What Are Bitcoin Cash and Bitcoin Gold?

Bitcoin Cash and Bitcoin Gold Explained in Less Than 5 Minutes

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Bitcoin Cash and Bitcoin Gold are parts of an emerging peer-to-peer monetary system that exists entirely online. Cryptocurrency completely circumvents the traditional banking system and monetary authorities found in national currencies. While cryptocurrencies began initially as a payment system, the space has since evolved into an asset class of its own for investors to buy and sell.

Cryptocurrencies such as Bitcoin and its descendants are secured by a data structure known as a "blockchain," and they have become the subject of some controversy because of the high volumes of energy required to "mine" them, but this energy-intensive process is also what keeps cryptocurrencies secure and viable across a decentralized network, and without the need for the financial system or central bank.

What Is Bitcoin Cash?

The three most popular types of Bitcoin cryptocurrency are Bitcoin (BTC), Bitcoin Cash (BCH), and Bitcoin Gold (BTG). All three types are traded on many exchanges, with Bitcoin being the most popular and available in the most places. Bitcoin Cash was created in part to limit certain groups from controlling Bitcoin. In order to understand Bitcoin Cash and Bitcoin Gold, it's necessary to understand the evolution of Bitcoin.

How Bitcoin Cash Works

To reduce spam and fraud, Bitcoin was originally launched with something called a "1MB block." As the currency became increasingly popular, the capacity limit meant that the transaction times for using or buying Bitcoin started to lag tremendously. Bitcoin began as a payment system but evolved into an investment.

Lagging transaction times limited the volume of Bitcoin transactions that could occur per second, hindering the ability for Bitcoin to scale. This limitation is why Bitcoin Cash was developed with a significantly bigger block, allowing 25,000 transactions per day.

Bitcoin Cash has an 8MB block. Think of it as an off-ramp on the Bitcoin highway. That off-ramp leads to an express lane carrying only high-capacity vehicles. It allows many more transactions per second to be processed on Bitcoin Cash than on Bitcoin itself.

In November 2020, Bitcoin Cash split into two more blockchains, iBitcoin Cash (BCHA) and Bitcoin Cash Node (BCHN).

Here's how these types of Bitcoin differ, work together, and relate to each other. You can learn where you can buy each one.

Types of Bitcoin

The original Bitcoin was meant as an experiment to fix central banking. While most people have heard about Bitcoin, there’s still a lot of confusion around what it is and what it’s meant to do.

What Is Bitcoin Gold?

You can “mine” Bitcoin with specialized "ASIC" mining computer equipment. This is expensive hardware and consumes a lot of energy. That cost has caused the main version of Bitcoin production to land more and more in the hands of the elite.

Bitcoin Gold is meant to put digital mining back into the hands of regular people. Instead of needing specialized equipment, Bitcoin Gold can be mined by regular computers. This allows anyone with a regular computer to mine Bitcoin Gold, much the way Bitcoin was mined in the beginning.

You can own Bitcoin, Bitcoin Gold, or Bitcoin Cash. They are related, but they are not the same. You can also have investments across all three.

How Bitcoin Pricing Varies

All three types of Bitcoin come from the same basic programming. You can own one, two, or all three types. In the marketplace, they tend to follow each other’s performance for the most part. If Bitcoin is trading up, then Bitcoin Cash and Bitcoin Gold will usually be up as well. However, they trade at very different prices.

  Bitcoin Bitcoin Cash Bitcoin Gold
Price as of May 27, 2020 $9,162.05 $231.93 $8.92
Market Cap 168.46 billion 4.27 billion $153.41 million
Supply 18.39 million 18.42 million 17.20 million

How to Buy Bitcoin Cash and Bitcoin Gold

Bitcoin Cash and Bitcoin Gold can be purchased on various exchanges in nearly any currency from places throughout the world. This includes the U.S. dollar, the euro, or the pound.

Coinbase is one of the more popular exchanges.

You can buy Bitcoin Cash at Coinbase. In order to buy Bitcoin Gold, you need to go to a different exchange—Bitfinex is one of the many that buy and sell Bitcoin Gold.

Like most other stock-trading applications, you do pay a fee for every transaction you make on these platforms. It’s usually pretty small, and you pay it both when buying and selling.

Bitcoin Cash and Bitcoin Gold remain less expensive per unit than Bitcoin. Mostly, this is a function of them being newer on the market.

You can buy fractions of Bitcoin, Bitcoin Gold, and Bitcoin Cash. If you have $100 and would like to invest in a cryptocurrency, you can get roughly 1/2 of 1 BCH. 

Disadvantages of Bitcoin Cash and Bitcoin Gold

The U.S. Securities and Exchange Commission has warned of potentially unlawful online trading platforms that lack regulatory oversight. That is because a lot of what is happening right now with cryptocurrency is kind of like the Wild West. It’s mostly unregulated or self-regulated, and there’s no guarantee that most of these platforms are following any other rules besides ones that are self-imposed.

It is also important to understand that cryptocurrencies often go through extremely volatile swings, both up and down.

Increasing attention is also being paid to the environmental impact of cryptocurrency trading. Because of how the blockchain mining system works, extremely large amounts of electric power are required, meaning that each trade has a detrimental impact on the climate.

Key Takeaways

  • Bitcoin Cash (BCH) and Bitcoin Gold (BCG) were created as spinoffs of Bitcoin (BTC).
  • Each is a digital-only piece of the unregulated blockchain trading platform.
  • Controversy around the environmental impact of "mining" cryptocurrencies is growing.
  • Don't be seduced by the notion of a "get rich quick" scheme.