link to your coins. This means that if you lose the keys, all the Bitcoin Cash coins you had in the network are lost. That is right. They are gone forever. This means that you must take care of the private keys with zeal.
Unlike the private keys, public keys can be shared in public. The keys are the link to your wallet. If someone wants to send you some BCH, what you provide is the public keys. For example, if a business is selling its products and accepting payment in Bitcoins, buyers will be provided with the public keys of that business. Consider the public keys as an email address that you can give to in public. However, the private keys are like password to that email address.
The main types of Bitcoin Cash wallets
Since 2009 when Bitcoin was launched, new wallets have hit the market to provide users with diversity and convenience. There are five main types of Bitcoin Cash wallets that you can pick.
- The desktop wallets: These are the simplest forms of Bitcoin Cash wallets available today. You have to download them as apps and install on the home computer to access your Bitcoin Cash coins.
- Mobile Bitcoin Cash wallet: Unlike the desktop wallets, mobile cryptocurrency wallets are made to run on your mobile phones. They work like standard apps and are the best option for Bitcoin Cash users on the go. Notably, you should be very particular about the compatibility of the operating system. Most of the Bitcoin Cash mobile wallets are designed for specific operating systems such as Android and iOS.
- Web-based mobile wallets: These are Bitcoin Cash wallets that are provided and maintained by third parties. With web-based wallets, you can only access the Bitcoin Cash coins when connected to the internet.
- Hardware wallets: These are actual hardware with special chips for storing the private and public keys. Most of them are finger-sized hardware that look like the standard flash drives. Unlike the web-based or desktop wallets, the hardware wallets are considered most secure because private keys never leave the wallet even when confirming transactions.
- Paper wallets. These are printed scripts of the actual private keys. The print outs allow you to store the coins in a safe until the time when you will need them. The paper wallets are ideal for those who want to hold BCH over a long time waiting for the value to go up.
Top five Bitcoin Cash wallets on the market today
Notably, most Bitcoin wallets also work perfectly for Bitcoin Cash. To pick a great wallet, it is important to factor its security, recovery capabilities, and cost of transactions. If you are involved in trading BCH, it will be a great idea to look for a wallet that also serves as an exchange. Here are the top five Bitcoin Cash wallets that you should consider.
1) Ledger Nano S (hardware wallet)
- Ledger Nano S is one of the leading cryptocurrency wallets in the market. Your Bitcoin Cash coins are stored offline to guarantee users of utmost safety. The coins are stored in a special chip fitted inside the hardware wallet. To guarantee users of greater security, the private keys are signed in the hardware and never leave the Ledger Nano S wallet even when making transactions.
- To make recovering your Bitcoin Cash coins easy, Nano Ledger S generates a private seed phrase to use in the event of a loss or malfunction. However, it is advisable to always maintain a backup such as buying two Ledger Nano S and keeping one under lock and key.
2) Trezor wallet (hardware wallet)
- This is another hardware wallet that has gained a lot of popularity in the recent past. Though the wallet was specifically designed to work on Bitcoin, it is equally effective on Bitcoin Cash. Like Ledger Nano S, the Trezor wallet is finger sized and also generates private keys seeds that make recovery easy.
3) The Exodus wallet (Desktop wallet)
- Though hardware wallets are classified as the safest when it comes to storing your Bitcoin Cash coins, they have the disadvantage of being very expensive. The immediate alternative is a desktop wallet that runs like an app on your computer. You have to install the wallet on your laptop or desktop to connect to Bitcoin Cash network and store the coins.
- The main features that make Exodus to stand out from others is that it comes with ShapeShift integrated into its system. This makes trading Bitcoin Cash for other coins easy, fast, and highly convenient. Besides, it also comes with email recovery and allows users to generate private keys seed phrase for direct recovery.
4) Electrum wallet (desktop and mobile wallet)
- This is one of the most popular wallets in the market because it serves as a desktop and mobile wallet. The main advantage of Electrum wallet is that it is lighter compared to other wallets that require users to download full Bitcoin Cash nodes. You simply download the app, configure it, and you are ready to start storing and trading BCH. If you want to use the wallet on the phone, it supports both iOS and latest Android versions.
5) BU Bitcoin Cash Client (Desktop wallet)
- This is one of the best Bitcoin Cash clients out there. It was designed by Bitcoin Unlimited Developers (Bitcoin Community) that was initially involved in the Bitcoin fork that yielded BCH. The wallet is available for most operating systems including Mac, Linux, and Windows.
Where to Buy Bitcoin Cash with Credit Card?
As the society edges closer towards a cashless system, the attachment to conventional payment methods remains strong. In particular people have a special attachment to their banks and credit cards. If you want to buy Bitcoin Cash with a credit card, you only need to follow these steps.
First, get an appropriate cryptocurrency wallet for holding BCH after the transactions are completed. Then, pick a cryptocurrency exchange that accepts credit cards. It is important to appreciate that all the exchanges and crypto brokerages require users to open an account with them before buying BCH using credit cards. In some cases, you might have to buy Bitcoins and convert to BCH. Some of the top options include;
Where to Buy Bitcoin Cash with PayPal?
By the end of 2017, no cryptocurrency market allowed users to buy BCH directly with PayPal. Most of the markets indicated they were still studying BCH to know whether to add it to their system or not. However, you can still get hold of BCH from some markets by purchasing BTC and then converting to BCH. Three main exchanges that accept PayPal for Bitcoin include Paxful, Coinbase, and LocalBitcoins.com.
How to Buy Bitcoin Cash with Wire Transfer?
One thing that many people hold dearly in their lives is a bank account. Even those who have invested a lot in cryptocurrencies still have deep connections with their banks. The banks are trusted because they verify transactions and reduce the danger of falling into scams. However, most of the banks do not want a lot of attachment with cryptocurrencies. This means that the process of buying Bitcoin Cash using wire transfer can be lengthy. Here are the main steps to successfully buy Bitcoin Cash with a wire transfer.
- Identify an exchange that accepts wire transfer and open an account.
- Navigate to the purchase section and select Bitcoin Cash.
- Choose Wire Transfer as the method of payment.
- Verify all the details required to complete the transaction and wait for confirmation.
Most exchanges that accept wire transfer take a number of days before they can process the transaction. They want to see funds before transferring BCH to your wallet. Therefore, you might have to wait for longer before BCH hits your account. Some great examples of exchanges that accept wire transfer include CoinFloor, Coinbase, and CEX.io. Note that the charges for buying Bitcoin Cash with wire transfer are relatively higher compared to other methods.
Where to Sell and Trade Bitcoin Cash?
When you accumulate some BCH over time, the only way to convert them into fiat currency is selling. However, others are interested in selling BCH for other cryptocurrencies with greater potential. The same platforms used for buying BCH are the same ones when it comes to selling Bitcoin Cash. Here are some of them.
- This is one of the leading cryptocurrency exchanges in the market today. It is preferred by Bitcoin Cash traders because it allows them to buy and sell their coins for other cryptos as well as fiat currencies. Besides, the exchange also accepts bank transfers and credit cards when trading BCH.
- This is a US based cryptocurrency exchange that was started to support Bitcoin. However, it has expanded over the years to accommodate other cryptocurrencies including Bitcoin Cash. The exchange has more than 4 million users and allows them to trade in top cryptocurrencies.
- The main disadvantage of using Coinbase is that they have a very lengthy verification procedure. Besides, their transaction fee is 1%. This is very high especially for traders handling big volumes in the exchange.
3) Gemini Exchange
- This is a major cryptocurrency exchange started and operated by Winklevoss. The cryptocurrency has become a favorite for many Bitcoin Cash traders because of its flexibility and low transaction fees. Its fee of 0.25% is very low compared to other platforms such as Coinbase that charge up to 1%.
- The main disadvantage of using Gemini is its complicated UI (user interface). The exchange is very complicated especially for first-time users or those new in cryptocurrency world. Besides, it also deals with only a few cryptocurrencies. This means that traders’ options are limited to only a few crypto assets on offer.
4) Trading on cryptocurrency clubs
- Because of the fast-growing popularity of cryptocurrencies, a lot of interest has emerged. Now, people have started forming groups to help them understand the cryptocurrencies and emerging trends. These local clubs have also become great options for direct sales of BCH for fiat or other cryptocurrencies. One such club is the LocalBitcoins.com that facilitates the meeting between buyers and sellers.
- Note that even with direct sales, you must have a cryptocurrency wallet because BCH only resides in the respective network. Besides, the clubs do not have restrictions for user. This means that you can agree to effect payment in fiat or another format.
The secret to successful trading in Bitcoin Cash is picking an appropriate exchange. You must carefully review to establish its security, commitment to customer value, and ease of use.
How Much Are the Transaction Fees of Bitcoin Cash?
One of the main reason that makes people run away from conventional banking institutions when making payments is the high cost of transactions. However, are the charges at Bitcoin Cash cheaper? When Bitcoin Cash was launched, the average cost of a transaction was $0.245. However, this fee has been fluctuating based on demand, trade volume, the price of Bitcoin Cash and other network logistics. The transaction fee of Bitcoin Cash fell sharply to 0.0095 BCH on 16th August 2017 after launch following the price dip.
The highest point that transactions fee in Bitcoin Cash network has ever reached is 0.9 BCH on 20th of December 2017. Therefore, as more factors come to play in shaping the demand and supply of Bitcoin Cash, the fee is expected to continue fluctuating.
Bitcoin Cash Markets
Crypto coins have become a hot commodity in the society today. If you have mined some BCH and want to trade them for fiat currencies or other cryptocurrencies, the focus should be picking a good market. The same way that cryptocurrencies are being introduced at a fast rate, so are the markets.
To use a specific market, you are required to become part of it. This means registering with the respective market and meeting all the regulations. Unlike the cryptocurrencies such as Bitcoin Cash and Bitcoin among others that are not regulated, it is different when it comes to markets. The exchanges are guided by local laws. This means that you will be required to provide a lot of details such as name, proof of address, and even phone number in some cases. This brings us to the question; how do you pick a great cryptocurrency market.
Five tips to help you pick an appropriate cryptocurrency market
One thing that every cryptocurrency trader should note carefully is that most crypto coins are at a higher risk of getting stolen at the market level. For example, it is very rare to hear reports of a specific cryptocurrency network being hacked and altcoins siphoned away. However, reports of cryptocurrency markets getting hacked and lots of coins stolen are way too common. Follow these tips to pick the best market for your BCH.
- The reputation of the market: This is perhaps the greatest factor when selecting a Bitcoin Cash market. If a market has a great reputation, the chances are that its services are good and reliable. You can tell this by following major reviews, individual feedbacks and joining cryptocurrency forums such as BitcoinTalk.
- The verification requirements: One of the main goals of joining the cryptocurrency world is ensuring that personal investment and transactions remain private. Because cryptocurrencies require some registration, it is advisable to look for the markets that do not ask for lots of personal information that can be used to identify you.
- The charges for using the market: To use every exchange, users are charged a fee. You should carefully review the charges to ensure that bulk of the profits do not go into the fee.
- Geo-restrictions: Some cryptocurrencies are designed to operate within specific geographical limitations. For example, Cryptopia only allows traders in the Far East to operate in its platform. If you are located outside New Zealand, the chances are that the system will reject your application immediately.
- The security of the market: Your Bitcoin Cash is at a greater risk of getting stolen at the market level. To be sure of picking a safer market, it is better to look for an exchange with multiple layers of security such as 2-factor authentication, blockchain transaction confirmation, and latest technologies. You should particularly target the market with no hacking history.
The top four Bitcoin Cash markets
- Poloniex is one of the most diverse and advanced cryptocurrency markets in the globe. It provides very high liquidity for most altcoins tradable against Bitcoin Cash. The exchange was started by d’Agosta Tristan in 2004. The design of the market is helping traders operate anonymously, provide full-time monitoring, and trading funds.
- The first step to using this market is signing up for an account. This takes less than 10 minutes to complete and start operating. When selecting the account, you will also be required to pick an appropriate operational level.
- You can opt to operate at level one that requires names, address, and email address for verification. However, level one comes with a trading limitation of $2000 worth of Bitcoin Cash. This level is ideal for new entrants who only target subtle trading. However, those who want higher trading levels of up to $25,000 should go for level two authentication that requires more personal details such as phone number and government-issued ID.
- Notably, there is a third level that allows traders who target very large volumes surpassing $25,000. However, this level requires users to contact Poloniex directly for the account to get set.
- The transaction fee at Poloniex depends on the volume involved. By the close of 2017, transactions involving amounts less than $600 worth of Bitcoin attracted charges of 0.15% and 0.25% for the maker and taker respectively. However, the feeling keeps going down as the transaction volume goes up. For example, a transaction of amounts worth more than $24,000 only attracts a small fee of 0.1% on the taker while the maker is not charged anything.
- Like Poloniex, Bittrex is one of the leading cryptocurrency exchanges in the market today. It was started in 2014 by computing experts, Bill Shihara and Lai Richie, who focused on offering a trading platform for the most trusted altcoins. It particularly stands out from others for allowing users to trade Bitcoin Cash with fiat currencies.
- In addition to operating as an exchange, Bittrex is also a cryptocurrency wallet. This means that you can store Bitcoin Cash in Bittrex and trade on the same platform. Notably, Bittrex confirms every transaction on the Bitcoin Cash blockchain to ensure that only those who own Bitcoin Cash can spend them.
- To guarantee users of extra security, the exchange uses a two-factor authentication model and ensures that all accounts are verified using government issued ID and addresses. The focus on security has helped to keep Bittrex free of hackers. Since its establishment, no case of successful hacking has been reported.
- The biggest setback for Bittrex is the lengthy registration process. Unlike Poloniex that allows users to complete the process in just a few minutes, it can take days before an account is ready for trading at Bittrex. Besides, the customer service is equally poor. Replies take a long time before replies are forthcoming.
- This is one of the top ten cryptocurrency trading exchanges for Bitcoin Cash holders today. It was founded in 2013 by the same forks who founded MinerGate. MineGate is among the leading Bitcoin mining pools. The main focus of Changelly founders was to create a platform that guarantees users of faster transactions and convenience without revealing their identities. To start trading Bitcoin Cash on Changelly, users are required to sign up for an account and have an appropriate wallet.
- The main features of Changelly include its market analysis and speed. The platform is one of the fastest markets for Bitcoin Cash traders who want to enjoy fast growth. The speedy transactions mean that you can take advantage of emerging opportunities to optimize profits.
- Another unique feature is the API (application programming interface) for merchants referred as "Smart Payin" API. This is designed for merchants especially in the entertainment industry who want to receive payments in Bitcoin Cash or other altcoins traded at Changelly. In addition to these enthralling features, Changelly does not have a limitation on the amounts that one can trade on the market.
- The only con of using Changelly is that the team behind it is anonymous. This has made users to hold a lot of suspicions that their Bitcoin Cash could be at risk of getting siphoned away. Despite these worries, no successful case of hacking has been reported.
- This is one of the fastest rising markets in the Far East. It is based in Christchurch, New Zealand, where founders target making it a one-stop point for buying and selling multiple assets. The biggest selling point for Cryptopia is that it allows users to trade Bitcoin Cash for fiat currencies.
- The first step in using Cryptopia is signing for an account. You could opt for level one that only requires email verification. However, trading is limited to $5,000 worth of BCH / 24 hours. If you target higher volume between $5000 and $50,000 worth of Bitcoin Cash, go for the Level Two Verification. This level requires users to provide an email address, national ID, and proof of address.
- Level Three Verification is the highest at Cryptopia. At the third level, you are required to provide an email address, personal phone number, proof of address, national ID, and an application demonstrating the personal need for the high transactional volumes. You are allowed to handle transactions of more than $500,000 worth of Bitcoin Cash every 24 hours.
- One notable thing about Cryptopia is that it comes with a marketplace. This means that you can visit multiple e-stores, make orders, and pay in Bitcoin Cash or other altcoins. The marketplace has enabled this exchange to become an irresistible attraction because users can purchase anything.
- The biggest undoing for Cryptopia is that it is geo-specific. Though it allows users to trade in fiat currencies, it is only limited to New Zealand dollar. Besides, users have to provide New Zealand identity cards to start operating. Well, though it has a lot of potential, the chances are that those outside New Zealand might find it very difficult to open accounts and operate smoothly.
Value of Bitcoin Cash
When Bitcoin Cash was launched after a hard fork of Bitcoin core code, many people expected it to follow the same trend depicted by Ethereum after the Dao Attack. But Bitcoin Cash has defied all odds to become one of the most valuable cryptocurrencies in the market by close of 2017.
In the first two days of trading after launch, Bitcoin Cash value had already hit $700 mark. This was a milestone because it had already surpassed even other top cryptocurrencies such as Ethereum and Ripple that had been on the market for longer. But the price growth did not stop there.
By the close of 2017, the value of Bitcoin Cash had grown to reach $2500. This is indeed remarkable factoring the huge number of cryptocurrencies available to users. But many people have been quick to ask about the reasons for fast growth in Bitcoin Cash value. Here are some of the main drivers.
- Association with Bitcoin which is an already well established cryptocurrency.
- Positive publicity about the benefits that Bitcoin Cash brings.
- Many people view Bitcoin Cash just like Bitcoin.
- The cryptocurrency was introduced at a time when the popularity of cryptocurrencies was growing rapidly.
Is It Profitable to Invest in Bitcoin Cash?
For many years, many people have mainly focused on placing their investment in hard assets such as real estates. Even those who invested in capital markets still maintained a large proportion of their money in hard assets. But things are changing rather fast. When Bitcoin entered the market, it opened a new line of investment that has demonstrated to yield good results.
A person who bought one Bitcoin in 2009 when the value was less than a dollar was more than $15,000 richer by close of 2017. But Bitcoin is not the only profitable cryptocurrency out there. Other highly viable options include Bitcoin Cash.
Why it is profitable to invest in Bitcoin Cash
Many people see Bitcoin Cash as a replacement for Bitcoin. While this is the wrong perception, it appears to work in the BCH advantage. Because BCH is marketed as a better crypto, they are rushing to the better option. This is the reason that has made BCH grow in value within a few months of launching. This trend is expected to continue.
Because Bitcoin and Bitcoin Cash are linked together, the latter is riding on the success of the former. This means that if you did not get a chance of acquiring BTC when it was launched in 2009, there is another opportunity in BCH. Simply buy BCH and wait for progressive growth in the years to come.
While Bitcoin value has hit the roof, many people are finding it difficult to buy because of the high price. The alternative has been to identify another option that provides the same impetus for growth. With Bitcoin Cash resembling and operating like BTC almost in every aspect, it has become an irresistible option.
It is important to note that though it is considered a profitable option, the flow of returns depends on the market conditions. For example, if the looming cryptocurrency regulations hit hard on cryptocurrencies, the anticipated profitability could become a mirage. Other things that can impact on expected BCH profitability include competition, cyber attacks, and technology changes.
Where to Spend or Use Bitcoin Cash?
One of the methods used to gauge the acceptability of a cryptocurrency is checking the number of traders who accept it as payment. While top cryptocurrencies such as Bitcoin and Ethereum have struck deals with many companies to facilitate payment in their native coins, Bitcoin Cash is still lagging behind. However, this could be understood because Bitcoin Cash was only a few months old by close of 2017 while others such as Bitcoin have been in operation for close to ten years. One store that has come out to accept BCH as a payment method is Overstock. The store also accepts payment in other crypto assets such as BTC and Ether.
Notably, the small number of stores that accept Bitcoin Cash should not deter you from joining its network. When you have Bitcoin Cash, converting to Bitcoins is only a click away. Therefore, consider all the stores that accept Bitcoin for payment to be within reach.
Can Bitcoin Cash Grow to Become a Major Payment Network?
Yes, Bitcoin Cash can grow to become a major payment network. As the popularity of cryptocurrencies continues to grow fast, many people see the blockchain technology as a great alternative to making payments easy and fast. However, the competition is stiff with more than 1300 cryptocurrencies fighting for the same space by close of 2017. Though Bitcoin Cash value has grown rapidly within the first five months of launching, signs indicate that it could become a major network.
- Bitcoin Cash is attracting a lot of users: Having a large following is the bottom line in becoming a major payment network. This means that people trust in the network and are willing to use it to make payments across the globe.
- The network value has continued to grow progressively: The main attraction to a cryptocurrency is its performance in the market. Many people only want to use the network that promises good returns. For example, users are opting to get payment in BCH because it will grow in value over time.
- The network is handling more transactions than Bitcoin: The major bottleneck that made the Bitcoin community opt for a hard fork was scalability. Though Bitcoin Cash does not indicate the number of transactions that can be completed per second in its network, it is better than the original Bitcoin.
- Most users are looking at Bitcoin Cash to fill the gaps created by Bitcoin: Notably, Bitcoin Cash is not being looked at to only address the issue of scalability. Rather, the community in the Bitcoin system is looking at it as the main alternative that will help to advance Satoshi Nakamoto’s main vision of being the greatest payment network.
While the capability of Bitcoin Cash to become a major payment network looks promising, there is no doubt that a lot has to be done. For example, Ripple has managed to grow rapidly because of working with banking and many financial institutions. Bitcoin Cash has to ensure that more companies are free to join and complement each other as opposed to being rivals.
How Does Bitcoin Cash Work?
Bitcoin Cash as one of the latest cryptocurrencies focuses on making transactions in the system faster, cheaper, and more reliable. To put it differently, the main operation of Bitcoin Cash resembles Bitcoin system but runs more efficiently. This is one of the reasons many people think that Bitcoin Cash will one day beat Bitcoin.
When you think of how Bitcoin Cash works, it is important to factor the original vision of Satoshi Nakamoto. In his white paper released late in 2008, Satoshi Nakamoto wanted to develop a completely anonymous system for sending money without using third parties. This is the central pillar upon which Bitcoin Cash is premised.
Bitcoin Cash is a network that allows users in the network to send money directly to the payee. A store that accepts Bitcoin Cash will receive payment directly from buyers without involving third parties such as banks, credit card companies, or brokers. The only thing that users require is being part of the network.
The Bitcoin Cash public ledger
Like other cryptocurrencies, Bitcoin Cash uses a public ledger which is a collection of the latest confirmed transactions. When a user in the network sends funds, the details of the transaction are confirmed and put together in a block that is stamped and added to the public ledger.
As a user, your Bitcoin Cash wallet links with the network to determine the number of spendable coins you can use. This is the confirmation that has to be made by miners when a transaction is initiated. The transactions are added to the public ledger in a chronological order using advanced cryptography and algorithm.
To start using Bitcoin Cash to send payments, you are required to have the cryptocurrency client and an appropriate wallet. The Bitcoin Cash client will help you to become a node in the network that allows users to start working as miners. The Bitcoin Cash wallet is used to hold your coins whether after mining or payment. The wallet will also hold your private keys that give access to and control of the coins.
Does Bitcoin Cash Use Blockchain Technology?
Yes, Bitcoin Cash operates on blockchain technology. The Bitcoin Cash network utilizes the model that Satoshi Nakamoto espoused in 2008 before launching Bitcoin. In his design, Nakamoto anticipated creating a system of payment that was free from interference by third parties.
The Bitcoin Cash blockchain uses a peer-to-peer protocol where transactions are completed without using parties such as banks or credit card firms. All that you need is the address of the payee to complete a payment. Once a user initiates a transaction, it is taken up by nodes distributed in the Bitcoin network for verification. Miners in the network race to solve complex mathematical puzzles to confirm the transactions initiated by users. The first person to confirm a transaction is rewarded with BCH. This is an incentive to keep miners at work and release all the BCH into the network.
Once transactions are confirmed in the Bitcoin Cash network, they are added to a public ledger (a series of confirmed transaction blocks arranged chronologically). After the transactions have been confirmed and added to the public ledger, they cannot be altered. The nodes have to agree on every transaction through consensus before it can be added to the public ledger every 10 minutes.
The blockchain technology in Bitcoin Cash is the main thing that helps to secure the network. A network of nodes spread in the network stores all the data and helps to maintain its integrity. As far as more than 50% of nodes are independent, the Bitcoin Cash network remains completely secure. This is the secret behind the success of the network because it is very difficult to control of influence the decision of more than 50% of the nodes.
The blockchain technology has also helped to give the nodes total ownership of the system. Whether it is simple transactions or major decisions, it is only the nodes that can make the decision about them. They also help to protect users from third-party seizures because every operation is encrypted and fully anonymous.
Mining Bitcoin Cash
Bitcoin Cash mining is the process used in the Bitcoin Cash network to add new coins to its system. When Bitcoin Cash was founded, a total of 21 million BCH were created. These coins are released into the Bitcoin Cash network through a process referred as mining. The nodes spread in the Bitcoin Cash network work hard to confirm transactions for a reward in BCH. To start mining Bitcoin Cash, you need Bitcoin Cash client, an appropriate software, and hardware.
- Find the appropriate mining hardware
- When Bitcoin was launched in 2009; it was possible to mine using the standard CPU (central processing unit). However, the mining difficulty grew so much and made CPU mining impossible. The next best alternative was using GPU (graphic processing units) that generate higher hashing power compared to CPUs. To mine effectively using GPU, you need to set up a mining rig with multiple cards for higher hashing power.
- Mining with advanced FPGA
- FPGA (Field Programmable Gate Arrays) are specialized hardware designed to deliver high hashing power to Bitcoin Cash miners. The hardware also requires less power to keep the cost of mining low and make the entire venture profitable. If you are not a fan of FPGA, consider going for the next best alternative, ASIC (Application Specific Integrated Circuit) that deliver even more hashing power. Note that these two advanced hardware options are very expensive in the market.
- Consider mining in pools
- One thing that users in the Bitcoin Cash network agree is that the competition is growing very fast. This means that as more miners compete to confirm transactions, the chance of success in confirming transactions when working alone is very slim. However, you can join a mining pool to consolidate the hashing power. This means that you are sure of confirming more transactions. The biggest disadvantage of using pools is that all the coins generated through mining are shared among the members.
What Are the Advantages of Bitcoin Cash?
The fast growth of blockchain technologies is an indication of the public acceptance and approval. At first, Bitcoin and other cryptocurrencies were considered disruptive and a threat to the conventional institutions such as banks. But the narrative has changed over time. Today, even governments are starting to appreciate the huge benefits that come with using blockchain technologies. Bitcoin Cash has particularly stood out because of its unique design and fast growing value. Here are the main benefits to anticipate after joining the network.
- Bitcoin Cash is completely anonymous
- The main attraction drawing more users to the BCH network is the high level of privacy. The team behind Bitcoin Cash network targeted enhancing anonymity for all their operations. From traders to individuals, no one wants third parties such as banks to know their personal details. All the transactional info in Bitcoin Cash network are encrypted so that even miners who confirm transactions can only ascertain the amount but not the owners.
- It is a great way to have assurance of payment across the globe
- If you want to make payment on a weekend, during public holidays, or at night through the bank, it is impossible. Most of these institutions only work between 8 am and 4 pm. However, Bitcoin Cash empowers you to make payments any time of the day or night. Because you have the network right in the wallet or node, sending payment is only a click away. This is the freedom that many have yearned to get for years.
- The surest way to own and control the network system
- When you join the Bitcoin Cash network, it becomes yours. That is right. The Bitcoin Cash network is owned by users. You are part of the system and will be involved in making the decisions on the network. Instead of relying on a centralized authority, Bitcoin Cash relies on the consensus of users spread on different nodes in the network.
- The surest way to operate without worrying about third-party seizures
- If your cash is in the bank, the risk of getting seized is very high. A case can easily whirlwind into your doorstep and drag you to court. Whether it is a social media or workplace issue, you can easily get involved without necessarily committing a criminal offense. With such risks, the savings in the bank are an easy target by lawyers. However, joining and storing your fund in Bitcoin Cash provides the freedom from third-party seizures. You operate anonymously and at no point will the court freeze your Bitcoin Cash account.
- The value of Bitcoin Cash continues to grow rapidly
- As more cryptocurrencies enter into the fast-growing industry, users want to join those that give them better prospects for growth. Bitcoin Cash is one of them. Though it was only 5 months by close of 2017, it managed to hit top five most valuable cryptocurrencies by then. Its growth has been remarkable with experts in cryptocurrencies indicating that it could easily rival Bitcoin.
What Are the Risks of Bitcoin Cash?
Just like Bitcoin Cash has numerous benefits, it also comes with a number of risks that users should know of. The hacking in a South Korean exchange at the end of 2017 saw many cryptocurrencies including Bitcoin Cash slump in value. Therefore, no one can be sure of what will happen to Bitcoin Cash in the next few days, months or years. Here are the main risks associated with Bitcoin Cash.
- The risk of being overtaken by newer cryptocurrencies
- Bitcoin Cash was forked from Bitcoin to create a new and more effective cryptocurrency. With new cryptocurrencies joining the industry at a supersonic speed, the risk of Bitcoin Cash getting overtaken by newer and more effective networks is rather high. This could see Bitcoin Cash getting relegated to the back seat as people scramble for the new option.
- The looming regulation
- From the US to China, the topic of cryptocurrencies is a hot potato issue. There is a general feeling that many governments are about to implement laws aimed at punishing cryptocurrencies. For example, Russia and Thailand have cautioned their traders that upcoming laws could make their cryptocurrency related operations illegal. The looming regulations are making a lot of people shy away and could pull down the value of Bitcoin Cash within hours after getting passed into law.
- The danger of losing Bitcoin Cash
- Like other cryptocurrencies, your Bitcoin Cash can also be lost. You could easily lose BCH through hacking of the personal computer, attack on the exchange, or sending to the wrong address. The danger of losing BCH is that they are very difficult to restore. In most of the situations such as sending BCH to the wrong address or getting hacked means that the coins are gone forever.
- The risk of getting involved in scams
- The anonymous nature of Bitcoin Cash has become an instant attraction to fraudsters. Because the transactions are completely encrypted, scammers are sure that they cannot get discovered. This puts users at a risk of getting drawn to scams without knowing. Some scammers often release fake ICOs (Initial Coin Offerings) and steal from unsuspecting clients. Others might opt to acquire or make fake products and sell through the BCH network. You must be extra careful to only buy and carry transactions with trusted addresses.
- High volatility
- While the fast-rising demand for cryptocurrencies has drawn a lot of people into the industry, the level of volatility is very worrying. Within a very short moment, the value of Bitcoin Cash can plummet and cause huge losses. This has been experienced in other cryptocurrencies such as Ethereum during the DAO attack and Bitcoin during the Silk Road Scandal.
These risks indicate that though you are on the right track by joining the Bitcoin Cash network, you must be extra careful. Every step made on the Bitcoin Cash network should have a special focus on keeping the risks at bay. One, do not place all the funds in one basket. Spread the risk between cryptocurrencies and fiats. Two, only use the funds that you can afford to lose.
What Happens if Bitcoin Cash Gets Lost?
Many people joining Bitcoin Cash network find it very fulfilling. Whether you target buying BCH or mining in the network, one thing that should remain clear in your mind is the risk of loss. Your Bitcoin Cash can get lost through hacking, loss of the Bitcoin Cash wallet, or even forgetting the private keys. Therefore, what exactly happens when BCH gets lost?
When you lose Bitcoin Cash, there are two scenarios that can come into play. One, you could lose the BCH coins through hacking attacks or send the coins to the wrong address. This means the coins have gotten a different owner. In such a situation, the BCH will still be in the network but under a different person. Well, this is one of the main disadvantages of using cryptocurrencies. They are anonymous and once transactions are completed, there is no way to reverse them.
The second scenario is forgetting the private keys of your wallet or losing the computer/ phone wallet with the BCH wallet. What this means is that the Bitcoin Cash will still be in the network under your signature but locked completely from use. If you cannot recover the Bitcoin Cash wallet or your private keys, the BCH will remain locked for life because the user cannot activate them.
To keep the risk of loss low, it is important to be extra careful with your Bitcoin Cash wallet and private keys. Consider using the following tips;
- Never share the private keys with anybody.
- Always use the same computer to sign up for your Bitcoin Cash wallet, mine BTC, and other operations.
- Make sure to pick an appropriate Bitcoin Cash wallet with recovery capabilities.
- Keep the Bitcoin Cash client, personal computer, cryptocurrency wallet, and the operating system updated.
- Do not store the Bitcoin Cash online. Always move them to cold storage where they are free from cybercriminals when not transacting them.
Bitcoin Cash Regulation
Starting from 2009 when Bitcoin was launched, cryptocurrencies have been looked at with suspicion. In one of the private communique released by FBI (Federal Bureau of Investigation), concerns were raised that cryptocurrencies such as Bitcoin Cash could be used for terror-related funding and scams. But this is not all.
Most governments see cryptocurrencies as an emerging force that could ultimately usurp their authorities. Think of it this way. The conventional method of sending cash is through government licensed institutions and companies such as banks, credit cards, PayPal, and Visa. These companies strictly adhere to the laid down regulations especially when it comes to tax matters.
Now, enters Bitcoin Cash. A new method of payment that uses person-to-person model, pulls down the cost of transactions, and allows users to operate anonymously. This means three things. One, there is a risk of governments losing a big chunk of the money they used to get through taxes especially from institutions. Two, the institutions such as banks that were otherwise very compliant to laid down laws are likely to close down. Three, there is a likelihood of losing a lot of employment for those working in institutions such as banks.
It is because of these situations that most governments appear infuriated by Bitcoin Cash and other cryptocurrencies. Despite these concerns, there is no established legislation that targets to guide Bitcoin Cash, Bitcoin, or other cryptocurrencies.
The dilemma of regulating Bitcoin Cash
While Bitcoin Cash has all the characteristics that governments and administrations would want to ban immediately within their jurisdictions, it is interesting to find that no single state in the world has clear guidelines on applications of cryptocurrencies. Many people are rush to ask; why?
Cryptocurrencies are bigger than they appear. But the worry is that no one appears to appreciate where exactly the cryptocurrencies will end up at. About 9 years after the establishment of Bitcoin, more than 1300 cryptocurrencies have entered the industry. But why are governments finding it difficult to pass laws that regulate Bitcoin Cash?
- The Cryptocurrencies are advancing at a very fast rate. Even if a government regulates Bitcoin Cash, the chances are that a new and more advanced technology will emerge. This demands a more thorough and comprehensive law that can withstand the shifting regulations.
- The administrations are playing catch up when it comes to blockchain technologies. Most governments are lagging behind when it comes to technologies used in blockchain networks such as Bitcoin Cash. This means that they are forced to start with learning about these technologies to understand how they are applied, their uses, and craft appropriate rules. In the EU (European Union), the giant union has been forced to set up a team to study the blockchains before crafting appropriate legal framework.
- The technology is very advanced, and no administration wants to block it. Today, there is no doubt that blockchain technologies come with numerous benefits. For example, businesses are finding them easy and more convenient to use because they make work easier, reduce the time needed to send cash, and cut on costs. Therefore, no administration wants to put a lid on the technology that is promising so much.
- There is no direct entity to target with legislation. Unlike conventional banks that have specific regulation such as companies, partnerships, or sole proprietorships, the Bitcoin Cash network is not owned by any single individual. It is simply owned by users spread in the network. Therefore, who exactly would the legislation target? Even in the event that a country managed to legislate the operations of direct applications such as exchanges and ICO (Initial Coin Offering), the blockchain would continue because it is anonymous.
- The benefits of blockchain technology are being enjoyed even by governments. For years, the technology advancement has yielded the current issue of big data. In many cases, huge data generated through social media, government agencies, and private entities is so big such that storage and management is an issue to many governments. Now, blockchain technologies have given one of the best solutions for storage and making meaning of Big Data among other related issues. Therefore, the governments are looking at blockchain with envy on how to localize the applications at the local level for greater efficiency.
Despite all the concerns, it is important to appreciate that at some point, Bitcoin Cash regulations are going to be passed. This means that you need to be prepared for the aftershocks that could affect the BCH network.
Is Bitcoin Cash Legal?
Yes, Bitcoin Cash is legal. Since 2009 when the first blockchain was established, the road to 2017 was long and rough. Many administrations were left to simply look without understanding how to go about passing appropriate laws. Some have only provided guidelines on how Bitcoin Cash and other cryptocurrencies should be treated for tax purposes. But even in such cases, the basis in law remains weak, and users can easily circumvent in the network’s anonymity. To get a better understanding of Bitcoin Cash legal status, let us turn to individual jurisdictions.
- The United States
- Bitcoin Cash is legal in the US. By the end of 2017, there was no legislation passed by the US government or individual states to guide application or use of BCH. The only mention of cryptocurrencies by the administration is when the Commodities Futures Trading Commission (CFTC) classified BCH and others as commodities. This decision was arrived at because BCH is convertible from one form to another, For example, you can buy BCH using fiat or even an asset. A federal judge further asserted that cryptocurrencies such as BCH are funds and must be treated as such.
- The European Union
- Like the United States, the EU had not passed any legislation by the close of 2017. This means that BCH is legal in the EU. In 2015, the EU Court of Justice ruled that any transaction of cryptocurrencies for fiat currencies should not be subjected to VAT (Value Added Tax). The court argued that the cryptocurrencies should be considered as means of payment as opposed to commodities.
- The European Central Bank appeared to depart from the general perception of the EU Government by cautioning against the use of cryptocurrencies. At the close of the last quarter of 2017, the value of BCH and BTC rose very high and started attracting a lot of investors including big companies. The EU Central Bank cautioned companies, individuals, and even banks the fast growth could be a bubble waiting to happen.
- Notably, the EU has taken a rather positive approach when it comes to BCH by accepting that there are many benefits that come with them. Therefore, it has set a task force to study and recommend the regulations that can help the benefits trickle to more people.
- In India, there is no legislation that prohibits the use of BCH. However, the government has been very categorical that it has not licensed any entity, individual, or groups of individuals to run alternative legal tenders. By pointing that BCH and other cryptocurrencies are not legal tenders; users are limited to trading BCH for other crypto assets only.
- BCH is legal in China. China is probably the first country that made the first move intended at regulating cryptocurrencies. In 2013, the country prohibited financial institutions from using cryptocurrencies in their networks. However, trading cryptocurrencies as an individual is legal. In 2017, China banned ICOs (Initial Coin Offerings) and indicated that most of them were fraud and aimed at stealing funds of sourcing cash for criminal activities.
- Japan officially acknowledges BCH and other cryptocurrencies as means of making payment. However, the government is quick to explain that the cryptocurrencies are not legal tenders. The Japanese administration pointed that there is no section in the country’s Banking Act and Financial Instruments and Exchange Law that prohibits using BCH or other cryptocurrencies for payment. This has resulted in some regions in Japan such as the Hirosaki City to accept cryptocurrencies as payment for tourism services.
From the US to Singapore and Hong Kong to Latvia, the status of Bitcoin Cash legality remains the same; it is legal. Most countries simply caution their citizens about using BCH indicating that it could easily cause them huge losses. As an individual, it is crucial to be on the lookout for related legislations and take appropriate action such as offloading some BCH if negative laws are in the pipeline.
Bitcoin Cash and Taxes
Many people joining the cryptocurrency world today hold a lot of expectations, especially regarding taxes. The same thing that has been making people rush to tax havens is also pushing them to BCH and other cryptocurrencies. This has led to common questions including these. Should I pay taxes? Because I will make all transactions in an anonymous way, will the government find and prosecute me for failing to pay taxes?
Tax experts have also weighed on the issue. They advise clients that they should always look forward to being tax compliant by paying all dues to the government. The suspicion by the government that BCH and other cryptocurrencies are designed to help people evade paying taxes will ultimately make them pass harsh regulations. If the legislations are passed, and the blockchain networks such as BCH are forced to reveal identities of users, the chances are that you will be exposed. This could come with numerous penalties.
What is the stand of governments when it comes to paying taxes?
In the United State, the classification of cryptocurrencies as commodities means that users should look at them the way they focus on other commodities such as real estate. Therefore, resulting profit is subject to taxation. The US is particularly known to spare no effort in ensuring everyone is tax compliant. Tax experts have indicated that people should anticipate far-reaching laws such as FATCA (Foreign Account Tax Compliance Act) that was passed after the devastating 2008-2009 economic recession. Though FATCA does not make it a criminal activity to hold cash abroad, people who stash cash abroad have to reveal on an annual basis.
In the European Union, users have been told to make sure they pay tax deductions the same way they do with fiat currencies. The EU has particularly indicated that traders must not lose sight of their obligations to meet all taxes simply because they are effected in a different format.
In Israel, the government has indicated that Bitcoin Cash and other cryptocurrencies do not fall under the legal definition of a currency. However, they are taxable assets and miners, traders, and other users have to meet a 25% capital gains tax on all profits.
In Singapore, the Monetary Authority of Singapore has provided a guideline for tax application in relation to use of BCH or other cryptocurrencies. Transactions done in BCH or other cryptocurrencies are taxed based on the involved volume.
How to stay on the safe side of the tax related regulations
As more governments come in the open to indicate that they will tax profits and trade done in BCH, you need to know the surest way of avoiding conflict with the law. Tax experts posit that all BCH users should help their governments become stronger and win their affection by making appropriate tax deductions and demonstrating it.
- Make sure to always make tax deductions to the relevant authorities after completing a transaction or over a specific time frame.
- Though transactions are anonymous, you should capture the transactions to demonstrate tax compliance.
- Ensure to document the rate of BCH in the local fiat currencies at the time of a transaction.
- Do not hesitate to follow on the looming regulations that are expected to touch a lot on tax matters.
- Regularly seek the opinion of tax experts when a new tax-related issue arises in the BCH or other cryptocurrencies.
Does Bitcoin Cash Have a Consumer Protection?
Bitcoin Cash does not have a consumer protection. The responsibility and protection of consumers lies on users in the network. If you look at fiat currencies such as the US Dollars, many people think that they own the notes and coins. But the truth is that the currency is the property of the Federal Reserve. Indeed, it is even illegal to burn US dollars!
When it comes to Bitcoin Cash, the reverse is true. There is no central authority that takes full responsibility when something goes wrong. To demonstrate this, let us check a situation that happened in August of 2017. When the Bitcoin community saw there was a problem with scalability and a solution was nigh, they could not agree on what to do. No single entity could decide what was right or wrong. The initial idea of implementing SegregatedWitness was discarded because there was no consensus. They had to go back to the drawing board and implement a hard fork.
Lack of consumer protection has precipitated into a huge debate in the cryptocurrency realms. There is a great sense of insecurity when operating in the Bitcoin Cash network. But this is the trend especially with the high level of anonymity in the system. Remember that even if you feel that personal rights have been infringed, there is nowhere to run to because the cryptocurrencies are not guided by any legislation.
The best thing that you can do to stay protected when working in the Bitcoin Cash network is being extra careful with the private keys and the exchange you opt to trade the coins. In addition, you should always store the coins in an offline location to reduce the risk of attacks.
Illegal Activities with Bitcoin Cash
Since Bitcoin Cash was launched in August of 2017, it is considered by scammers and fraudsters as a softer landing because of enhanced anonymity. Scammers found it extra difficult to continue using Bitcoin after it became apparent that the network was not as private as they thought. For example, the Ransom wannacy cybercriminals who launched a series of attacks in May 2017 had not withdrawn their Bitcoins by close of 2017.
Though there is a shift towards Bitcoin Cash by scammers, no case of illegal activities had been reported by 2017. The community appears focused on maintaining the integrity of the system by keeping fraudsters away. They regularly update the Bitcoin Cash Client and ensure that only those with BCH can use them. Despite these efforts, it is important for users to remain extra vigilant and avoid sending BCH to unconfirmed addresses.
Is Bitcoin Cash Secure?
Bitcoin Cash is one of the most secure cryptocurrencies out there. The blockchain took the original Bitcoin core and strengthened it to make a more secure crypto. This is one of the reasons that many people are developing a lot of interest in the cryptocurrency. The security of the Bitcoin Cash system is guaranteed through three things.
- The Bitcoin Cash system relies on the consensus of nodes spread in its network. This means that no single authority can make decisions that can threaten the network. As far as more than 50% of the nodes do not conspire to harm the network, the system remains very secure.
- All the transactions in the system are encrypted to help protect users and the network. This means that even miners can never tell the details of a transaction beyond confirming the amount. This level of anonymity has been crucial in keeping the network from damage or loss of user coins.
- A highly aggressive development team. The Bitcoin Cash development team has learnt a lot from the previous use of Bitcoin and other emerging cryptocurrencies. These are the changes that they are adding in the new Bitcoin Cash core to make it extra secure.
Despite these advances in securing Bitcoin Cash, it important to appreciate that the greatest task lies with the owner. You have to take extra care with the Bitcoin Cash wallet, protect the private keys, and only pick the most secure exchanges. If BCH are lost at the exchange level, you cannot claim that Bitcoin Cash network is insecure.
Is Bitcoin Cash Anonymous?
Yes, Bitcoin Cash is anonymous. The design of Bitcoin Cash core is aimed at ensuring that all the transaction details are hidden from the public. When a user initiates a transaction to send cash, the details are encrypted immediately. At the confirmation level, the nodes mining the Bitcoin Cash network can only follow the details to confirm that the respective user has the BCH to spend. However, they cannot know the personal details of the user.
The advanced cryptography used in Bitcoin Cash is the main pillar being used on to help to grow the list of e-commerce businesses that accept BCH for payment. More traders and buyers want to use a system that can guarantee them of extra privacy to avoid charge-backs.
Despite the progressive focus on anonymity, the debate about the level of privacy in BCH and BTC demonstrate that more need to be done to make these networks extra secure. Just like Bitcoin, it is still possible for someone to follow your transactions and pull out personal details. However, such actions require a very advanced level of computing.
Has Bitcoin Cash Ever Been Hacked?
Since Bitcoin Cash is an anonymous network, many fraudsters target using it to mask their identities. This fear has been raised on several occasions especially at the administration level. China has indicated that it will always follow the operations of BCH with a view of pinpointing when scammers are targeting to steal from unsuspecting clients.
Since its establishment in August of 2017, there have been numerous attempts targeting both the client and exchanges. As a fork of Bitcoin, it is also important to the point that the original Bitcoin network has also been targeted very many times. In both Bitcoin and Bitcoin Cash situations, no successful hacking has been reported.
Note that cases of hacking that regularly hits the news such as in South Korea at the end of 2017 are mainly perpetrated at the exchange level. At this stage, the control of the BCH is not directly under Bitcoin Cash network, but respective individuals and exchanges. It is, therefore, crucial to be extra careful with the personal Bitcoin Cash wallet and only pick the exchange with no history of hacking. For example, you can look for an exchange that insures all traders BCH from risks such as hacking.
How Can I Restore Bitcoin Cash?
Perhaps the worst that can ever happen to a Bitcoin Cash owner is getting the native coins lost. However, it has become a reality because of the myriads of risks that users face today. Many people work hard to earn BCH either through mining or as payment for services. For others, BCH is the perfect opportunity for investment with huge potential. You can lose BCH through hacking, sending to the wrong address, or losing the Bitcoin Cash wallet. If BCH gets lost, here is how to restore them.
Note! You cannot restore Bitcoin Cash lost through hacking or sent to wrong users. Such transactions are irreversible. Your Bitcoin Cash is lost for good. The only BCH that can be restored are those lost through loss of a wallet or private keys.
If you lose the Bitcoin Cash wallet or private keys, it is possible to recover BCH and restore to the network. If you lost the wallet, you need to use a backup, restore the wallet, and reconcile with the Bitcoin Cash network. In many cases, digital wallet services providers maintain backups for their clients to help them restore lost Bitcoin Cash. However, those who have older version wallets should ensure they manually back them up.
For Bitcoin Cash owners who lose their coins after forgetting their private keys, it is possible to restore the BCH using the secret seed phrase. In many cases, digital wallets prompt users to generate recovery seed phrases which are codes comprising of numbers, letters, and symbols. If you did not have the seed phrase, it might be impossible to restore Bitcoin Cash.
The last option of restoring Bitcoin Cash involves using personal secret codes. However, this method is only workable in web-based wallets. The method works like recovering an email address where users are required to answer special questions to prove they own the wallets and BCH in them.
To make recovering BCH easier, the bottom line is getting a backup. Get used to backing up everything starting from the private keys seed phrase to the entire wallet. It is also prudent to protect your wallet through regular updates and triple checking the payee address before sending payments.
Why Do People Trust Bitcoin Cash?
When cryptocurrencies entered the financial industry, little was known about them. Indeed, a lot of myths were peddled about them. This drove many people from getting the truth about their application and advantages. However, the narrative has changed over the years as more people come to appreciate the blockchain technologies. When Bitcoin Cash was launched, there was a lot of anxiety as more people waited to grab the highly publicized crypto. This trust has continued to grow over time as followers including those in other networks express their trust in the network.
Here are 4 reasons why people trust Bitcoin Cash.
- Bitcoin Cash is seen as a cure for the issues such as scalability that negatively affected Bitcoin.
- Though it is a completely different cryptocurrency, many people still associate it with the mother network.
- Because of close association and operations that resemble those of Bitcoin, Bitcoin Cash is expected to continue growing at the same pace. The cryptocurrency community indicates that it anticipates Bitcoin Cash to reach the current level of Bitcoin in only a few years.
- The value of Bitcoin Cash has grown steadily since inception. If an investor follows the growth curve, it means that he can predict growth with ease.
History of Bitcoin Cash
Though the history of Bitcoin Cash is very short, it cannot be looked at in isolation from the mother network, Bitcoin. By the end of 2017, Bitcoin Cash was only 5 months old. To understand Bitcoin Cash even better, here are some important highlights starting from the formation of Bitcoin.
- In 2008, Satoshi Nakamoto released the main Bitcoin whitepaper detailing how the blockchain technology would work.
- In 2009, Bitcoin core code was activated and Nakamoto mined the first block.
- Between 2011 and 2013, major scandals were reported in relation to Bitcoin network. These included the Silk Road Scandal and acceptance by some organizations such as Wikileaks.
- Early in 2017, the Bitcoin community started debating the scalability issue that was holding the network hostage. They agreed that a new solution was needed.
- On August 1st 2017, Bitcoin Cash was launched as a hard fork of the original Bitcoin. The value of Bitcoin Cash hit $700 in the subsequent two days.
- By the end of 2017, the value of Bitcoin Cash grew to $2500.
At this point, early in 2018, Bitcoin Cash is still very young, and no one can say with certainty how the future will be. Will the security system in Bitcoin Cash be better and deter attacks?
Who Created Bitcoin Cash?
Bitcoin was created by the Bitcoin community that felt everything was not right on Bitcoin network. They were particularly disturbed by the scalability problem that was giving other cryptocurrencies chance to edge closer and even overtake Bitcoin.
With the community taking direct votes on whether to implement a soft or hard fork. Bitcoin Cash network was tagged the cryptocurrency that is fully owned by users. After the hard fork was implemented, all those who had Bitcoins were allocated equal coins in Bitcoin Cash. With the community taking reigns of every decision at Bitcoin Cash, it joins the list of other cryptocurrencies whose creators remain a mystery.