A beginner’s guide to Bitcoin Cash
Bitcoin Cash comes from Bitcoin. It is based on the same technology and used the same way. However, it is a unique variation separate from the world’s first and most famous cryptocurrency. Here’s what you need to know about Bitcoin Cash.
What is Bitcoin Cash?
Bitcoin Cash is a cryptocurrency created in 2017 from a “fork” in the original Bitcoin blockchain. You can think of it as a branch on a tree that can then form new branches of its own.
Just like Bitcoin, Bitcoin Cash is:
- Decentralized and not backed by a bank or government
- Processed, validated, and logged on a blockchain
- Finite and therefore impervious to inflation (just like Bitcoin, only 21 million will ever be made)
The original Bitcoin blockchain had several problems involving complicated stuff like signature data, block size, and a technology known as segregated witness. Bitcoin outgrew its blockchain made from small blocks that got clogged as Bitcoin’s popularity surged. As more people joined, the system became harder to scale. Both transaction times and transaction costs grew so high that Bitcoin’s chief miners and producers worried about its viability.
They responded by creating what is known as the Hard Fork, a deviation from the original Bitcoin chain. The new chain had bigger blocks that could be scaled to accommodate Bitcoin’s ever-growing user base. It sped up processing times and reduced costs. The new coin had to keep a new name ‘Bitcoin Cash’, as the old blockchain kept its original name.
The major differences between Bitcoin and Bitcoin Cash are:
- Bitcoin Cash has a bigger block size.
- Bitcoin Cash does not support SegWit or the Lightning Network.
- Bitcoin Cash adjusts the mining difficulty for mining new blocks more quickly than the original Bitcoin.
How much is Bitcoin Cash worth?
Around Christmas 2020, it was trading under $300. As of September 1, Bitcoin Cash is trading around $642, much less than around $47,000 for a single Bitcoin. However, when it comes to value and price, the twin cryptocurrencies do have one thing in common — extreme volatility. In early May, it was up to over $1,500, but as of July, it was down to around $418. That, however, is nothing compared to 2017-18, when Bitcoin Cash went from well over $1,000 to well under $100, and then back again in about a year.
Is Bitcoin Cash a good investment?
You can opt for Bitcoin Cash if you can keep up with its complex technology and are okay with its volatility and the fact that it’s not backed by any institution that you recognize. Like Bitcoin itself, Bitcoin Cash offers the potential for otherworldly profits but also comes with high risks, big bubbles, and crazy price swings are part of the package.