What Are Bitcoin Cash & Bitcoin Gold?
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We may have all heard of Bitcoin and other cryptocurrencies but are you confident that you know the difference between Bitcoin Cash and Bitcoin Gold?
Bitcoin Cash and Bitcoin Gold were each formed out of what is known as a bitcoin fork.
In this article, we take a look specifically at Bitcoin Cash and Bitcoin Gold – focusing on what they are, why they were formed and how to make the most of any investment.
Please be aware that this article is not designed to provide financial advice; if you choose to invest then you should undertake thorough research and due diligence into the effectiveness of cryptocurrency investments. This article is to be used solely to provide a brief overview of the key differences between Bitcoin Cash and Bitcoin Gold.
Bitcoin Cash was developed in 2017 after forking off from the original bitcoin currency. Although it has a lot of similarities to bitcoin and previously shared the same transaction history, it is now a completely separate currency.
Like the original bitcoin, Bitcoin Cash uses the Proof of Work (PoW) algorithm and mining is carried out by application-specific integrated circuit (ASIC) hardware.
Why Was Bitcoin Cash Formed?
It was hoped by the original Bitcoin inventor Satoshi Nakamoto, that bitcoin could be used as a peer-to-peer currency that could handle daily transactions and compete with traditional credit card transactions such as Visa.
Bitcoin Cash was developed because bitcoin (BTC) was struggling to process large transactions.
The original bitcoin was launched with a 1MB blockchain; this was in part because it wanted to reduce the likelihood of spam and fraud. However, as bitcoin grew in popularity, transaction times slowed down significantly because there were only so many that it could process per second.
As a result, Bitcoin Cash forked off and became its own distinct currency. By incorporating a larger blockchain between 8 MB and 32 MB, it can handle much larger transactions quickly and more effectively.
What Can You Do With Bitcoin Cash?
As a peer-to-peer currency, the benefit of Bitcoin Cash is that you can transfer it directly to other users without the need for a third party such as a bank. It’s a popular currency choice when sending large transactions because the fees involved are minimal.
In some instances, you may be able to use Bitcoin Cash as a payment method – particularly when purchasing online. However, due to a lack of understanding in the mainstream, this is still uncommon, although it could change in the future.
Bitcoin Cash is a strong investment possibility; although as with stocks and shares and forex trading, any investment is volatile with no guaranteed return on income.
Bitcoin Gold was also developed in 2017 as another hard fork. Unlike bitcoin and Bitcoin Cash, Bitcoin Gold uses a different algorithm called ‘Equihash’.
As Bitcoin Gold is designed to be more accessible than its fellow cryptocurrencies, it uses graphics processing units (GPUs) or graphic cards to allow people to mine.
Other than the algorithm and mining habits, Bitcoin Gold works in exactly the same way as bitcoin and Bitcoin Cash.
Why Was Bitcoin Gold Formed?
Due to the increasing centralisation of bitcoin mining techniques that required expensive computer hardware, it was agreed that bitcoin was becoming elitist and unaffordable.
Bitcoin Gold was devised as a way to allow ‘average’ people to mine for bitcoins on their home computers using graphics cards (or GPUs).
What Can You Do With Bitcoin Gold?
Bitcoin Gold can be used in exactly the same way as Bitcoin Cash. It is a legitimate cryptocurrency and can be used to send money to others or used for investment purposes.
Hopefully, having read through this article, you’ll have a bit of a clearer understanding of the key differences between Bitcoin Cash and Bitcoin Gold – here is a handy recap:
|Bitcoin Cash||Bitcoin Gold|
|Fork date||August 2017||October 2017|
|Total supply||21 million||17.1 million|
|Algorithm||Proof of Work (PoW), SHA256||Equihash|
|Mining hardware||Application-specific integrated circuit (ASIC) hardware||Graphics Processing Units (GPUs)|
When it comes to purchasing Bitcoin currencies (whether that’s bitcoin, Bitcoin Cash or Bitcoin Gold), it is wise to do your research first.
We’re sure that you’ll have received copious emails suggesting that you buy bitcoin over the last few years. Some of them may be legitimate whilst others may be phishing scams. Therefore, it is important that you feel confident about where to purchase your first bitcoins from.
Coinswitch is the largest cryptocurrency platform. You can easily trade coins in one simple place and feel confident that your money is secure. You can make your initial purchase through a credit card and then choose to switch between more than 300+ cryptocurrencies.
Coinmama and Luno are also trustworthy and reputable places to purchase bitcoins (including BTC, BCH, BTG).
Before you start, you will need a bitcoin wallet; this is where you’ll send your chosen bitcoins.
You can choose to purchase more than one type of bitcoin at a time, although remember they are separate currencies and cannot be converted.
You can also purchase bitcoins from multiple exchanges – some of them have limits for how much you can purchase at any one time, so buying from more than one exchange is a workaround.
Do You Have to Buy the Entire Bitcoin?
Each type of bitcoin has its own value and you may decide that you don’t want to purchase an entire bitcoin. In this case, you can purchase a smaller amount.
Bitcoins are divided into 100,000,000 pieces and each unit is called a Satoshi (named after the Bitcoin inventor). This gives you greater flexibility into how much you wish to invest – for example, if a whole unit is worth £300 and you only want to invest £150, you will receive 0.5 of a coin in your digital bitcoin wallet.
Once you’ve purchased your bitcoin, you should always remove it and put it into your wallet rather than leaving on the exchange. This is because bitcoin exchanges are susceptible to cyber hackers (despite stringent security checks).
Are Bitcoins a Good Investment?
Due to the relative newness of bitcoins, there are mixed feelings as to whether they are good investments. Bitcoins retain their value because there are limited bitcoins available – both bitcoin (BTC) and Bitcoin Cash (BCH) are limited to 21 million whilst Bitcoin Gold is limited to 17.1million. This makes bitcoins comparable to investment in gold, where there is a finite amount available.
Bitcoins can also be viewed as a safe investment model because they are truly global, and apolitical – meaning that they are not impacted by one single country. At times of relative confusion (such as issues caused by Brexit, or the escalating coronavirus crisis) this can ensure that the value of bitcoins remains stable.
However, in contrast, because bitcoins are held solely online, they are at great risk of cyber threats. We mentioned briefly above that you should always keep your bitcoins in a personal digital wallet. You need to feel trust that your wallet is completely secure and resilient against hackers. This is because they can be easy to steal and incredibly difficult to trace and return.
Hopefully, you’ll now have a clearer understanding of how different cryptocurrencies are formed and why, as well as the two most common bitcoin forks – Bitcoin Cash and Bitcoin Gold. More forks may occur as technologies continue to develop and evolve.
It’s also interesting to learn that they are completely different currencies in their own right. This means that if you do decide to invest in cryptocurrencies you should do your research into what type of currency is best for you, where to buy them from and where to store them.
WikiJob does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.