How to buy Bitcoin Cash: A beginner's guide for buying BCH
Bitcoin Cash (BCH) is one of Bitcoin’s (BTC) early competitors formed out of a hard fork back in 2017 led by Roger Ver, one of the early Bitcoin investors. In the world of cryptocurrency, a hard fork is a process of splitting a blockchain to create a token with new features and capabilities. While BCH was purpose-built to outperform the original Bitcoin in terms of transaction speed, the ecosystem’s mission statement and its growing value have attracted a broad demographic of investors worldwide.
The earliest owners of Bitcoin Cash were the people holding BTC before the BCH hard fork took place. After the historic hard fork commenced, Bitcoin investors were entitled to the same number of BCH tokens they held before the split. The price of BCH right after the Bitcoin fork was set at roughly around $600.
Although BCH’s block is 8 times bigger than BTC’s 1 MB block size, both ecosystems use a proof-of-work mining algorithm to confirm the transactions. However, the more giant blocks allow BCH to validate more transactions every 10 minutes when compared with BTC.
Owning assets in Bitcoin Cash has become easy given the numerous in-house and external platforms offering to sell the crypto holdings against fiat and other cryptocurrencies.
This guide takes you through the various dos and don’ts of buying Bitcoin Cash.
Back to basics
Just like any other cryptocurrency on the market, BCH tokens are stored in digital wallets, protected by a private key. Therefore, the first step is to procure a cryptocurrency wallet that supports BCH storage.
As a result of its widespread adoption, the BCH ecosystem is supported by numerous wallet options including software wallets, hardware wallets, paper wallets, mobile wallets and wallets provided by cryptocurrency exchanges. Check out Cointelegraph’s guide on choosing the right wallet for storing BCH tokens based on your unique requirements as an investor, enthusiast, or hodler.
Various ways to buy Bitcoin Cash
As we know by now, the earliest BCH tokens were awarded to the Bitcoin holders after the original hark fork. The good news is that owning BCH has become as easy as buying coffee in the morning due to the internet and easily accessible open-source programs that help you buy or sell cryptocurrencies. Open-source programs are built on freely available codes and technology that allow users to buy and sell cryptocurrencies without charging an upfront cost for using the service. However, numerous paid services are also available for crypto investors that offer similar services for a premium.
Let’s check out the available venues for buying BCH below:
Cryptocurrency exchanges are arguably the most sought-after platforms among first-time investors to buy a cryptocurrency token like BCH. Depending on the platform and its services available within your jurisdiction, BCH can be purchased with just a few clicks in exchange for local fiat currency (traditional money like the dollar, the euro or, the pound) or any other cryptocurrency.
Crypto exchanges have built-in wallets that can support numerous tokens, differentiated by unique addresses. Depending on the area of operation, exchanges offer different methods for depositing fiat currency, which will later be used to buy/trade cryptocurrency on the platform. Many jurisdictions have laws that prevent citizens from using debit and credit cards to make deposits on the crypto exchanges. However, they allow users to make deposits using third-party payments services such as Cash App.
Once BCH is bought on the exchange, it can be moved to the corresponding wallet. The BCH holdings can now be sent to any other BCH wallet around the world.
The rising restrictions and regulations have resulted in many mainstream crypto exchanges requiring government-issued know your customer (KYC) documents such as Social Security card or driver’s license before allowing users to buy or sell cryptocurrency. Although collecting KYC information does not comply with the ethos set by Satoshi Nakamoto (the anonymous inventor of Bitcoin), authorities tend to impose such requirements to monitor user’s money laundering efforts and related crimes.
However, one of the biggest concerns, in this case, is the safety of exchange wallets and the user’s assets. Practically speaking, your assets are only safe until the time the exchange can fend off hackers. So, as long-time investors, you’d be interested in moving your assets to safer cold storage options such as a hardware wallet.
Peer-to-peer (P2P) implies direct buying and selling of cryptocurrencies with another person. This method of buying BCH involves finding a service that can connect you with people willing to sell their tokens for cash (local currencies). The main advantages of this method include lower transaction costs and faster settlements.
In a typical P2P trade, a user will deposit a certain amount of fiat currency with the platform, such as a crypto exchange. The platform will then find a suitable seller(s) that wants to cash out on their BCH savings and enable the peer-based transaction between the two parties.
The P2P service guarantees every transaction by escrow service protection, which involves a third-party vendor or service that holds assets from both sides of the transaction (i.e., from the sender and receiver). This process is widely considered to be the most secure and fastest way to buy BCH tokens. However, there have been instances where scammers exploit the chargeback (payment dispute) feature to claim the transferred amount from the platform wrongfully.
Instead of depending on platforms, one can also go old-school and physically meet people to exchange BCH tokens. As a result of the influx of numerous dedicated forums and blogs, offline traders find each other based on the users' proximity and online credibility. In such trades, users typically scan the recipient's QR codes for sending BCH and collect the corresponding fiat currency through bank transfers or cash payments. However, as no third party will be involved in such direct transactions, the users need to be extra cautious in ensuring the credibility of others.
To help you decide the best option, let's look at some of the general differences between P2P and cryptocurrency exchanges. Please note that the transaction fees and speed will differ for each platform/service.
Bought BCH and still don’t see it in the wallet?
Buying BCH or any other cryptocurrency can sometimes result in delays, no matter the method you go for. The delays in receiving the BCH token can be due to a multitude of factors, ranging from partner banks, mining complications and fees allocation and internal issues of the platform. For example, when you make a cash payment on the exchange or a P2P service, the transaction goes to the platform’s banking (or payments processing) partner for processing and confirming its legitimacy before the platform can send out the corresponding BCH tokens.
As a result, the confirmation of transactions can take anywhere from a couple of hours to several days. If your bank denies the payment, then the deducted amount gets transferred back to the original mode of payment.
The service provider ideally mentions information regarding expected delays. So every user needs to do extensive research before settling with a platform or service.
More ways to stack up BCH tokens
Buying cryptocurrency from an exchange or a peer-to-peer service is only one side of the coin when it comes to stacking up BCH tokens. One can also contribute to the ecosystem by mining BCH tokens, which involve confirming and legitimizing transactions on the blockchain. To learn more, visit Cointelegraph’s beginner’s guide on mining BCH.
Another way to earn cryptocurrency is by accepting BCH payments for products and services. As a business owner, you can also take payments in BCH - both offline and online. One of the most important things to look out for is the local regulations to ensure that your business can remain compliant with crypto tax and income laws within that jurisdiction.