Overnight, thousands of Bitcoin owners saw their wealth go up significantly due to a simple change - Coinbase started showing balances of Bitcoin cash in peoples' wallets. While these people always owned some Bitcoin cash, most "non-techy" owners had no idea and didn't know what to make of their newfound wealth.
So, what happened? What is Bitcoin Cash? How is it different from Bitcoin, and how can you invest in it?
While there have been some hiccups on day 1 of Bitcoin Cash really being widely accepted, there is still an opportunity to get in on this cryptocurrency - and it could even compete with what investors have been seeing with the original Bitcoin (and other coins, such as Ethereum and Litecoin).
Before you get started with Bitcoin Cash, you need a digital wallet. We recommend Coinbase, which we discuss a bit more down below. Plus, if you open a new Coinbase account, you'll get $5 in BTC when you make your first trade!
If you're considering jumping into Bitcoin Cash, make sure you fully understand the risks. We break it down as much as possible, but realize that this is extremely, extremely risky to invest in.
What Is Bitcoin Cash?
Bitcoin Cash is a hard fork from the original Bitcoin blockchain. This split occurred on August 1, 2017.
If you're new to cryptocurrency investing, a hard fork is essentially a split from the original blockchain. Think of it like the Catholic Church - if you go back in time, there were multiple "hard forks" along the way. Some of the biggest include Protestantism splitting from Catholicism. This is very similar.
Both Bitcoin and Bitcoin Cash use the same algorithm (i.e. Bible), but they have different ways of interpreting it. Once they split, Bitcoin Cash uses its protocol, while Bitcoin uses it's protocol.
How Bitcoin Cash Is Different
In technical terms, Bitcoin Cash wanted larger block sizes than Bitcoin - they increased the block size to 8MB. However, all else is pretty much the same.
The last common block of Bitcoin and Bitcoin Cash was Block 478558. At that split, any owners of Bitcoin (on the blockchain) also received an equal value of Bitcoin Cash. That's where the surprise came from this morning. Any holders of Bitcoin at that split received Bitcoin Cash.
But that Bitcoin Cash wasn't easily available to non-tech savvy investors, until today when Coinbase put Bitcoin Cash onto it's wallet publicly.
Bitcoin Cash is much cheaper than Bitcoin. Currently, it's about 90% cheaper. You'll notice that the price is about 90% lower than it's all time high as well - currently trading in the $400 range.
How To Invest In Bitcoin Cash
If you're looking to invest in Bitcoin Cash, it's important to remember that Bitcoin Cash is a currency. This means it doesn't act like a stock or bond. Instead of buying shares of Bitcoin Cash, you are swapping your currency for Bitcoin Cash currency.
For example, $1 USD is equal to about $449 in Bitcoin Cash today. The goal is for the value of Bitcoin Cash to rise, in which case, you could exchange your coins back to dollars (from someone willing to do the exchange).
So, where can you do this? Sadly, you can't invest in Bitcoin Cash at your stock broker. Instead, you need a digital wallet. The best digital wallet we've found for US Citizens is Coinbase. Coinbase allows you to buy and sell Bitcoin, Bitcoin Cash, Ethereum, and Litecoin all in their app.
Since Coinbase is also a digital wallet, you can use your wallet to buy, sell, send, and receive Bitcoin Cash as well (for example, using Bitcoin Cash to pay for goods or services online).
By using THIS LINK you'll get $5 in bitcoins after you make your first trade. You can then convert your Bitcoins and bonus into Bitcoin Cash if you wish.
Another option to invest in Bitcoin Cash includes eToro, which is a full service brokerage that also allows cryptocurrency investment.
Final Thoughts
Bitcoin Cash is one of the newest cryptocurrency choices available to consumers. While it's new, it's based on Bitcoin, which is one of the oldest. However, it's become popular because it's suddenly become easy to access - so keep that in mind. This is also the case with Ripple - it's not easy to access, but as that changes, you might see an explosion in popularity.
If you're thinking about investing in Bitcoin Cash, remember, there is an incredibly high degree of risk involved. The only way you "make money" is if the price goes up - meaning other people are willing to buy it from you. This isn't an asset, but more of a gamble on price.
Did you wake up and find Bitcoin Cash in your account today? Are you planning on buying or selling Bitcoin Cash?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.