Since Bitcoin (BTC) has become more and more popular, the amount of time it takes to process a transaction has become slower and slower. It has also made the cost of each transaction more expensive for the sender.
To improve the current Bitcoin system, Bitcoin Cash (BCH) was created! And they seem to be doing an excellent job so far — although it was only released in August 2017, Bitcoin Cash has already become a top 5 cryptocurrency! That's quite obvious while looking at how its traded in some popular exchanges, too.
But are you still asking yourself “what is Bitcoin Cash?”, worry not - all will be revealed in this article!
This guide will tell you everything you need to know about the what is Bitcoin Cash question, why it was created, and what it actually does.
Once you have understood the basics, we will then explain how you can buy Bitcoin Cash. Since you'll have to store your crypto somewhere, you should also consider getting yourself a secure wallet, too! Also, for those feeling really adventurous, we will also show you how to mine it!
So, what are you waiting for, let’s go and explore what is Bitcoin Cash and how it started!
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- Fast transaction times
- Low transaction fees
- Better scalability than Bitcoin
- Sways aways from the initial philosophy of Bitcoin
- Low trust among cryptocurrency communities
Table of Contents
- 1. What Is Bitcoin Cash: How it Started?
- 1.1. Idea 1: Change the Format of Each Block
- 1.2. Idea 2: Increased Block Size
- 1.3. Which Idea was the Most Popular?
- 2. What Does Bitcoin Cash Do?
- 3. How do I buy Bitcoin Cash?
- 3.1. Opening an Account with Coinbase
- 3.2. Verify Your Identity
- 3.3. Add Your Payment Details to Coinbase
- 3.4. How do I Buy Bitcoin Cash at Coinbase
- 4. How is Bitcoin Cash Mined?
- 5. Conclusion
What Is Bitcoin Cash: How it Started?
It all started with agreements and disagreements about how to improve Bitcoin’s technology. You see, one of the problems with Bitcoin is, as more people use it, the networks take longer and longer to process a transaction. It also means that transaction fees become more expensive!
Bitcoin vs. Bitcoin Cash | Source: vastava
Bitcoin enthusiasts understood that this was becoming a big problem, especially now that the cryptocurrency was getting so popular. To help find a solution, developers suggested two different ideas.
Idea 1: Change the Format of Each Block
Here’s a real-world example for you: think about writing each Bitcoin transaction on a blank sheet of paper. First, you would need to write the wallet addresses of both the sender and receiver. Then, you need to write the individual signatures for each transaction.
Think about it, this would take up quite a lot of space on your sheet of paper!
So, one group of developers suggested separating the one sheet of paper into two. One sheet of paper would have the addresses of the sender and receiver, while the other sheet would contain the signatures.
Essentially, as there would be more space on the paper, more transactions could be processed!
Idea 2: Increased Block Size
Another group of developers thought that this was a bad idea. Why? Well, although changing the format of each block would technically increase Bitcoin’s transaction speed, it would only be a temporary solution. So, when the Bitcoin network becomes even more popular, it would require another upgrade.
They thought that the best way to solve Bitcoin’s speed issue was to increase the maximum block size.
Using the same real-world example as above: now, imagine the original sheet of paper was 10mm long. That is the size of the block (with Bitcoin, this amounted to 1MB). It was suggested that by increasing the block size, more transactions could be processed.
So, they thought to increase the sheet of paper by 2 times, or to 20mm long (2MB in the case of Bitcoin)! What this idea also allowed is the maximum block size to be increased by 8 times, if this was needed in the future.
The main argument was that for Bitcoin to become an everyday payment system, it needed larger block sizes. Otherwise, it would be more like gold than money!
Which Idea was the Most Popular?
Anyone wondering about what is Bitcoin Cash should be aware that, in the case of Bitcoin, nobody can make changes to the system unless most people agree. So, to decide which option was chosen, it went to a vote! Can you guess which idea won? Idea 1!
Idea 1 received 97% of the votes! However, for the Bitcoin blockchain to make this change, the system needed to perform a soft fork.
Of course, the group of developers that preferred the solution in idea 2 wasn’t happy with the final decision. So, they decided to perform a hard fork that created Bitcoin Cash!
Well, now that you know the story behind the Bitcoin Cash fork, let’s find out the answer to “what is Bitcoin Cash?”.
What Does Bitcoin Cash Do?
Bitcoin Cash was officially released in August 2017. Its technology is very similar to Bitcoin, and there is also the same amount of coins — 21 million.
Anyone that held Bitcoin on the day that Bitcoin Cash was created automatically received free Bitcoin Cash! The fortunate people who were holding Bitcoin received Bitcoin Cash at a ration of 1:1. Yes, that’s right! If you were holding 1 Bitcoin at the time Bitcoin Cash was formed, you would have instantly received 1 Bitcoin Cash.
One of the more common answers to the question "what is Bitcoin Cash?" is that the main purpose of Bitcoin Cash is to be used as a payment system. This means that, just like the original Bitcoin client, people can send and receive funds. However, Bitcoin Cash’s technology allows for much faster transaction times, and lower transaction fees!
Many people thought that those who received their free Bitcoin Cash would sell it as soon as they could, but this hasn’t been the case. Since it was released in August 2017, Bitcoin Cash has performed very well. It is currently a top 5 cryptocurrency and is also listed on Coinbase.
Being listed on Coinbase is a huge deal as they are the most popular and well-known exchanges in the world! Coinbase only lists 4 different cryptocurrencies, so the fact that they have listed Bitcoin Cash improves the credibility and awareness around the project.
Because the cryptocurrency is still in its early days, there are not many merchants that accept it yet, especially in comparison to Bitcoin. However, as Bitcoin Cash becomes more and more popular, new merchants are starting to accept it as a payment method.
There is a cool website called AcceptBitcoinCash which lists all the different merchants that allow you to use Bitcoin Cash. They include things like accommodation, music, casinos, perfume, fitness products, clothes and much more! Guess what? If you live in South Africa, you can even pay for legal advice with Bitcoin Cash!
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How do I buy Bitcoin Cash?
Although you no longer need to ask “what is Bitcoin Cash?”, you might need some help buying some!
The easiest way to do this is with a broker exchange. The most popular of these is Coinbase, as it’s great for beginners. You can buy Bitcoin Cash using your fiat currency via credit/debit card or with your bank account.
To make things even easier for you, we are going to give you a step-by-step guide on buying Bitcoin Cash with Coinbase! First, you will need to open a Coinbase account.
Opening an Account with Coinbase
- Visit the Coinbase homepage, and click on Sign Up.
- At this point, you will only need to enter your name, email address, and create a secure password.
- You will then need to verify your mobile number. So, enter the code that is sent to your phone to the Coinbase website.
You should now be able to log in to your Coinbase account! Now you need to verify your identity.
Verify Your Identity
1. First, click on Buy/Sell at the top of the page.
2. Coinbase will now tell you that you need to add a payment method to complete your account set up. Click on Add Payment Method.
3. You are given two choices. You can either add a credit/debit card or a bank account. The quickest way to buy Bitcoin Cash is with a credit/debit card. So, we will select that option.
4. You will then need to upload your ID. This is a requirement at most exchanges when you want to use a credit/debit card. Click on Upload ID.
5. Coinbase gives you three options. You can upload your passport, driving license, or a government-issued ID. Click on the one you want to upload.
6. Now, you need to decide how you want to upload your ID. You can do this by either using your webcam, mobile phone or simply upload the file from your computer. Select the method you wish to use.
7. If you have uploaded your ID correctly, you will see the message below. If you get an error, this is probably because the image quality was not to a high enough standard. Try again until it is confirmed.
Congratulations! You now know what is Bitcoin Cash, and your identity has now been verified. However, before you can actually buy Bitcoin Cash, you will need to add your payment details.
Add Your Payment Details to Coinbase
1. Here you need to enter your billing address. It must match the address of your credit/debit card, otherwise, you will get an error!
2. You will now be asked to enter your credit/debit card details. Don’t worry, Coinbase has high security, so your details are safe. Once you have done this, click on Add Card.
Congratulations! You have not verified your identity, and you have also added your credit/debit card. Now you can buy Bitcoin Cash!
How do I Buy Bitcoin Cash at Coinbase
1. First, click on Buy/Sell at the top of the page. Then click on Bitcoin Cash.
2. As you will see in the below image, you need to enter the amount of Bitcoin Cash you want to buy. In our example, we want to buy 100 Euros worth of Bitcoin Cash, so that is what we have entered into the box. You will notice that the BCH box updates. At the time of our trade, we are receiving 0.12377315 Bitcoin Cash in return for 100 Euros. However, this will change depending on the market price at the time of your purchase.
3. Once you click on Buy Bitcoin Cash Instantly, Coinbase will ask you to confirm your payment details. Click Confirm.
And that’s it, it’s as easy as that! You have just made your first Bitcoin Cash purchase.
BCH can also be purchased via Simplex - you'd do so with your credit or debit card, which ensures that the process is going to be fast and smooth, without any security hiccups along the way.
It is also possible to buy Bitcoin Cash from a crypto-for-crypto exchange. This is where you deposit using a different cryptocurrency (such as Bitcoin) and exchange it for Bitcoin Cash. Most major exchanges will list Bitcoin Cash as it is one of the most popular coins on the market.
If you have followed our guide to this point, you should now be able to easily answer “what is Bitcoin Cash”, and you now know how to buy it! Next, I will explain Bitcoin Cash mining.
How is Bitcoin Cash Mined?
Like most cryptocurrencies, Bitcoin Cash is decentralized. This means that no single person or authority has control over the network.
However, for a decentralized system to operate, it requires nodes (computers) to verify transactions.
So, how are transactions verified? People known as miners use computing power to solve mathematical equations on the blockchain. Once a node on the network solves the mathematical equation, it verifies a transaction block. It then receives a reward for verifying the transaction.
This reward, in the case of Bitcoin Cash mining, is a Bitcoin Cash coin.
In the current day, though, it is becoming harder and harder to earn money from mining. There is so much competition that only those who can generate huge amounts of computing power are rewarded. To generate enough computing power to become a successful miner, you must invest a LOT of money (and I’m talking about 10s of thousands of USD)!
However, there are other options for all you beginners out there! There’s something called a “mining pool”. This is where you join a network of other miners. Together, you combine your computing power to try and solve the mathematical equations to earn the Bitcoin Cash reward. If your mining pool successfully verifies a Bitcoin Cash transaction, the reward is split equally between your mining pool!
Well, to join a mining pool is simple - you can learn more by visiting one of these sites:
Bitcoin Cash mining is a great way to earn Bitcoin Cash if you have the right software and hardware to do so. However, if not, then investing in the Bitcoin Cash coin might be the better option for you!
(This isn’t financial advice, though… I’m just saying!)
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If you read this guide from start to finish, you should no longer be asking yourself “what is Bitcoin Cash?”. Instead, you should have a good understanding of why it was created and how it works!
Not only that, but I have shown you how to make your first Bitcoin Cash investment (that is, if you want to). There are a few other methods of buying Bitcoin Cash other than Coinbase, but for beginners, I feel that Coinbase is the most favored choice!
The purchasing process should look a little something like this:
- You create an account on Coinbase;
- Go through the process of verifying your identity and setting up all of the security measures;
- Choose the appropriate payment method, and the crypto that you'd like to purchase;
- Make the purchase - that's it! Now all that's left to do is transfer your coins into a safe wallet - Ledger and Trezor are the most commonly-used cold wallet that you could look into.
An alternative to purchasing Bitcoin Cash this way is by utilizing the services of Simplex. Simplex is a fintech company that allows you to safely purchase cryptocurrencies with your credit or debit card - it's fast, simple, and secure!
You should also have a good understanding of the importance of mining, and how you can become a miner too. Remember, Bitcoin Cash mining isn’t always profitable, though, and requires a bit of an investment before you can begin.
So, what did you think of the “What is Bitcoin Cash” guide? Do you think the developers made the right decision to create Bitcoin Cash? Or, do you prefer the good old Bitcoin?
I'd love to hear your thoughts. So, don’t be shy, leave a comment!
The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.