How to Invest In Bitcoin Cash - Step-by-Step Guide
Bitcoin Cash is a P2P digital cash network that has been developed for facilitating global transactions with quick payments, micro fees, high scalability, and privacy. Being a permissionless and decentralised cryptocurrency, Bitcoin Cash doesn't need any third parties such as financial institutions or a central bank.
At the time of writing, Bitcoin Cash's native token denoted by BCH is trading just above $625.00 per coin with a market capitalisation of over $11.7 billion. BCH has a maximum supply of 21 million tokens out of which more than 18.6 million are in circulation.
Table of Contents
Invest in Bitcoin Cash in 3 Steps
Get a Bitcoin Cash Wallet
Investing in Bitcoin Cash requires you to acquire a secure BCH wallet that comes in both hardware and software forms. There is a wide range of crypto wallets available on the market and you will have to evaluate a number of key factors before making your final decisions. Depending on your usage and investment strategy, you will need to find a wallet that offers the right combination of user-friendliness, coin accessibility, and security.
Join a Bitcoin Cash Exchange
The second phase of investing in BCH requires you to make an account on a cryptocurrency exchange and verify your account. You have the option to choose from a variety of cryptocurrency exchanges including Coinbase, Coinmama, and Binance. Remember that you cannot directly purchase BCH tokens and first you will need to deposit funds. Then you will be able to purchase BCH tokens.
Invest in Bitcoin Cash
When you make your account on a crypto exchange, you will provide your basic personal information including your name, email address, country and phone number. You will also be required to verify your account through documentation submission which may include your driver's license or ID card. This is done by exchanges and brokers to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
Investing in Bitcoin Cash Explained
Before investing in Bitcoin Cash, the first thing you should do is get a secure BCH wallet. Some of the crucial factors that you should take into consideration before getting a wallet is to consider backup ability, security features, private key control, user-friendliness and customer support. Keep in mind that different types of investment strategies will require different types of BCH wallets.
If you are going in for a long-term and intend to store your BCH tokens for months or even years, then security should be the top-most feature on your list. Cold wallets do not require a constant internet connection so they are safe from outside security breaches. Cybercriminals and hackers won't be able to access your BCH coins present on your cold wallet.
But if you are a day-trader or a short-term investor then mobile wallets offer the portability and accessibility you are looking for. They offer the right balance of security and access to coins for your trading strategy. If you want something more feature-rich, then you also have the option to go with a desktop wallet which is a software package like MS Office.
Apart from that, there are investors who just want to store their BCH coins for a few minutes or an hour or two. For such investors and traders, hot wallets or web wallets that are built into your cryptocurrency broker or exchange platform can be quite useful. They may not be as secure as hardware or desktop wallets but they offer almost instant accessibility so you can execute your orders and trading positions in a matter of seconds.
There is another method to acquire BCH tokens and that's through peer-to-peer networks that connect sellers with buyers. The best benefit of such platforms is that you can negotiate your own terms with the selected seller including the price of BCH tokens and payment method.
It doesn't matter which platform you pick for investing in or trading BCH, every highly-reputed service will ask for your personal identity verification to ensure compliance with AML and KYC regulations. This helps these platforms prevent illegal and fraudulent activity on their websites and apps so you have a safe and secure ecosystem where your personal information, as well as funds, aren't at risk.
Where Can You Invest In Bitcoin Cash?
It can be a challenging decision to pick the right platform. That's why we have carried out comprehensive reviews of all the top platforms testing each essential feature including user-friendliness, customer support, regulatory compliance, fees, and more. Here are some of our recommendations.
As you sign up on a cryptocurrency investment platform, you will notice right away that there are numerous payment modes available to you including debit and credit card, bank transfer and other digital payment options. These payment modes depend on the country and the platform you choose. If you are just a beginner, then the best option for you is a debit or credit card. It is a tad expensive but you will be able to transfer money right away without any hassle. After you have made your minimum deposit, you can start purchasing BCH coins.
Some exchanges enable you to deposit through your bank account. This is quite simple to use but the funds may take some time to transfer into your account. For this method of payment to work, you will need to provide your preferred fiat currency and the name of your bank. The platform will take you to another page where you will be asked for bank account verification. Once completed, you can deposit your funds into your exchange or broker account.
Bitcoin Cash Investment Strategies
To invest in BCH, there are a number of short and long-term trading and investment methods. Below, we have discussed the most popular BCH investment strategies and when and how you should use them to capitalise on the cryptocurrency market.
Buy and 'Hodl'
What is it?
'Hodl' is nothing but the word 'hold' which has been misspelt. It has become an inside joke of the crypto world which started when a frustrated Bitcoin investor made a comment about holding his coins. The strategy, as you might be thinking, involves holding onto your BCH tokens for a long period until a huge price surge results in substantial profits. Looking at the performance trajectory of Bitcoin Cash, it is not exactly a surprise that the 'hodl' strategy has worked for many investors. Since many analysts believe that BCH price will rise in the future, BCH 'hodling' could potentially be a profitable strategy.
How to use this strategy
For 'hodling' BCH tokens, you need to make an account on a crypto exchange and verify your identity. Make the minimum deposit and acquire BTC tokens. Then exchange them for BCH coins. Remember that this strategy is all about investor's discipline and patience and you will be tempted to sell on many occasions. But you will need to wait for long-term gains for the holding strategy to work.
When to use this strategy
The ideal moment to acquire BCH tokens is when the market is down and the price is witnessing a decline. Purchase BCH coins and hold them in your secure Bitcoin Cash wallet until the right moment arrives. You have to bear in mind that the cryptocurrency market goes through ups and downs almost every second and you cannot be swayed by these temporary hikes and drops if you want to make huge earnings in the long run. Just buy your BCH tokens and forget about the market and price charts until the price is right.
Buy Fractional Bitcoin Cash
What is it?
Just like Bitcoin, you don't need to buy an entire token since the Bitcoin Cash network also offers smaller units. Like many other cryptocurrencies such as Bitcoin, Bitcoin Cash blockchain's native currency, BCH, is also divisible. The smallest unit you can buy is 0.00000001 BCH. Purchasing a fraction of Bitcoin Cash gives you the ability to invest even if you don't have thousands of dollars. Fractional purchasing of BCH has turned into one of the most popular ways of retail BCH investment as it enables you to buy Bitcoin Cash worth any sum, even if you have only $25. This method is about investing little by little at regular intervals so your portfolio and stake in the coin increase in the long-run.
How to use this strategy
One of the most effective methods to implement this investment strategy is to save a certain amount on a monthly basis and invest it in BCH. If you are able to save and invest in a disciplined manner, you will be able to purchase sufficient enough BCH coins in the long run to build your stake which can be profitable depending on the market.
When to use this strategy
This investment method is perfect for those who are just starting out and don't want to put a lot of money into BCH right away. This step-by-step method will allow you to learn and withdraw any time you want.
Long Position on Bitcoin Cash
What is it?
Opening a long position means that you are betting on the fact that the price of BCH will go up in the near future. Since this is about your confidence in the market, long positions are often opened through Contracts for Differences or CFDs. This method enables you to bet on the price without actually buying the asset. You can also leverage the position but don't forget that this is a high-risk and high-reward investment strategy that should only be used by seasoned investors who know and understand their financial risks and have a deep understanding of cryptocurrencies and digital asset markets.
How to use this strategy
When you are quite sure that the BCH price is about to go up, you have the option to go for a long position on BCH by signing up on a brokerage platform. First, you will need to verify your identity and then you will choose the amount you want to put in your trade. You will then buy a CFD. The brokerage platform will also ask you to enter the price at which you want to initiate your position. If and when your desired target price point is reached, you can close your position and take your profits. If the price doesn’t hit that mark, you will have to bear the losses.
When to use this strategy
It should be clearly understood that long positions that are opened through a leveraged trade should only be used by highly experienced investors who are completely aware of the consequences if the trade goes wrong. This particular strategy is ideal in a market where the price is moving upwards due to some evident factors. It takes an immense amount of experience and skillset to execute such trades successfully.
This is one of the reasons why you need to familiarise yourself with cryptocurrencies and financial market dynamics if you want to engage in high-risk leveraged trading. If you are informed enough, you can rely on the charts, graphs and other guidance indicators to make better investment decisions and have higher odds of pulling off a long position trade in a successful manner. Whatever you do, ensure that you are only investing the amount you can afford to lose.
Benefits of Investing in Bitcoin Cash
- Low transaction fees – For sending and receiving funds, fees matter a lot. With a low average fee per transaction, BCH provides an affordable way to transfer money.
- User-Friendly – Bitcoin Cash hasn’t gone mainstream as of yet but the adoption is rising across the world.
- Accessibility – Since Bitcoin Cash exists in digital format, you can access it from anywhere if you have a device and an internet connection.
- Autonomy – No central authority like a government or financial institution has any control over your BCH tokens.
- Anonymity – When you use the Bitcoin Cash network for transactions, it is almost impossible to track your identity.
- Peer-to-Peer Network – BCH allows you to directly deal with the other person or party without any involvement of intermediaries.
- Scarcity – Since there are only 21 million BCH tokens that will ever exist, the scarcity combined with higher demand will potentially continue to push the BCH price upwards.
Disadvantages of Investing in Bitcoin Cash
- High volatility – Owing to the nature of the market and high trading volume, BCH’s price is always volatile.
- Beware of scams – The cryptocurrency market has witnessed a large number of scams that have robbed people of their hard-earned money. You need to ensure that you are being cautious.
- Superior Currencies – Although BCH enjoys quite a lot of success, there are many currencies on the market that are technologically superior.
- Environmentally Non-Friendly – Since Bitcoin Cash coins are created through mining, it consumes a lot of energy that results in carbon emissions.
Other Ways of Investing in Bitcoin Cash
If you are looking for alternative methods to invest in BCH, you can:
- Directly meet with a seller face-to-face relying on a P2P platform. Make sure you meet at a safe spot.
- Use the ATM Radar website to find the nearest legitimate BCH ATM in your area.
Invest in a Bitcoin Cash ETF
A Bitcoin Cash ETF provides traders and investors with a legal and simple method to invest in BCH. It's an investment driver that keeps track of the price movement of Bitcoin Cash and is traded on the conventional stock market. ETF's value increases and decreases the subject to the price of BCH. It's a perfect way to invest for individuals who don't want any technical involvement like managing Bitcoin Cash addresses, wallets and private keys.
Mine Bitcoin Cash
Any individual can mine Bitcoin Cash tokens. For mining BCH, you need specialised hardware called mining equipment which you can either rent or purchase. Miners are also required to run a full node software such as BCHN that can create blocks and enables you to connect to the rest of the cryptocurrency network. You can perform mining alone but, for better results, miners pool their hash rate and share the resultant rewards proportionally.
Frequently Asked Questions
No. You can buy a millionth of a Bitcoin Cash token.
Instead of just investing all of your capital in BCH, choose some other promising cryptocurrencies as well and diversify your investment portfolio. This will allow you to dilute your risk.
It depends on the tax laws in your country. Check with your local laws.
Bitcoin Cash can be mined using specialised hardware called ASICs and running a full node software such as BCHN. You might need to pool your computing resources since the competition has become intense in the mining sphere.
To ensure compliance with AML and KYC regulations, reputed platforms require you to verify your identity. This helps them curb illegal and unethical financial activities on their platform and provides you with a safe and clean investment environment.