While there are hundreds of cryptocurrencies, a few of them make up a substantial portion of the total value of the asset class. The most prominent is, of course, Bitcoin, which kicked off the whole phenomenon of cryptocurrency and is worth nearly $1 trillion.
And then there’s Bitcoin Cash, an offshoot of the original Bitcoin, that itself is worth just over $9.5 billion as of late March 2021, according to CoinDesk, and is one of the ten most valuable cryptocurrencies.
What is Bitcoin Cash and How Did it Start?
If you want to know what Bitcoin Cash is, you should first ask, what is Bitcoin?
Bitcoin is the foundational cryptocurrency, the first to utilize blockchain technologies that generate unique entries on a “ledger” and can then be exchanged between users without an intermediary or third party. While there are now hundreds of types of cryptocurrencies, coins, and tokens, Bitcoin is one of just a handful of cryptos, including Ethereum, that make up the bulk of the cryptocurrency economy.
Bitcoin Cash (BHC) was launched in 2017, eight years after the original Bitcoin. It is what’s known as a Bitcoin “fork”—a new branch in the technology that was designed with the intent of easier and more efficient transactions on its blockchain. Bitcoin Cash proponents argued that the size of Bitcoin “blocks”—one megabyte or less—was too small, and designed Bitcoin Cash to have eight megabyte blocks in order to drive the cost of processing payments on the blockchain down. Since then the Bitcoin Cash block size has gone up even more, to 32 megabytes.
When Bitcoin forked to Bitcoin Cash, everyone who owned Bitcoin on that date received the same amount of Bitcoin Cash, deposited into their wallet (the software used for storing cryptocurrency).
Bitcoin Cash (BCH) Price
As of this writing in March 2021, the price of Bitcoin Cash (BCH) is $547.24. That’s up from a record low in November of 2020, when it dropped to 241.13.
But Bitcoin Cash’s all-time high to date occurred 5 months after its 2017 launch, in December 2017. At that time, BCH hit $3,556.
5 Steps to Buying Bitcoin Cash
Buying Bitcoin Cash is not that different from buying Bitcoin or other well known and popular cryptocurrencies.
Before investing in crypto, it can be helpful to do some reading. In fact, we’ve put together a list of 6 things you should know before investing in crypto. Additionally, while the exchange you ultimately choose to buy crypto will have its own extensive guidelines and rules, it’s a good idea to familiarize yourself with basic cryptocurrency regulations beforehand.
Then you can buy Bitcoin Cash in 5 simple steps:
1. Sign Up for an Exchange to Buy BCH
Most investors exchange “fiat money” (aka the currency you use in everyday life to pay bills, taxes, etc) for cryptocurrency through a consumer-facing exchange. When choosing between the many crypto exchanges available, there are a few things to consider. Safety and security is paramount, but things like fee structure and ease of use are also important. Some common exchanges you might come across include Coinbase, Gemini, CoinEx, or Kraken.
2. Choose an Account to Fund Your Crypto Investments
Although one promise of cryptocurrencies like Bitcoin and Bitcoin Cash is freedom from the traditional financial system, you typically need a bank account to use a mainstream cryptocurrency exchange. Coinbase, for instance, takes payment through ACH transfer, wire transfers, debit cards, and PayPal. These different methods have different times to clear, so you may not be able to buy Bitcoin Cash immediately if you’re using an exchange for the first time.
3. Be Prepared to Verify Your Identity
While crypto is identified with cryptographic keys and is thus “pseudonymous,” to actually make a financial transaction like buying BCH, you will most likely have to verify your identity.
Generally, like virtually all US financial institutions, cryptocurrency exchanges have to abide by so-called “Know Your Customer” and money laundering rules which require identity verification. After verifying ID, you’ll be able to do a bank transfer or debit card payment and fund your account.
4. Download a Crypto Wallet
While anytime you own a cryptocurrency that uses blockchain technology, you have a “public” key, you also have a “private” key that needs to be secured. Many mainstream crypto exchanges, like Coinbase or Gemini, also offer wallets which keep private keys secure. You can also download your own stand-alone wallet software or even store your private key on paper or on standalone hardware systems.
5. Buy Bitcoin Cash
At this point you can actually buy BBCH and then decide to hold onto it, sell, or whatever you like depending on your risk tolerance and preferences. In general, it’s a good idea to look up the price of Bitcoin Cash before buying, although you can sometimes buy fractions of cryptocurrency that will cost less than the value of a single unit of cryptocurrency. Typically, investors can buy Bitcoin Cash using either fiat money (dollars) or other cryptocurrencies if the exchange offers crypto-for-Bitcoin-Cash trades.
Remember to Pay Crypto Taxes
If you’re buying Bitcoin Cash as an investment with an eye to selling it in the future, keep in mind your tax situation. Just because Bitcoin and other cryptocurrencies are not fiat currency, that doesn’t mean they can’t entail tax obligations when they’re bought and sold: you have to pay your crypto taxes. In most cases the IRS currently taxes crypto as property, not income. So it can be helpful to learn the rules and regulations before selling.
Bitcoin Cash is a fork of Bitcoin, the OG of cryptocurrency. Buying Bitcoin Cash is much like buying any other cryptocurrency—investors can get set up with an exchange, a wallet, and everything else they need to buy, sell, and hold Bitcoin Cash in just 5 easy steps.
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