Cryptocurrencies are increasingly popular with traders, be it Bitcoin (BTCUSD), Bitcoin Cash (BCHUSD), Ethereum (ETHUSD), Litecoin (LTCUSD) or Ripple (XRPUSD).
There are more and more signs that this new kind of currency will play an increasingly fundamental role in our daily lives and in the way the world works.
Bitcoin Cash vs Bitcoin
You will find here on the left the daily graph of Bitcoin - BTCUSD and on the right that of Bitcoin Cash - BCHUSD.
In order to better explain what Bitcoin Cash is exactly and why there is so much Bitcoin Cash in the news, it is important to return to the history and functioning of cryptocurrencies as a whole, including the original Bitcoin.
What is Bitcoin?
Bitcoin is a cryptocurrency, originally created in 2009 by <Satoshi Nakamoto> a pseudonym for one or more individuals. Their motivation was dissatisfaction with the existing fiat money system and its role in the global economy, as well as the perceived strengthening of geopolitical power structures.
While there are a number of differences between cryptocurrencies, the main differences between Bitcoin and other cryptocurrencies such as LiteCoin and Ether will not be discussed here. We will only remember that Bitcoin records the majority of transactions. Bitcoin was the first real cryptocurrency to have generated a certain and growing interest in carrying out transactions, to the point that even some companies are starting to accept it as a means of payment.
Bitcoin Cash was created in response to the debate that has been going on for years in the Bitcoin community over the best way to evolve Bitcoin to more users. The simplest solution was Bitcoin Cash. This is to increase the Max Blocksize Limit parameter of the Bitcoin code base. Although Bitcoin's block size limit remains at one megabyte (allowing around 250,000 transactions per day), Bitcoin Cash has increased the limit to 8 MB, which can process around two million transactions per day!
The main difference between Bitcoin and Bitcoin Cash is the fact that the Bitcoin Cash protocol allows more transactions per second, which results in:
Faster payments
Lower fees
News about Bitcoin Cash is daily for now! This new cryptocurrency is a hot topic for the press - and it has only been around since August 1, 2017. While new cryptocurrencies are appearing all the time, some significantly different from Bitcoin and others are rather imitations, the main difference with Bitcoin Cash is that its origins come directly from Bitcoin.
On August 1, 2017, the Bitcoin Cash Hard Fork, the Bticoin blockchain, split into two new blockchains - Bitcoin and Bitcoin Cash. The <forked> blockchain means that up to the range (until separation) Bitcoin and Bitcoin Cash have exactly the same accounting register. From the separation, called the fork, the books of account become separate, which now means two full-fledged cryptocurrencies exist.
What caused the hardfork between Bitcoin and Bitcoin Cash?
Bitcoin's blockchain technology is based on data blocks. As interest in Bitcoin increases, so does the number of transactions, which makes blocks of data fill up faster.
The transaction execution and recording time was longer because they required new <blocks> to confirm and verify them, which cannot be done faster by miners. Again, without going into technical details, this has become a scalability issue. The Bitcoin block size had to be increased, which required a software update and <fork>.
There are a few technical differences between Bitcoin and Bitcoin Cash, such as the fact that Bitcoin Cash is a smaller block size. From a trader's point of view, the difference is that Bitcoin and Bitcoin Cash are now two separate cryptocurrencies, while being derivatives, there are now two separate financial instruments - BTC (Bitcoin) and BCH (Bitcoin Cash exchange) .
The Benefits of Bitcoin Cash:
Speed, transactions are done in seconds and confirmations in just minutes.
Reliability, Bitcoin Cash is a network that works without clutter.
At low costs, you can send money at minimal cost.
Simplicity, Bitcoin Cash is easy to use and intuitive.
Stability is a proven payment system.
A guarantee, Bitcoin Cash is part of the blockchain technology represented as the most robust in the world.
Security, new transaction signatures offer:
Protection against re-reading
Improved security of the hardware portfolio
The absence of the quadratic hash problem
This cryptocurrency is still evolving. Initially, the blocking limit was adjusted, with a default value increased by 8 MB, but research is underway to allow future massive increases!
Why trade/buy Bitcoin Cash?
The main attraction of cryptocurrencies as tradable derivatives is their relative volatility compared to more <mature> fiat currencies.
They are like emerging market currencies experiencing waves of very high demand, creating significant upward and then downward movements.
Like a new cryptocurrency, the volatility on Bitcoin Cash is expected to be even more pronounced in the coming weeks and months compared to Bitcoin and other cryptocurrencies such as Ether, LiteCoin and Ripple.
Today you can buy Bitcoin cash with derivative financial instruments, like CFDs. We can therefore speculate - buy and sell Bitcoins cash without holding them and win/lose the difference between the position entry price and the position exit price on this cryptocurrency.
A Bitcoin cash purchase or sale is easier to liquidate on a speculation platform with CFDs than having cryptocurrencies directly in your wallet. We can therefore have an Android Bitcoin cash, from our smartphone with the MetaTrader trade platform.
This potential for volatility is attractive to traders with a pronounced taste for risk who would like to position themselves in buying Bitcoin Cash or selling Bitcoin Cash. Bitcoin Cash trading, and trading other cryptocurrencies, can provide return on investment opportunities, however, it should always be remembered that high volatility also carries a higher risk of loss.
Take advantage of the volatility protection tools at your disposal and exercise your trading in a secure environment such as on our free demonstration accounts for our customers, before trading Bitcoin Cash with real money.
Another feature of cryptocurrencies that appeals to traders is their low correlation to traditional financial markets and other asset classes.
Because cryptocurrencies are not part of the fiat money system, therefore their value is not influenced by the fluctuations of fiat currencies. And because they are not linked to any government or central bank, they are not influenced by geopolitical factors unlike other assets and the financial instruments based on them.
