The fear was that transaction speeds would suffer as Bitcoin became more popular, leading to a loss of users and, ultimately, the network failing. Considering those What is Analytical Crm differences, why wouldn’t developers want to increase block sizes? The problem is that bigger block sizes limit who can run a node that validates transactions.
Set it too high, and large organizations will be the only ones with enough processing power, resulting in a more centralized network. BCH was designed to function as a transactional cryptocurrency, meaning that it can be used to pay for goods and services online (similar to an electronic payment system). Investors hope that BCH’s improved speeds and lower transaction fees will make the cryptocurrency more versatile and easily integrated. As is the case with any cryptocurrency, you can also trade BCH on a day-to-day basis or hold it as an investment in the long-term. Bitcoin Cash’s greatest advantage — its 32-megabyte block size — can process 100 transactions per second versus Bitcoin’s seven transactions per second, according to Bitpay.
About Bitcoin Cash
Anyone who held Bitcoin at the time of the fork received Bitcoin Cash as well. Due to its much lower price, Bitcoin Cash is popular with new crypto investors looking for a more affordable alternative to Bitcoin. In this Bitcoin Cash guide, we’ll cover what it does and whether it’s worth buying. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. BCH offers multiple benefits over the original Bitcoin network and other major cryptocurrencies on the market and large-scale financial institutions.
Though commonly confused with one another because they share basic structures, Bitcoin and Bitcoin Cash are distinct cryptocurrencies. Understanding the difference between Bitcoin and Bitcoin Cash can help you determine which investment opportunity you’d like to add to your cryptocurrency portfolio. Read on to learn a little more about the structure of Bitcoin Cash and how it functions. As noted, the key difference between Bitcoin and Bitcoin Cash is the block size. Because of this adjustment, Bitcoin Cash can have faster and less expensive transactions.
Can I make passive income with Bitcoin Cash?
Bitcoin Cash is among the top 30 or so cryptocurrencies, with a market cap of a little over $2 billion. Currencies enable transactions, and that was to be an aspect of Bitcoin as well. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.
- Crypto users seeking more confidentiality of their online activity — whether for personal protection or business purposes — may also consider Bitcoin Cash.
- BCH is a popular investment cryptocurrency and is available on a wide range of exchanges, including Coinbase, Kraken and more.
- CoinDesk Indices, Inc. (“CDI”) does not sponsor, endorse, sell, promote, or manage any investment offered by any third party that seeks to provide an investment return based on the performance of any index.
- She coordinates and produces videos for Morningstar.com and other channels.
- Sarah Horvath is a seasoned financial writer with a specialization in investing content.
Since Bitcoin Cash uses a proof-of-work consensus mechanism, miners must prove they’ve expended computing power to validate transactions. The first miner to do so can confirm a block of transactions and add it to the blockchain. The team behind Bitcoin Cash began as part of the Bitcoin community. In 2017, network congestion was becoming an issue for Bitcoin, and transaction fees were increasing. Bitcoin Cash’s block size limit was originally 8MB and has since grown to 32MB, far larger than Bitcoin’s maximum block size.
How to Get Bitcoin Cash
This was mainly due to the 1MB block size limitation for Bitcoin blocks. Transactions queued up, waiting for confirmation, because blocks could not handle the increased number of transactions the network was experiencing. This hard fork occurred in 2017 and was caused by a riff in the Bitcoin community over the scalability issue and how it should be solved.
They either wanted to keep the blocks small, installing storage and transfer solutions like Blockstream instead, or bundling transactions on sidechains external to the mainnet using the Lightning Network. In line with the Trust Project guidelines, the educational content on this website is offered in good faith and for general information purposes only. BeInCrypto prioritizes providing high-quality information, taking the time to research and create informative content for readers. While partners may reward the company with commissions for placements in articles, these commissions do not influence the unbiased, honest, and helpful content creation process.
Why More Diversification Doesn’t Mean Better Returns
Are you interested in learning more about cryptocurrency investments? BCH is just 1 of thousands of cryptocurrencies that you can invest in. Explore a few of our favorite investment opportunities within the emerging cryptocurrency market using the table below.
That added a layer of expertise to his work that other writers cannot match. Whether you should buy Bitcoin Cash or Bitcoin depends on whether you are looking for a long-term investment or something to use for transactions. Note that Bitcoin Cash has run into some issues due to branding trouble. For example, the crypto exchange OKCoin delisted Bitcoin Cash in early 2021 because they thought it might confuse investors offering both Bitcoin Cash and Bitcoin on the same system.
Relevant Content
As of writing, Bitcoin Cash has a total market capitalization of around $7.1 billion. Like its predecessor, Bitcoin Cash runs on an open-source, proof-of-work protocol that operates on a distributed network of blockchain nodes, or moderating servers. The altcoin’s feasibility enables users to incorporate fintech into their real-world buying habits, like small-cart checkouts while online shopping or tipping content creators for their services.
Initially, Bitcoin Cash received significant backing from Bitmain, a leading mining entity. Additionally, Roger Ver — rumored to possess about 100,000 bitcoins — secured his reputation as one of the first bitcoin billionaires and supported the currency. Roger Ver even procured the domain name Bitcoin.com to endorse the Bitcoin Cash network (a direct competition with Bitcoin.org, which officially promoted the original BTC). In 2018, the Bitcoin Cash network forked again, creating Bitcoin SV and Bitcoin ABC. It’s important to remember that all cryptocurrencies experience volatility, so you have to accept the risk of large losses along with the possibility of large gains.
Is It OK to Invest in Bitcoin Cash?
Some of the considerations that were taken into account for the top exchanges are security, user-experience, features and products. Security includes compliance, account controls, proof of reserves, and many other factors. You can also purchase a machine called an application-specific integrated circuit (ASIC) miner that can mine BCH. These machines are much faster at mining than personal computers, but they cost several thousand dollars new. You can find used ones for much less, but their speeds are generally lower, and it’s hard to tell what kind of condition they are in. Bitcoin Cash is designed to be used as a cheap payment system, much in the way Bitcoin was designed to be originally.
With lower fees when compared to the original Bitcoin and faster transactions, it’s easy to see why investors may be interested in trading or holding BCH. However, it’s important to remember that the cryptocurrency market is still developing and that cryptocurrencies are highly unregulated compared to securities like stocks and bonds. If you do decide to invest in BCH (or any other cryptocurrency) know that the price of your assets can drop drastically at any point in time.
