Is Bitcoin Cash A Crypto Worth Considering In 2021?
BCH Investing Guide 2021
What is Bitcoin Cash? What’s the difference between Bitcoin (BTC) and Bitcoin Cash (BCH)? Is it worth investing in BCH in 2021? If these are some of the investment questions on your mind, then this is the right place for you.
With a range of educational materials, crypto news, and interactive courses, we at Trading Education are here to help you access relevant and in-depth financial information and decide for yourself if cryptocurrency investing is for you.
Keep on reading to find out more about one of the major players in the crypto sector: Bitcoin Cash.
What Is Bitcoin Cash?
Bitcoin Cash is a popular peer-to-peer digital payment currency that facilitates cross-border transactions at low costs. One of the major pros of BCH investing is the fact that transactions happen without any involvement of central banks and intermediaries.
As a matter of fact, decentralised finance is increasing in popularity worldwide, with blockchain technology offering an impressive alternative to traditional banking.
On the other hand, perhaps one of the most appealing aspects about BCH is the fact that Bitcoin Cash was created in 2017 as a fork of Bitcoin - the long-time leader in the crypto sector in terms of market cap, adoption, and sentiment.
To be more precise, Bitcoin Cash was created in order to improve Bitcoin’s scalability and allow more transactions to be processed into a single block. Note that Bitcoin Cash was created with blocks 8 MB in size, which was further increased to 32 MB.
Here we should mention that the Bitcoin scalability problems were triggered by its own popularity: the more people use it, the longer and more expensive it takes to process a transaction.
Nevertheless, Bitcoin Cash and Bitcoin share some similarities: both employ mining algorithms and are capped at 21 million coins.
Before we dive into the specifics of Bitcoin Cash, we should say a few words about forking. Blockchains can be usually upgraded via a hard or a soft fork. The main difference is that a soft fork is backwards compatible, while a hard fork is a non-backwards compatible technique.
Or as explained by blockchain enthusiasts: “Think PlayStation 3 and PlayStation 4: In a hard fork, you cannot play PS3 games on PS4 and you cannot play PS4 games on PS3. Should a soft fork take place, sticking with the PlayStation analogy, you would be able to play PS3 games on the PS4 (but not PS4 games on PS3).”
Forking is also an easy way to create new crypto and a network of users; it can also benefit crypto development in places where Initial Coin Offerings (ICOs) are illegal.
The History of Bitcoin Cash
The history of Bitcoin Cash is veiled in controversy. Amidst a lot of discussions and crypto projects to resolve the Bitcoin scalability problem, two major solutions were proposed: to separate addresses from signatures for each transaction or to increase the maximum block size, which was proposed by the team behind Bitcoin Cash.
Using a real-life example: if we record each Bitcoin transaction on a sheet of paper that is 10 mm long, Bitcoin Cash wanted to increase its size by 2 times (to 20 mm long), with the potential to increase it further by 8-32 times (in our case, MB).
Willing to increase block sizes, developers launched BCH in 2017. The coin debuted with a high price of up to $900 on major exchanges. Interestingly enough, in December 2017 - at the height of the crypto buzz - Bitcoin Cash reached $4,091.
Nevertheless, the development of Bitcoin Cash itself sparked numerous debates because in 2018, Bitcoin Cash split into Bitcoin Cash ABC and Bitcoin SV.
Note that Bitcoin Cash ABC uses the original Bitcoin Cash client and has incorporated changes like the Canonical Transaction Ordering Route, while Bitcoin SV is led by Craig Wright who rejected the use of smart contracts. Today Bitcoin Cash ABC is referred to as Bitcoin Cash.
Recently, Bitcoin Cash split again into Bitcoin Cash ABC and Bitcoin Cash Node - a fork that, according to CoinDesk, may become the dominant software.
How Does Bitcoin Cash Work?
Bitcoin Cash uses a peer-to-peer network of computers to support the decentralised nature of the system.
We should note again that the block size of Bitcoin Cash has been increased to 32 MB, which facilitates transactions, processing times, and fees.
That’s right! Because of its bigger blocks, Bitcoin Cash is able to offer low transaction fees and faster processing times. Moreover, as stated by Roger Ver - one of the major proponents of Bitcoin Cash - Bitcoin Cash is closer to the original vision of Satoshi as cash for the world.
Simply because increased block sizes will enable Bitcoin Cash to be used as a medium for everyday payments and help it compete with Visa and other cross-border payment systems!
That said, similarly to Bitcoin, Bitcoin Cash employs Proof of Work (PoW) consensus mechanism to mine new coins and also uses the services of Bitmain, one of the leading crypto miners.
If you are new to the cryptocurrency sector, we should mention that mining is the process in which transactions are verified and added to the public ledger. Mining is also the process in which new coins are introduced in the existing supply without the need for central banks or financial authorities.
It’s worth noting that Bitcoin Cash is capped at 21 million coins.
Unlike fiat currencies, Bitcoin Cash is not printed by governments, which reduces the risk of inflationand devaluation. At the same time, this scarcity makes it an attractive investment in the long-term.
Would you consider investing in Bitcoin Cash?
What Is BCH?
BCH is the ticker symbol of Bitcoin Cash. As stated above, there is a limit of 21 million coins, with 18,600,863 coins currently in circulation, as per CoinMarketCap.
BCH offers quite a versatility as an asset: it is accepted in more than 5,000 physical locations and adopted by a wide range of online services. Experts claim that it also brings support for different payment platforms and offers a Point of Sale (PoS) solution for business ventures.
That said, though Bitcoin Cash aspires to become a medium for daily transactions, the truth is that unlike its competitor Bitcoin and altcoins like Litecoin, Bitcoin Cash is still lacking mass adoption outside the crypto community.
On top of that, the four-year history of BCH has been affected by numerous events and forks that impacted its price significantly without allowing it to adapt to a natural growth flow.
After its recent fork, we are still anticipating if BCH is going to gain more investors.
Is It Worth Investing In Bitcoin Cash In 2021?
With a market cap of $5,473,421,549 and various benefits, investing in Bitcoin Cash in 2021 is definitely worth it.
Let’s not forget that Bitcoin Cash has a wide range of advantages over other digital coins. BCH offers transaction fees next to nothing, decentralised financial transactions, relative stability compared to other cryptocurrencies, quick and safe transactions, and robust infrastructure.
At the same time, remember that Bitcoin Cash is a high risk and high reward investment.
Cryptocurrencies are highly volatile and trading cryptos can wipe out your savings. That’s why never invest money you can’t afford to lose. Don’t forget one of the main rules in the financial sector: never invest more than 1% of your account on a single trade.
Moreover, if Bitcoin manages to improve its scalability, Bitcoin Cash may lose relevance.
So if you decide to invest in BCH, always do your research and proceed with caution.
How Much Will Bitcoin Cash Be Worth?
While nobody can make accurate price predictions, you may want to know how much Bitcoin Cash will be worth in 2021.
Looking at past performance and analysing different technical indicators, we can say that Bitcoin Cash may increase in value in the near future.
Let’s not forget that when it was launched, Bitcoin Cash had an impressive opening value, and at the end of 2017, as stated above, Bitcoin Cash jumped to over $4,000.
Note that on 1st January 2020, BCH was $204.62 or 24.12% higher than the start of 2019; and on 15th February, Bitcoin Cash reached $491.16.
Since then, Bitcoin Cash has been relatively stable and managed to keep its stability even during the coronavirus-triggered bearish market. To be more precise, Bitcoin Cash (BCH) price remained stable between February and November 2020, fluctuating between $230 and $270.
The BCH/USD price has seen some recovery as well.
Some experts claim that Bitcoin Cash may double in 2021. According to figures presented by Digital Coin Price, Bitcoin Cash may reach $700 by the end of 2021, ranging between $500 (max) and $60 (min).
With a strong roadmap and ideas for what Bitcoin should be, the future of Bitcoin Cash seems pretty bright.
Ready to invest in Bitcoin Cash?
Should I Invest in Bitcoin Cash?
Given its positive future and advantages over other cryptocurrencies, Bitcoin Cash offers some great opportunities for investors.
But just because you can, that doesn’t mean you should. Before investing in any asset, you should consider its risk-return trade-off and decide on a strategy, either in the short or long-term.
Because no highly profitable investment is 100% safe! Risk management is crucial in order to set stop-limit and stop-loss orders and to reduce risks.
When it comes to potential risks, we should note that usually, three factors affect the longevity of a cryptocurrency: adoption, a community of supporters, and a strong development team. The future of BCH also depends on how it will withstand competition.
The good news is that right now all these factors indicate that it looks like BCH can succeed.
That said, though these indicators are at a good level for BCH, always proceed with caution.
How Can I Invest in BCH?
If you decide to invest in Bitcoin Cash, finding a place to buy and sell BCH it is easy. There are different ways to invest in BCH either in the short or long-term, with cryptocurrency exchange platforms like eToro being the safest places to invest in crypto.
Note that with our partner eToro, one can buy BCH and trade CFDs of up to 90+ crypto pairs. All you need to do is sign up, open and fund your account, and start trading.
Here you can read more about how to buy Bitcoin Cash.
Key Points
Bitcoin Cash is one of the most popular cryptocurrencies, currently ranking #6 as per CoinMarketCap.
Bitcoin Cash was created in 2017 as a fork of Bitcoin.
One of the main differences between Bitcoin Cash and Bitcoin is that BCH has increased block sizes of 32 MB.
Similar to Bitcoin, Bitcoin Cash uses Proof of Work and is capped at 21 million coins.
BCH is the ticker symbol of Bitcoin Cash.
BCH caused controversy in the crypto community and as a result, just a day after its appearance, its market cap exceeded $7 billion.
Bitcoin Cash has a good chance of staying in the crypto world as an alternative to Bitcoin; as a matter of fact, BCH has managed to stay stable despite the ongoing coronavirus pandemic.
Some experts believe that its value will double by the end of 2021.
If you decide to invest in BCH, we at Trading Education can help you understand the complexities of cryptocurrency trading and crypto news and establish a profitable risk management strategy.
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