Bitcoin is the most valued cryptocurrency on the market and investors are beginning to take notice of
However, the first step towards investing may be more difficult than you think due to Bitcoin Cash, another popular cryptocurrency that many people confuse with Bitcoin. Despite their similar names, these cryptocurrencies are quite different.
Experts recommend that you stick with Ethereum and Bitcoin as long-term investments, and experts recommend crypto investment and trading using reliable cryptocurrency exchanges to avoid the risks associated with niche exchanges.
Many crypto trading software, such as crypto genisus, are also there to help you getting real-time Bitcoin trading signals.
However, it is important to not confuse Bitcoin Cash with the original Bitcoin. Below are some basic facts about each:
What Is Bitcoin?
Bitcoin was the first cryptocurrency launched by Satoshi Nakomoto in 2009. Its price fluctuated between lows of $10,000 per coin and highs of over $60,000 over the past year.
Bitcoin was initially intended to be an electronic cash system that could be used to make payments. Kiana Danial, author of Cryptocurrency Investing For Dummies & says that Bitcoin is difficult to use for payments due to its slow processing and volatility.
Instead of using Bitcoin to make payments online, people bought the coins and on hold on to them expecting that their prices would increase in future. This is similar to the way some people keep onto gold.
A group of Bitcoin users in 2017 tried to make Bitcoin more efficient in processing transactions and to make it easier for people to use it as an electronic cash system. Enter Bitcoin Cash
What Is Bitcoin Cash?
Danial explains that Bitcoin Cash was born out of a desire to find other crypto assets and other cryptocurrencies optimized for actual payment. Bitcoin Cash was borne out of Bitcoin for this very reason.
A group of developers can fork the blockchain that a crypto is based on if they want to alter an aspect. A fork is a process that takes the main code of a cryptocurrency like Bitcoin and adds or modifies it so it can be created as a separate entity.
Bitcoin Cash was created to be an electronic cash payment system. However, Bitcoin Cash has also experienced the same volatility as Bitcoin as a currency. You should be cautious when making payments with either currency.
Imagine that you pay $5 for coffee and the same amount of cryptocurrency tomorrow is worth $20. This volatility could result in a loss.
You should also note that although you are not required to report crypto purchases to IRS, you must report when you trade crypto for goods or services. This requires extra diligence from your part.
Bitcoin vs. Bitcoin Cash: Which Should You Buy?
Experts recommend that you should stick with Ethereum and Bitcoin, the two most popular cryptocurrencies. They also suggest that you pass on any other altcoins such as Bitcoin Cash.
There are many different cryptocurrencies available on the market. Most have little value and have uncertain future potential. Experts recommend that investors stick with Bitcoin, even though Bitcoin Cash shares the same name.
Which Is More Valuable: Bitcoin Or Bitcoin Cash?
Bitcoin was launched in 2009. It has seen a rise from $0 to $60,000 over its lifetime, but it has not been an easy ride. Just this year, Bitcoin reached its highest price point of all time at just above $60,000, and then rapidly lost 50% of that value in the following weeks.
The fact that cryptocurrencies can be linked to no other asset class or company makes them highly volatile and speculative. This is why you should not invest more than 5% of your portfolio in cryptocurrency. Only invest what you are comfortable losing.
How To Buy Bitcoin Or Bitcoin Cash
Experts recommend Bitcoin as the best investment option, but the process of buying both is the same.
1. Select a cryptocurrency exchange. You cannot purchase cryptocurrency through traditional banks or brokerages. Instead, you will need to access a specific cryptocurrency trading platform like Coin base or Gemini.
2. Fund your account: To transfer funds to your chosen cryptocurrency exchange, you will need to connect your debit or bank card.
3. Place your order: After your payment method has been established, you can place your order. You can choose how much you would like to purchase in USD or crypto. Because they are so costly, most people will be buying fractional shares of one coin.
4. Keep your crypto safe: You can store smaller amounts of crypto directly in your exchange. A crypto wallet will provide greater security for large amounts of crypto.