Among the new cryptocurrencies, Bitcoin Cash, a new version of the Bitcoin, the most important cryptocurrencies in the world, immediately made its way both in popularity and capitalization. But what exactly does Bitcoin Cash consist of? How does it differ from the “classic” Bitcoin? We will answer these questions in this article.
In addition to presenting the characteristics of this cryptocurrency, we will also discuss how you can trade this online for profit. Along with its usage, in fact, you can trade its value upwards or downwards in order to achieve short-term economic results.
How Bitcoin Cash was born
The subject is so complex that even the most experienced technicians in the sector had a headache. Bitcoin Cash was born as a result of a “fork” or rather a “hard fork”, a fork that currently stops at a fork, which covers precisely Bitcoin and Bitcoin Cash.
The person who owned a certain number of Bitcoins on the “old” Blockchain platform found himself with as many Bitcoins Cash on the new Blockchain as well. This is being understood as two cryptocurrencies having different values.
This bifurcation was created because of the problem of scalability, or in simple terms, the adaptation to new market demands (enlargement). The new technology is, in fact, scalable according to the real needs of users who wish to make transfers quickly, cheaply and in a decentralized manner.
This “Hard Fork” took place on August 1, 2017 after the vote of the so-called “Miners”, who voted for 97% in favor of this proposal, after several internal clashes. Obviously, Bitcoin Cash immediately became one of the first cryptocurrencies for capitalization value.
What is Bitcoin Cash and how it works
In light of what we read in the previous paragraph, Bitcoin Cash is nothing more than a new version of Bitcoin and sits alongside it. Being a different cryptocurrency on a different platform, it is understood that all transactions and all data prior to the bifurcation have been kept intact. Each Bitcoin owner will have to choose which of the two Blockchain platforms will he or she continue.
Is Bitcoin Cash being used in the same way as the previous one? Practically yes, even if from the “server side” (you pass this term), it has blocks up to 8mb as compared to 1mb of Bitcoin. Therefore, there are fewer limits, which is one of the main strengths shown by Bitcoin.
How to Trade with Bitcoin Cash
Just as interesting as the possibility of buying Bitcoin Cash for use or investment, so will the possibility of trading with Bitcoin Cash be.
Trading with Bitcoin Cash allows traders to get economic results based on changes in its market prices. Like other major cryptocurrencies, Bitcoin Cash also has a dollar counter value.
Based on your predictions about possible increases or decreases in the value of this cryptocurrency, you can trade Bitcoin Cash CFDs. CFDs are financial instruments that offer economic results (profits or losses) proportional to the changes in the prices of the asset on which you trade.
What are CFDs on Bitcoin Cash about?
A CFD (Contract for Difference) is a financial instrument that replicates the performance of another financial instrument. The replicated financial instrument is called an underlying asset or simply, an asset.
A Bitcoin Cash CFD, therefore, replicates the performance of the Bitcoin Cash quote on the market.
So, in terms of money, when you trade Bitcoin Cash CFDs, you trade CFDs that have Bitcoin Cash as their underlying asset. The CFD replicates its price and allows you to get results in proportion to the increases and decreases of Bitcoin Cash in the market.
With CFDs, you can open upward or downward positions depending on whether the value of the cryptocurrency is expected to rise or fall.
But what does it mean to open a position?
Opening a trading position means buying “Long” CFDs (this position is called “Buy”), or “Short” CFDs (this position is called “Sell”).
This is how they differ:
- Buy Position: you open a Long or Buy position when you expect a rise in prices and then you want to achieve positive economic results in proportion to the rise in price.
- Sell Position: you open a Short or Sell position when you expect a fall in prices and therefore want to obtain positive economic results in proportion to the fall in price.
Let’s make it easier to understand these concepts with an example.
On a newspaper or a specialized site, we read that an analyst publishes market analysis and makes predictions about Bitcoin Cash. So let’s say that Bitcoin Cash could actually rise in value in the next few days.
Considering these forecasts, we could open a Purchase (long) or upward position.
- In the event that the forecasts prove to be correct and the value of Bitcoin Cash rises, we would get a profit proportional to the upward changes produced from the time of opening the position.
- On the contrary, if the forecasts turn out to be wrong and the value of Bitcoin Cash falls, we will suffer a loss proportional to the downward changes produced from the time of opening the position.
How to Trade Bitcoin Cash on Plus500
To trade with Bitcoin Cash, you can use a specific platform that offers this particular cryptocurrency. At the moment and amongst the most important of these platforms is Plus500. On Plus500, there are more than 10 cryptocurrencies that include the most important based on capitalization.
We would like to recommend Plus500 for its clarity, ease of use and the ability to try the platform out with a demo that requires no deposit.
The deposit-free demo allows you to test the platform or practice trading without risk and cost. The practice mode remains always available, even if you decide to start trading with real money (real account). The demo account and the real account are in fact separate and you can switch from one to another with a simple click.
How does it work? Simple.
To open a trading position with Bitcoin Cash on Plus500, simply select Bitcoin Cash from the Crypto category (in the left column as shown in the figure below).
The Crypto category includes the Cryptocurrencies item. Clicking “Encrypts” displays the list of Cryptocurrencies in the main box on the right. As you can see, on the same line of Bitcoin Cash in the main panel are the “Sell” or “Buy” buttons with which you can open short (down) or long (up) positions depending on your price forecast.
Clicking the Buy or Sell buttons will take you to a window where you can set the details of the open position.
The user can modify the following details:
- The amount of Bitcoin Cash to trade with (notional value): in this box, you can manually write a quote of your choice or use the plus and minus keys. In addition to the amount of Bitcoin Cash, you will always see the amount of margin required (which we will talk about shortly)
- Margin required: this is the actual capital that the transaction is economically using. In fact, CFDs are leveraged instruments, a mechanism that allows you to use an amount that is much lower than those required for traditional investment. In the case of trading with Bitcoin Cash on Plus500, for example, the leverage is equal to 1:2 so with $10 of initial margin, you can trade a total value of $20.
- Stop Loss: This order allows you to order the platform to automatically close the position if the position reaches a certain level of loss percentage set by the user. Stop Loss is essential as it allows you to set a maximum loss limit for each individual trade.
- Stop Limit: also called Take Profit, it works in the opposite way to Stop Loss, so it allows you to set a desired maximum profit level and automatically close the position once you have reached it and thus “saving” the profit.
- Operating stop: is accessed by clicking “advanced” and allows you to order the platform to automatically update the level of the stop loss in case the market moves in favor of the prediction.
- Buy only when the rate is: allows you to “enter” the market only when the quote reaches a certain level, or when the market is closed, it allows you to place an order for the next trading day.
With regard to the last point, it should be noted that if the box relating to this order appears to have already been ticked and unmodifiable, it simply means that the market is temporarily closed and that you cannot open a position immediately. However, you may issue a buy (or sell) order for the next trading day.
After setting the orders, to open a position, you must click the button at the bottom with the words “Buy” or “Sell”. Once the position is opened, it will immediately begin to have an effect on the capital available.
In this respect, it should be noted that the profit and loss account (prof/per) will always start with a negative value. Don’t worry, it doesn’t depend on your forecast. This is, in fact, an absolutely normal because during the opening of a position, the broker takes a small percentage of the spread as compensation for its service.
On the contrary, once the position is closed, it will no longer affect the available capital. At the close of the trading position, the maintenance margin is returned to the trader, as well as the initial margin net of profits and losses.
Bitcoin Cash on IQ Option (CFD)
You can also use IQ Option to trade Bitcoin Cash. This long-time binary options broker has expanded its services by offering CFDs and has also added Bitcoin Cash to its asset list.
One of the main aspects of Bitcoin Cash CFDs offered by this broker is the lack of leverage. However, it remains possible to open positions even with very small capital (even smaller than Plus500).
To trade Bitcoin Cash on IQ Option, just click the “+” button at the top to see the list of tradable instruments, including cryptocurrencies. By clicking on “Krypto” you can access the list of available cryptocurrencies from which you can easily select Bitcoin Cash.
After selecting Bitcoin Cash, you proceed by setting the amount to be invested in the single transaction on the right of the display. Finally, just click “buy” or “sell”.
Afterward, you can close the trading position whenever you want by obtaining the corresponding economic result. By closing the position, you can recover the amount based on the new exchange rate between dollars (USD) and Bitcoin Cash CFDs on IQ Option and the net of profits and losses.