Explanation of Bitcoin Cash... for normal people

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Bitcoin Cash is "you are your own bank" money. It exists solely on the Internet.

It's the money that nobody can print out of thin air destroying your savings.

It's the money that can't be taken away from you by anyone without you cooperating.

It's the money that you can hide in your brain.

It's the money that can be moved in billions in seconds for less than one US cent.

It's the money that nobody can forbid you to give to somebody via sanctions, border controls or banking rules.

Bitcoin Cash is definitely a revolution in money.

Why? Let's compare it to the most popular currency - the US Dollar.

Comparison to the US dollar in simple terms

Situation 1: QE/Inflation

Let's say you have saved $10'000 and put it into a bank.

Five years later the government comes in and says: "Hey, your bank is broke. You can't withdraw money from it anymore. Worry not, we have a plan - we will just start a 'QE' program, creating(printing) one billion new US dollars, we will give it to the bank and you can withdraw your money again."

Whew! Saved!

Right?..

Not so fast! The money that was created is a huge problem here.

The bank got the money. The bank won't give this money away, but rather will start "investing" it, for example by buying houses and apartments. The sellers of the houses will see that the houses are selling well and will start increasing prices until the bank doesn't feel like buying houses anymore.

What happened?

The government created (printed) new money and some time later the house prices rose.

What happens next?

The sellers of the houses got somewhat richer, so they can afford to spend somewhat more on other things, like groceries.

Suddenly, the grocery shops see that people can afford to spend a little more and start to increase the prices.

What happened? The government created new money and... some time later the groceries prices rose.

Now, the bread that you could have bought for $10 before, costs $11.

What happened to your savings?

You had $10'000 before and you have $10'000 now.

How many loafs of bread could your savings buy you before the creation of money? 1000 loafs of bread.

And after the creation of money? Only 909 loafs.

$10'000 / $10 = 1'000
$10'000 / $11 = 909.09

The money was created and suddenly you can afford less, therefore, even though you have the same amount of money - you are now poorer.

Creation of money creates the inflation most of the time (unless economy grows faster than money is created) which leads to you losing your savings.

Bitcoin Cash prevents this by having a predictable creation schedule. Nobody in the World can come in and say that tomorrow we'll have created a billion new Bitcoin Cash. It's impossible. Some very advanced math guarantees it.

Current new money creation schedule in Bitcoin Cash is about 4% new money per year and is about to become about 2% in mid-2020.

Situation #2: Withdrawing money from your bank

You have $50'000 in the bank. You come in and you tell the cashier that you want to take it home in cash.

Most of the time the cashier would tell you that you need to wait a few days.

But sometimes you'll stumble into a fact that you can't withdraw such big amounts at all. It happened to a lot of people in the US, the UK, all over the World.

You can move this amount between banks sometimes, but withdrawing is not always possible. You'll be given a lot of reasons, like the withdrawal being suspicious, needing an explanation of why you need such a big amount, etc...

The problem is that it's your money! You shouldn't ask for permission to use it. The bank just keeps it there. You must be able to withdraw it at all times.

(There are reasons why this happens and often the reason is that the bank doesn't have the money, due to something called "fractional reserve banking", which all banks do)

With regular money this situation is possible, with Bitcoin Cash this situation is impossible. You control your money at all times and nobody, except you, can move it. Not governments, not your bank, not your enemies (unless you cooperate).

Situation #3. Accepting money

Let's say you are a merchant (a shop) that wants to accept money.

You can of course, accept cash, that seemingly costs nothing, but there are associated processes that you need to do, like bringing your cash to the bank yourself or have the armed guards do that. This costs time and money.

For example: You need to deposit the daily cash receipts into the bank, but you have your employees do it. That employee must be paid for the time it takes for them to perform this business activity. There is also a chance that an employee steals from the till.

With Bitcoin Cash you can accept any number of transactions for free. If you want to put your money away into the "bank" (so-called "cold storage"), it costs less than one US cent and you don't need the armed guard, just a smartphone or sometimes even an usual SMS-capable phone will suffice.

You can accept credit cards, but it will cost you 3-4% of the amount and you'll get the money in about a week.

With Bitcoin Cash - accepting money is free and immediate. With big amounts you might decide to wait 10-20 minutes to be absolutely sure that the money is yours. For small amounts money arrives immediately.

Credit card payments can lead to fraud. A customer might leave and then do a chargeback.

With Bitcoin Cash all transactions are final and irreversible. As soon as you have your money (again, for big amounts it might be 10 minutes) - the customer can't take it away.

Situation #4. Moving money

Let's say you want to send your money to a friend that you met a few years back at a conference. He's from Some Asian Country. You'll find that sending money to Some Asian Country is impossible, because it's under some sanctions. It's your money. You must be able to give it to whomever you want.

With Bitcoin Cash this situation is impossible. You will always be able to give the money to anyone, anywhere.

Ok, let's say your friend is in the neighboring country. How much would it cost to send the money there? Usually it's about $20. How fast would it be? Probably about 3 workdays.

With Bitcoin Cash it's less than one US cent and immediate, in some cases the recipient of the money would need to wait about 10 minutes for the money to "settle" if the amount is big enough.

So, you've decided to bring your money to your friend anyway during your visit to a new conference. Your friend wants to start a new business and you want to bring $100'000 to him as an investor.

You're going to face a few problems. First, $100'000 is a big amount. You can be robbed on your journey. Second, you might face the problems with customs both in your own country and in the destination country. For example, if you don't declare the money properly - you might get the whole amount confiscated.

With Bitcoin Cash all you need to do is remember 12 words or store them somewhere safe online, so that you can access them upon arrival. As soon as you have these 12 words - you control your money again - nothing else is needed. So, now you can travel to other countries with billions... in your brain!

Situation #5. Opening a bank account

You just came to a new country. You want to open an account. But the bank tells you that it's impossible, because you don't have certain documents.

Or maybe you live in a country, where banking isn't even available to everybody, just like about a billion people live.

With Bitcoin Cash it's impossible. Everyone can open as many accounts as soon as he wants. Opening is immediate and nobody can prevent you from doing so.

Innovative nature

Bitcoin Cash is also programmable money. It can do things that regular money cannot. For example, you can send a specially constructed tip to a friend and if the friend doesn't claim the tip - you can take it back after some time. (This doesn't make the transaction reversible, if your friend takes the money - it's gone)

You can lock your money away from yourself for some time (to avoid spending it), if you want to.

You can allow your money to only be spent if two of your business partners agree that the money should be spent on something.

Wow! Is everything better about this magic Internet money?

Not quite. The good news is that all the troubles are temporary, even if they are going to take a few years to be sorted out, all the benefits are permanent.

Bitcoin Cash is absolutely usable now and secure, but at the time of this writing in 2019 Bitcoin Cash is just two years old, so not too many people know about it and use it.

Due to the relatively low popularity it has a few problems, which all are going to disappear once more people start to accept it.

Acceptance

Since Bitcoin Cash is young - it won't be accepted everywhere. There are thousands of places that accept Bitcoin Cash both online and offline and the numbers are increasing, but your local butcher probably haven't even heard of Bitcoin Cash.

You can see an incomplete list of major places accepting Bitcoin Cash here.

Exchange rate

Until Bitcoin Cash is accepted by more merchants, who can pay their vendors in Bitcoin Cash, thereby creating a closed economy, the exchange rate of Bitcoin Cash to local currencies like US Dollars is going to be dominated by day-traders on internet currency exchanges.

This means that the exchange rate of Bitcoin Cash to US Dollar and other national currencies can move up and down pretty fast.

This is both the good news and the bad news.

The bad news is that during the stable times in the economy sometimes you're going to see the exchange rate move downward, due to people preferring national currencies. This means that if you want to exchange your Bitcoin Cash to national currency later - you'll get less money than if you had exchanged earlier.

The good news is that in case of a major economy failure, you are going to see the exchange rate of Bitcoin Cash surge (get very high), thereby saving you from devastating effects of hyperinflation (=money losing value fast).

We see Bitcoin Cash as a hedge (a protection) against a catastrophic collapse of national currencies and national banking systems around the World, just like what happened in 2008. This has a very high chance of happening again ...and soon.

We didn't have Bitcoin Cash in 2008, so we don't know what would have happened. However, the common sense tells us that if one money can be created on a whim (national currencies) or is currently going through hyperinflation (where the prices might double or triple daily) and the other money is created slowly without creating inflation, people would flock to the second form of money immediately.

It might just so happen that after a major failure nobody would even want to leave the Bitcoin Cash and convert back, thereby creating a new economy. In that case, any people who had Bitcoin Cash before the collapse might become very rich. It will also mean that all the prices are going to be in Bitcoin Cash, thereby making exchange rate obsolete.

You can always exchange your local currency to Bitcoin Cash and back using local.bitcoin.com.

How does Bitcoin Cash relate to Bitcoin?

Bitcoin and Bitcoin Cash have a common history until 2017, but they are two different incompatible projects now.

Three biggest differences that you should know are:

  1. With Bitcoin, you can't sometimes know for sure how much to pay when you want to move Bitcoin.
    You can't sometimes know for sure how long it's going to take.

    The price that you need to pay when you need to move your Bitcoin Cash is always about $0.01 or less. The money arrives instantly, but if you transfer huge amounts of money - you might need to wait anywhere from 10 minutes to an hour to avoid a potential fraud (called "double-spending" - it's very expensive to do after about 10 minutes).

    With Bitcoin, due to the legacy design of the fee structure, you can expect to pay ten to thousand times more to move your money.

    In November 2017, the typical transaction fee (cost to move your money) reached $35 (that's just to move your money). That happens always when Bitcoin gets attention. Also, the waiting times for your transaction to be processed can be up to two weeks in Bitcoin sometimes. You can't predict when.

    There are none of those problems with Bitcoin Cash.

    At the peak of popularity in December 2018 Bitcoin has processed 490 thousands transactions in a single day and was fully congested (transactions taking weeks to finish, fee to move your money: $35+). Bitcoin Cash run a test in September 2018, where it has processed 2.1 million transactions and was not congested at any moment (transactions taking seconds to finish, fee to move your money: $0.01 or less).

  2. Bitcoin transactions are sometimes reversible (called "replace-by-fee"). A customer can send you a special transaction that he/she can take away from you especially during the popularity peaks of Bitcoin. You can a video here how easy it is to cheat merchants using "replace-by-fee" (note: "Bitcoin Core" referenced in the video is "Bitcoin".) This is an unacceptable risk for merchants.

  3. Bitcoin has stopped its technological advancement. Many new features that are available in Bitcoin Cash (such as privacy technologies CashShuffle and CashFusion, which prevent people from snooping what you are doing with your money, or non-custodial exchanges that can't steal your money, like local.bitcoin.com) required changes called "hard forks" that Bitcoin agreed to never do anymore. Therefore, Bitcoin doesn't have many of the things that make Bitcoin Cash great and doesn't even plan to implement it. These are just a few examples.

Bitcoin is sometimes referred to as "BTC".
Bitcoin Cash is sometimes referred to as "BCH".

Conclusion

Hopefully, after reading this, you now understand a bit about Bitcoin Cash and why we think it's revolutionary and brings you back the freedoms you should have had from the beginning. The freedom to use your money however you want.

We think that everybody should have at least some small amount of Bitcoin Cash. You can try to earn it by writing articles on read.cash or inviting other people to use read.cash. It's not a guaranteed way.

There are other ways, of course. You can simply buy it with local currency.

In the next parts (being written) we're going to try to use this new form of money, find out how to convert your national currency to Bitcoin Cash and back, how to accept it if you are a merchant and even a bit about how it works inside.

See you later.

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1 month ago (Last updated: 1 week ago)
Topics: Bitcoin Cash
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Comments

Plenty of Information on the article, and hard to assimilate In one day read😀 but awesome news there👌🎉

$ 0.00
5 days ago

Such a simple explanation, yet so useful. You're absolutely right about the inflation.

$ 0.50
1 week ago

Thanks!

$ 0.00
1 week ago

The article is really good, I loved the part you are explaining with simple examples about inflation I wish I could come up with examples like that when I'm debating something!

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1 month ago

Thank you!

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1 month ago

Nice article!!

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