Bitcoin Cash for beginners: Step by step guide

Bitcoin Cash is the first example of democracy in the world of cryptocurrencies at play. Bitcoin Cash came about in 2017 when members of the Bitcoin community split off the Bitcoin blockchain creating their own, independent blockchain or “fork” and named it Bitcoin Cash. As a result of the new blockchain, anyone owning Bitcoin also became owners of the new Bitcoin Cash.

What is Bitcoin Cash?

Bitcoin Cash is a cryptocurrency that was designed to be used as currency to facilitate the exchange of goods and services. Similar to how Bitcoin was designed to decentralise control of global currencies and transactions between people, Bitcoin Cash was also designed for people to be able to exchange Bitcoin Cash between one another without any institution, like a bank, in between.

What’s the difference between Bitcoin and Bitcoin Cash?

Bitcoin Cash came about in 2017 as a reaction to problems with the Bitcoin blockchain. A group of individuals felt that things like the higher transaction fees and slow transfer rate were problems with Bitcoin that needed to be fixed. There were others, however, that believed that the high transaction fees allowed Bitcoin to become as valuable as it is and therefore was part of its appeal.

The disagreement grew further when you brought in the reason why Bitcoin came into existence in the first place. Bitcoin was designed as a currency that was meant for exchange – it was never meant to be purely a store of value, which it has now become. In order for it to function as a currency, it needed to be fast and cheap, otherwise it was no different from the current state of global currencies. This is another reason why Bitcoin Cash broke away from the original Bitcoin blockchain and grew as its own cryptocurrency.

Today, Bitcoin Cash continues to live up to its vision of being a currency to facilitate exchange and it continues to be faster than Bitcoin with lower transaction fees than Bitcoin. The only advantage Bitcoin has over Bitcoin Cash is that Bitcoin is far, far more valuable.

What can I do with Bitcoin Cash?

Bitcoin Cash was designed to be a currency that facilitates payments for goods and services globally. Therefore, Bitcoin Cash currently works exactly like you would expect any kind of currency to work (minus the centralised control of course).

  • Buy things with Bitcoin Cash

    Several online stores both within Australia and globally, offer the ability to buy goods and pay for them using Bitcoin Cash, exactly like you would with PayPal or a credit card.

 

    • Pay your bills with Bitcoin Cash

      With the Living room of Satoshi, you can pay your regular bills directly using your Bitcoin Cash wallet. Similar to buying things with Bitcoin Cash, the online experience of paying your bills with this cryptocurrency is exactly what you’d expect from any other currency.

 

    • Something to invest in

      Investing in Bitcoin Cash works exactly the same way as you would invest in gold, shares or Bitcoin. Similar to how you would buy gold, shares or Bitcoin for a certain price and hope that it would become something that could be sold for a higher price, you would do the same with Bitcoin Cash. In this way, Bitcoin Cash is acting like a store of value and the expectation is that that value would increase over time.

How do I buy Bitcoin Cash in Australia?

There are two ways to buy Bitcoin Cash in Australia today:

 

Buy Bitcoin Cash from a cryptocurrency exchange

You can use Australian dollars to buy Bitcoin Cash from a cryptocurrency exchange. Similar to share trading exchanges, cryptocurrency exchanges allow you to purchase Bitcoin Cash using Australian dollars either through a debit card, credit card or bank transfer. In addition, if you already own other cryptocurrencies, like Bitcoin, you can exchange Bitcoin for Bitcoin Cash in these exchanges too. You would need to follow these steps:

  1. Find the cryptocurrency exchange that’s right for you. Every cryptocurrency has its own merits, demerits and special features. There are dozens of exchanges with more exchanges launching every day. You are also not limited to exchanges within Australia.
  2. Register for an account and verify your identity with an official ID
  3. Navigate to the section that lets you buy Bitcoin Cash. Select the amount of Bitcoin Cash and the price at which you want to buy it at.
  4. Select the payment method – Most cryptocurrency exchanges offer the ability to buy using debit card and credit cards.
  5. Review the order details and click ‘Buy’

 

Buy Bitcoin Cash as a cryptocurrency portfolio investment

The process of buying Bitcoin Cash from an exchange might not appeal to everyone. You would need to start with deciding how much of Bitcoin Cash to buy and at what price. This amount of Bitcoin Cash would need to be measured against the other currencies that you currently hold in your portfolio.

Once you buy the Bitcoin Cash, you would need to decide how long you want to hold it for. Or when should be the next time you invest in Bitcoin Cash. Or whether you won’t invest in Bitcoin Cash any longer, instead increasing your holding of other cryptocurrencies in your portfolio. You would then repeat this process for the rest of time that you plan to invest in cryptocurrencies.

A potentially easier alternative would be to invest in Bitcoin Cash as part of a diversified portfolio through Chillur and invest small amounts in Bitcoin Cash and other cryptocurrency regularly. Through this way, you would invest in 10 cryptocurrencies proportionately to their size and value in the larger cryptocurrency marketplace. And by regularly investing small amounts, you would no longer have the headaches of trying to time exactly the right time when you should invest in Bitcoin Cash.

How do I invest in Bitcoin Cash?

There are two ways to invest in Bitcoin Cash – directly, as we described in the previous section or by investing in Bitcoin Cash as part of an index portfolio.

 

Index portfolio with Bitcoin Cash

A convenient option to invest in BItcoin Cash is to invest in a cryptocurrency index portfolio. A cryptocurrency index portfolio doesn’t require you to select the cryptocurrencies you invest in, rather, it allows you to invest in a range of cryptocurrencies. Your currency follows an “index” or cryptocurrencies allowing you to not only invest in a range of cryptocurrency tokens but also derisks your investment by investing in a variety of options and not putting all your tokens in one basket.

 

Chillur offers a cryptocurrency index portfolio of selected 10 cryptocurrencies by market capitalisation. This means that every $1 that you invest through Chillur is spread across Bitcoin Cash and nine other cryptocurrencies based on their size relative to the broad cryptocurrency market. Chillur’s model allows users to invest small amounts regularly rather than try and attempt one big win by timing the market.

Where do I store my Bitcoin Cash?

Ripple wallet | Chillur

Cryptocurrencies storage devices are known as wallets. Broadly, there are two kinds of wallets, hot and cold – Hot wallets are those that are part of the exchanges that you buy the cryptocurrency from and cold wallets are physical devices that have incredibly high encryption allowing you to store your cryptocurrency offline. You can essentially store your cryptocurrency in the safest place in your house – the back of your socks drawer.

At the time of writing this article, there were well over a dozen different types of cold wallets and several dozen more hot wallets that come as part of the cryptocurrency exchange. Bitcoin Cash does not have its own wallet nor does it recommend a specific kind of wallet to store the token. You have the option to store BItcoin Cash in one of several dozen different options including mobile apps and desktop computer apps.

What next for Bitcoin Cash?

The Bitcoin Cash roadmap is their defined pathway to Bitcoin Cash to “become sound money that is usable by everyone in the world.” The technical improvements that are currently being worked on include the ability for BItcoin Cash to handle lower and lower transaction fees.

 

The north star for the Bitcoin Cash roadmap is the ability for the Bitcoin Cash blockchain to be able to handle 5 million transactions per second, up from the current 100 transactions per second. They define this ability as their “mankind scale”. They also plan to secure transactions within 3 seconds with the same low transaction fees and ultimately, Bitcoin Cash wants to allow businesses and developers to be able to trade all kinds of assets on the Bitcoin Cash blockchain.

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