CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data. *Availability subject to regulation.
Having come into existence as recently as August 1st 2017, Bitcoin Cash is the newest of the popular cryptocurrencies. A new cryptocurrency launching is generally not an event of particular note, with over 900 in existence at the last count. Very few new cryptocurrencies gain any real traction, particularly those that have no unique and defining quality to set them apart and demonstrate that they add value beyond existing cryptos.
Bitcoin Cash, however, within a few months of its launch, is the cryptocurrency with the fourth highest market capitalisation, over $25,832,302,885. Behind only Bitcoin ($179,379,328,671), Ethereum ($99,424,513,053) and Ripple ($46,193,716,062). When it comes to gaining adoption traction, Bitcoin Cash has had a unique advantage. It’s actually an offshoot of the original Bitcoin, coming into existence as a result of a ‘hard fork’ in the Bitcoin blockchain initiated on August 1st 2017.
Bitcoin Cash’s blockchain is an exact replica of that of Bitcoin up until August 1st, at which point the two, now unique, cryptocurrencies forked into two distinct blockchain ledgers.
The hard fork in the bitcoin blockchain that resulted in the emergence of Bitcoin Cash came as a result of a dispute within the bitcoin community on how to best resolve a scalability issue the dominant cryptocurrency was facing. The blockchain ledger system that verifies and validates ownership and transactions of Bitcoin is made up of a chain of peer-to-peer verified data blocks in which all historical transactions are recorded. Each of these blocks is of uniform size and contains transaction data and the individual key signatures of senders and recipients. As the volume of bitcoin transactions increased these data blocks were filling up more quickly. Bitcoin’s software protocol limited the pace at which new blocks of roughly 1MB could be verified and added to the blockchain to one every 10 minutes. This was leading to backlog of transactions waiting to be verified, which meant paying by or exchanging Bitcoin was becoming gradually less efficient.
The solution to the problem proposed was a technology change to the Bitcoin protocol termed ‘segregated witness’ or SegWit2x. This involved removing the signature data from transactions, which accounts for up to 65% of the total data in a block. Signature data was to be stored in a separate interlinked blockchain thread running parallel to the main blockchain. This would increase the number of transactions that each block could hold, increasing the speed of the verification process.
Some miners and developers were opposed to this solution, considering it to be both in conflict with the bitcoin ‘roadmap’ set out by founder ‘Satoshi Nakamoto’ and also as not effectively addressing the scalability issue longer term. The counter-proposal was to simply increase the size of the blocks in the blockchain to 8MB. The difficulty level of verifying these larger blocks was also made adjustable so that regardless of the number of transactions being processed, and number of miners verifying them, the verification speed would not drop. SegWit2x advocates believed this solution compromised the blockchain’s security and deadlock was reached with neither party having a large enough majority within the community to reach the consensus rules set by bitcoin’s software protocol.
The result was the hard fork in the blockchain on August 1st. With neither party verifying the kind of blocks being verified by the other, the blockchain split in two. The SegWit2x fork, which had majority support, continued as bitcoin, and the 8MB blocks fork became bitcoin cash.
Bitcoin Cash can now be traded with regulated online brokers using CFDs, along with other major cryptocurrencies. Trading bitcoin cash with a CFDs broker means that traders can gain exposure to the cryptocurrency’s price changes without owning actual bitcoin cash. Traditionally, buying cryptocurrencies involves setting up an online or offline wallet, not all of which currently accept bitcoin cash and creating an account with a cryptocurrencies exchange, also not all of whom offer bitcoin cash.
Trading bitcoin cash with a regulated online broker using CFDs also allows the trader to go short and take a position on bitcoin cash’s exchange value dropping, not only rising. It also allows traders to take shorter-term positions on price, from just a few hours.
Choosing a regulated online broker is important from the point of view of safety. Holding an account with a regulated broker protects clients in the case of the broker collapsing as client funds are held in segregated accounts and in the worst case scenario compensation would be paid by the financial regulator. Should this happen to a non-regulated broker, the client would almost certainly lose everything in their trading account.
Non-regulated brokers also often have small print attached to bonus offers that subsequently make withdrawals from a trading account difficult. A further issue is a lack of regulatory supervision to ensure asset pricing is legitimate and consistent and trades are opened and closed without slippage which can manipulate the end result of a trade.
Cryptocurrencies are generally influenced by different market considerations from fiat currencies and other traditional asset classes. Because they are not tied to any particular geography or nation, geo-political events do not have a major influence on price direction, nor does economic data.
The main driver of cryptocurrency values is the rate of adoption and extent of supporting infrastructure such as wallets, exchanges and vendors accepting the cryptocurrency. Sentiment on future prospects for mainstream adoption is also key. As such, statements and developments around government policy, acceptance by mainstream financial institutions and vendors of goods and services are the main fundamental drivers of cryptocurrency values, including bitcoin cash.
As a new cryptocurrency resulting from the bitcoin civil war, bitcoin cash’s price is currently primarily being driven by sentiment around its prospects for survival as a genuine alternative to bitcoin. Major exchanges or wallet providers deciding to accept bitcoin cash as well as the dominant bitcoin fork is key to its future, and therefore value. Subsequently, whether vendors of goods and services begin to accept payments in bitcoin cash will be decisive.
Launch date: August 1st 2017
Launch value: $767.77.
Lowest and highest levels to date: within 2 days of its launch, bitcoin cash’s exchange value dropped to $206.84, its lowest level to date. A subsequent recovery was again followed by a steady slide down but on November 10th 2017, bitcoin cash passed its launch price for the first time to reach $819.2.
Daily exchange volume (as of Jan 29th 2017): $28,472,398,496
First brokers to offer bitcoin cash trading: Avatrade and Admiral Markets both started to offer CFDs on bitcoin cash from August 2017.