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What is Bitcoin Cash? 2020 - How it works

What is Bitcoin Cash? 2020: how does Bitcoin Cash work? The most important questions about the cryptocurrency Act now BCC.

Maybe you have already received the recommendation from friends or acquaintances to invest in Bitcoin Cash. The new coin is on everyone's lips and the media is increasingly reporting on cryptocurrencies. But what is Bitcoin Cash and how does Bitcoin Cash work? We would like to answer these and many other questions on this page.

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What are cryptocurrencies?

Cryptocurrencies are digital means of payment, in which cryptographic information processing ensures that cannot be counterfeited. A key feature of cryptocurrencies is their decentralized management. In contrast to money issued by banks, they are not regulated, their value results exclusively from supply and demand. This often leads to high exchange rate fluctuations, but also ensures that no institution can control the value of the currency. Among other things, inflation is to be avoided, which can be triggered by an artificial increase in the money supply.

The Bitcoin was the one in 2009 first available cryptocurrency. To date, it is the largest cryptocurrency with a market capitalization of around $ 60 billion.

After Bitcoin, further cryptocurrencies were created, some of which are based on the same technology based and partly work according to other principles. The currently second strongest cryptocurrency is Etherum, the Bitcoin Cash, which was only split off from Bitcoin in 2017, is in third place. In total there are significantly more than 4,000 different cryptocurrencies, of which approx. 1,000 reach a daily trading turnover of 10,000 US dollars.

The Bitcoin and the ones that originated from it or cryptocurrencies created according to its model are based on the so-called blockchain technology. For each transaction, a new block with cryptographic information is generated and appended to the previous chain made up of blocks, the blockchain. The blocks contain all information about who has which bitcoins.

The blockchain is stored on each of the participating computers and can therefore not simply be forged. In contrast to central administration, all participants have the complete information. A transaction must first be confirmed by several independent computers on the network before it is considered valid.

What is Bitcoin Cash?

The cryptocurrency Bitcoin Cash has only existed since August 1, 2017. At this point, it was split off from the blockchain of Bitcoin by a so-called hard fork.

Bitcoin Cash was created because of problems with Bitcoin at Speed ​​ gave, with which the transactions were carried out among the participants. This meant that you either had to pay a high fee for the transaction to be carried out quickly, or long waiting times had to be accepted. But how does Bitcoin Cash work? With the new cryptocurrency, the transaction speeds are no longer a problem. This is because new blocks can be calculated faster. While the size of a single block with Bitcoin is limited to 1 MB, a block with the new Bitcoin Cash can be up to 8 MB in size. Thus, more transactions can be carried out in a short time, which makes Bitcoin Cash accessible to a larger number of users. If the currency is actually established as a common means of payment like the euro and other fiat currencies, the maximum block size can also be adjusted later.

With Bitcoin Cash, the original idea behind Bitcoin should be better implemented. The aim of the developer or the team, which is behind the pseudonym "Satoshi Nakamoto" , was supposed to be independent, anonymous and tamper-proof Create currency that better meets the needs of users than the money spent by the banks.

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Since when has Bitcoin Cash been available?

Bitcoin Cash is on 1st August 2017 emerged from Bitcoin. The spin-off was carried out to increase the maximum block size from 1 MB to 8 MB and thereby the smooth use by more To enable participants.

The two cryptocurrencies are therefore based on the same technology, and up to block 478,558, the last block before the spin-off, are even the blockchains are identical. However, the new cryptocurrency is not a 100% copy, because ultimately the two coins differ in their essential functions. While Bitcoin Cash has expanded the maximum block size and thus uses a so-called "on-chain" scaling, the Bitcoin developers have The problem of the low transaction speed has now been solved by a so-called "off-chain" scaling.

So what is Bitcoin Cash really? The answer to this question is: "A standalone cryptocurrency." Bitcoin is the original currency, but Bitcoin Cash has been modified so that it is no longer possible to mix the two cryptocurrencies and transactions from Bitcoin Cash are not transferred to the Bitcoin blockchain or vice versa.

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How does Bitcoin Cash work?

Exactly how the original currency Bitcoin works also Bitcoin Cash with the so-called blockchain technology. The information is stored on each of the computers participating in the network. Due to this decentralized management it is not possible to manipulate the blockchain, because for this you would need more than 50% of the computing power of the entire network.

But how does Bitcoin Cash work as means of payment? Who sets the value? As with all cryptocurrencies, these are only users, because there is no regulation, but the coin is freely traded. How much a Bitcoin Cash costs therefore results from supply and demand. If there is a buyer and a dealer who wants to sell Bitcoin Cash for a certain amount in another currency, this is the current value of the coin. Corresponding trading opportunities are offered on large online exchanges and Bitcoin Cash marketplaces. Due to the unregulated administration, there is no official Bitcoin Cash trading price, but the information usually refers to the amount that the users are willing to pay at the large crypto exchanges.

If a participant sends to another Bitcoin Cash, a new block is calculated by the network and added to the blockchain. This block receives the information about which owner the coins belong to. However, with the anonymous process no names are saved, because it is an anonymous system. Rather, users can access the bitcoins with the cryptographic keys that are on their wallet, a type of electronic wallet, and send them on.

Are cryptocurrencies really counterfeit-proof?

One of the advantages of Bitcoin Cash is often mentioned that it is absolutely counterfeit-proof. But is that possible? What is Bitcoin Cash for a currency if it is not possible to replicate or sabotage? The answer lies in managing the information. While the fiat currencies regulated by banks are managed centrally, Bitcoin Cash involves all network participants in the administration. This is easily done by providing computing power. In this way, new blocks can be calculated and confirmed for transactions . As a result, each participant has all the information about the bitcoins stored on the blockchain. Thus, in the event of a counterfeit, the majority of all participating computers would have to be manipulated. Only those who can provide more than 50% of the total computing power on their own would be able to inject false information into the blockchain and thus appropriate Bitcoin Cash without authorization.

In the first years of the bitcoin was actually a certain danger here, because the large mining pools provided a large part of the computing power and there were occasional participants who were close to the 50 % came up. This is now no longer the case l. If the situation occurred again, this would also be apparent to crypto experts and corresponding solutions could be found in good time.

How can I buy Bitcoin Cash?

In order to receive Bitcoin Cash, a so-called Wallet must first be created. This is a virtual wallet, on which the cryptographic keys are saved, which can be used to access your own bitcoins . Even if it is often read that the coins themselves are on the wallet, this is not correct. The actual coins are stored on the blockchain. With the cryptographic key,, which consists of a public and a private key, the coins can be forwarded and thus as means of payment can be used. The cryptographic keys do not necessarily have to be managed in an online wallet. They can also be noted on paper or stored on special hardware. This makes them inaccessible online and thus even better protected against hackers.

Cryptocurrencies can be purchased online for euros or other currencies. There is an increasing number of exchanges, to which users can submit their offer or to which other users can react. With crypto exchanges, on the other hand, there are no individual trading offers, but buying and selling takes place at prices set by the provider, which also result from supply and demand.

A third way to get Bitcoin Cash is to buy this privately. For security reasons, however, a meeting is required, because once transactions have been carried out, cannot be reversed if the trading partner should not pay. Therefore, the private sale of Bitcoin Cash is in most cases for cash.

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What are the risks at Bitcoin Cash?

Bitcoin Cash was developed to offer a better payment alternative than the usual, due to its counterfeit protection and its decentralized management being money controlled by banks. But how secure is the cryptocurrency really? How does Bitcoin Cash work? And are there also dangers?

In fact, it is so that criminals should hardly be able to counterfeit Bitcoin Cash, because of that they would have to spend more than 50% of the total computing power of all users. Payments with Bitcoin Cash, on the other hand, harbor their dangers, because these are anonymous, but can do so also cannot be undone. Anyone who sends an excessive amount or to a wrong recipient of Bitcoin Cash can only hope that they will send the coins back. Otherwise there is no possibility, because anonymity cannot even be used to determine who exactly received the coins.

Another risk when using Bitcoin Cash is the typical one for cryptocurrencies high volatility. Since is not regulated by a central authority, the value of the coins can fluctuate greatly. This has made some users of Bitcoin millionaires, because its value today is a multiple of the entry price. The rate of a cryptocurrency can also develop in the reverse direction. If the demand is no longer there, for example because the users migrate to a other cryptocurrency or prefer to invest their capital in classic financial investments, so is Bitcoin Cash correspondingly worth less. Therefore, only money should be invested that is not needed to finance important needs.

Getting rich with cryptocurrencies - is that really possible?

The Internet is from with reports of people who bought bitcoins early, who were once available for a few cents per coin. Meanwhile, Bitcoin is worth several thousand euros and has made these users millionaires or even multi-billionaires.

But what is Bitcoin cash? Is the same with this cryptocurrency?

Just like with Bitcoin, the value of Bitcoin Cash is not artificially regulated by a central authority. The maximum amount of coins is limited to 21 million, so that no inflation is to be feared due to the excessive creation of new units. Since the rate is based solely on supply and demand, it must inevitably increase if more capital is invested in Bitcoin Cash. So far, not even 1% of the population has Bitcoin Cash. Should the crypto coin really develop into a means of payment used by the broad mass, this should lead to a huge increase in the value.

Summary: Cryptocurrencies could replace fiat currencies in the long term

Bitcoin Cash is a promising cryptocurrency, which is the current fiat money used by most people in several points superior is. As we have seen, among other things, in the financial crisis, interest in cryptocurrencies increases especially when trust in institutions and banks decreases. With a decentralized managed currency, users are no longer dependent on individual rulers, but have the certainty that the community manages their own money.

Due to the high volatility of the trading price, the value can decrease in phases or increase quickly. This is the attraction for many investors who hope for a return from the Bitcoin Cash, which cannot be achieved with classic capital investments.

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