What Exactly is Bitcoin Cash?
Bitcoin Cash (BCH) stems from the scalability issues that face Bitcoin. The original blockchain has grown exponentially in recent times. This means that many more users and transactions are using the cryptocurrency, which is weighing down the network. The limited Bitcoin block size of 1 MB means that blocks are filling up more quickly than they can be mined. Transactions have, at times, become slow and expensive.
Bitcoin Cash makes some distinct protocol changes, the main one being an 8 MB block size. This change allows for more data per block, meaning more transactions can be processed in each block mined. Many see this as a step forward in terms of how best to scale the network. Others remain adamant that it’s simply a short-term fix that doesn’t solve the problem, and there’s no implementation of ideas—such as Segwit, whose protocol is now active on the original Bitcoin blockchain—to help effectively break transactions down into smaller, more manageable pieces.
Importantly, with a split in a blockchain, currency is duplicated. This means that the historical Bitcoin transaction data were copied, and anyone with Bitcoin funds was credited with the same amount of Bitcoin Cash. If you had Bitcoins in your possession prior to August 1st, 2017 when the Bitcoin Cash hard fork happened, you are able to claim the same number of tokens in Bitcoin Cash. Even if you haven’t claimed your Bitcoin Cash tokens by now, they will be safe and sound waiting for you to claim them.
Here’s a guide on how to claim or get your Bitcoin Cash.
Step 1: Get a Bitcoin Cash Wallet
Before you can buy BCH, you’ll need a BCH wallet to store it in. Many providers and platforms have been reluctant to embrace BCH. There could be many reasons for this. Some may hold on to ideas about how best to scale cryptocurrency; others may simply want to focus their efforts. Recently, many major wallet creators have been adopting Bitcoin Cash.
While there may still be fewer exchange choices, you can find plenty of places to squirrel your funds away for now. Hardware wallets that support Bitcoin Cash include industry leaders Ledger and Trezor. Both provide functions for you to use Bitcoin Cash as you would any other cryptocurrency. After a slightly slow start, they’ve also introduced the ability to claim your funds if you already owned Bitcoin at the time of the blockchain split. There are a variety of software wallets you can use; you may even already be using one of these for your original Bitcoin.
Exodus provides a seamless shapeshift service with its software so that you can move your currency at will. For example, you can morph between Bitcoin Cash and Ethereum Classic if you’re feeling particularly alternative. Jaxx supports multiple currencies, including Bitcoin Cash. The service runs on desktop and mobile devices, so you can keep your private key with you at all times.
Electron Cash is a derivative of Electrum. If you’re used to Electrum, then you’ll have no problem jumping on board with its sister technology: it’s simply a fork from Electrum with all the necessary components for Bitcoin Cash.
Some exchanges work with Bitcoin Cash, although you may not want to leave your funds in their wallets for extended periods of time. Storing funds with online companies can make for quick trading, but you tend to lose control of your private keys. This might be a security risk depending on what service you use. Coinfloor offers a decent wallet that allows you to trade on its UK exchange. It will keep your keys in cold storage offline while making your funds available to trade with on short notice.
Other wallets include Keepkey, BTC.com, Bitpay, and Coinomi. You can view all available wallets on the official Bitcoin Cash website.
Step 2: Claiming you BCH from BTC split
If you have a full node wallet (which is a wallet that requires you to download the entire Blockchain) like Bitcoin Core or Bitcoin Knots, simply back up your wallet by navigating the menu and selecting ‘Backup Wallet’. This will generate a wallet.dat file which you can import into a full node Bitcoin Cash wallet, such as Bitcoin ABC, where your BCH tokens will be available to you.
It is very important to note that some full node wallets can conflict with each other. For example, the default data directory for Bitcoin ABC is the same as Bitcoin Core. Therefore, installing Bitcoin ABC may result in Bitcoin Core’s data being overwritten.
If you haven’t backed up your private keys, this may result in you losing both your BTC and BCH tokens forever. To avoid this, install Bitcoin ABC, or any similar full node Bitcoin Cash wallet, on a different computer.
If you are using an SPV (Simplified Payment Verification) wallet (which doesn’t need the entire Blockchain downloaded to your computer to operate) you should still be able to claim your Bitcoin Cash tokens.
Most of those wallets use a recovery seed, which is a phrase that holds your Bitcoin private keys, and by extension, your Bitcoin Cash private keys. Therefore, you should be able to access your BCH simply by inserting this seed into a dedicated wallet.
However, the procedure to do this may differ depending on what type of wallet is used. So, to be on the safe side, search for an announcement made by your wallet provider which provides instructions on how to claim your funds. Have a look at this post on Reddit for a variety of announcement links. Alternatively, you can always contact your wallet’s support team.
If you weren’t holding any Bitcoins at the time of the split, you can still purchase Bitcoin Cash at some cryptocurrency exchanges or opt for a peer-to-peer transaction.
Step 3: Find a Bitcoin Cash Exchange
Bitcoin Cash exchanges are not as abundant as Bitcoin exchanges. However, there are still some heavyweight options to work with.
eToro: Platforms like eToro don’t give you actual access to your coins and you can’t send coins from eToro to other people. The only thing that can be done with the platform is to buy and sell Bitcoin Cash for fiat currency (i.e. Dollars, Euros, etc.). Meaning this platform is good if you only want to speculate on the price. This method is only valid if you live outside of the US.
IMPORTANT! If you use eToro you don’t actually need a Bitcoin Cash wallet as they don’t supply you the actual coins. Also, Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any regulatory framework. So, keep in mind that your capital is at risk.
Coinmama: this is one of the oldest exchanges around. Coinmama allows you to buy Bitcoin Cash with a credit card at a relatively low fee (considering other credit card accepting exchanges). Coinmama also accepts users from almost all countries around the world.
CEX.IO is also a nice option. Based in London, the company is a trusted, experienced name in the industry, having been around since 2013. You can choose from a selection of currencies, including Bitcoin Cash (read our CEX.io review here). If you just want to get ahold of some currency, there’s a quick buy option via credit card. Be aware, though, that the credit card option is an expensive one. For low-fee trading, you can deposit via bank transfer and trade on the exchange for a 0.2% fee, and it will save you a small fortune on large buy and sell orders. The European-based company allows you to work in both euros and USD. You can even use margin-trading techniques on the platform to maximize (or minimize) your returns while also keeping an eye on the market depth.
Coinbase – The most reputable Bitcoin exchange around just added Bitcoin Cash support and buy/sell options (starting Dec 19th, 2017). Coinbase allows you to get competitive rates if your country is supported by the broker.
Coinfloor supports a Bitcoin Cash open exchange; it’s also London based, so it’s very helpful for UK traders.
If you know what you’re doing when it comes to trading, Kraken has been functional with Bitcoin Cash ever since the cryptocurrency’s launch in August.
Other options include Bitfinex, Poloniex, HitBTC, and more (you can view all available exchanges on Bitcoin Cash’s website).
Exchange BCH-fiat trading pairs BCH-Crypto trading pairs
Coinbase BCH/USD BCH/BTC
Bittrex – BCC*/BTC, BCC*/USDT, BCC*/ETH
Kraken BCH/USD, BCH/EUR BCH/BTC
Cex.io BCH/USD, BCH/EUR, BCH/GBP BCH/BTC
Poloniex – BCH/BTC, BCH/USDT, BCH/ETH
*BCH is known as BCC on Bittrex
Alternatively, you can opt for a peer-to-peer purchase. LocalBitcoinCash is an example of a service which supports this for Bitcoin Cash, as LocalBitcoins does for the original Bitcoin. LocalBitcoinCash provides a platform where users can trade BCH for fiat currencies directly with each other. Users can either place orders and wait for someone to respond or fulfill other people’s orders, with the platform itself providing an escrow service. However, whether this platform can be trusted still remains to be seen.
If you do decide to use the platform, bear in mind that you will be dealing with individuals, instead of reputable companies. This means that the chance of fraudulent behavior is significantly higher.
Step 3 (optional): Transfer the BCH to your wallet
As usual, we recommend that you never leave money on an exchange. Once you’ve finished buying your Bitcoin Cash, move it to your own self-hosted wallet (the one you have control over the private keys too). You can then follow the status of your transaction using a Bitcoin Cash block explorer. Once you receive three confirmations for your Bitcoin Cash, you can safely say you’ve completed the process.
Bitcoin Cash Conclusion
It’s apparent that Bitcoin Cash has still not gained full acceptance by large parts of the cryptocurrency community. It still sits firmly in second place to its older brother in terms of both price and availability. The future is unclear for Bitcoin as a whole. More splits and hard forks are a certainty, and Bitcoin Gold (yes, another Bitcoin) hasn’t enjoyed a large profile since it forked from Bitcoin in October 2017. Bitcoin Cash is staying clear of Segwit, whereas the original blockchain pushes on toward increasing the implementation of Segwit. Who will reign supreme? In the short term, no one—and we’re likely to see further turmoil as 2017 concludes. Bitcoin Cash might have the advantage of being the first major split that has garnered acceptance.