CASHING IN

How to buy the new bitcoin cash after the split of the popular cryptocurrency

Obsession
Future of Finance
Obsession
Future of Finance

Yesterday bitcoin split into two cryptocurrencies: bitcoin and “bitcoin cash.” The new cryptocurrency is trading at around $600 per unit today, or about 20% of the value of a bitcoin. The market value of all bitcoin cash in circulation is $7.8 billion, to bitcoin’s $44.4 billion.

One way to get bitcoin cash is to buy it. It’s is now trading on several major exchanges (here’s a list), with the bulk of trading volume taking place on Kraken and Bittrex, according to Crypto Compare.

However, Kraken and Bittrex have reported heavy traffic over the last couple of days, leading to problems with log-ins and withdrawing and depositing funds, including bitcoin cash. This means it’s going to take some time before you can reliably buy bitcoin cash on the open market.

Anyone who held bitcoin before the split would now also hold the equivalent amount of bitcoin cash. So the other way to get bitcoin cash is to claim it from any bitcoin holdings you owned before the fork. In theory, it’s simple: All private keys—basically the password to unlocking bitcoin holdings—are identical on both the bitcoin and bitcoin cash blockchains. This means you use the same private key to access funds on both chains. But in practice, this can be tricky.

The most reliable, though fiddly, method is to run a bitcoin cash “full node.” This is software that downloads the entire bitcoin cash blockchain, which is around 126 gigabytes, and also checks the validity of live transactions on the bitcoin cash network. This method reduces reliance on third parties like exchanges to credit you with your bitcoin cash.

Once the full node is running, import the private keys from your existing bitcoin wallet to the wallet linked to the bitcoin cash full node. You should then be able to access the new bitcoin cash funds. Check out the detailed instructions, and two other methods, including hardware wallets and paper wallets, in this Bitcoin Magazine piece.

Some exchanges also automatically credit pre-fork bitcoin holders with bitcoin cash. These include Kraken, Bittrex, and Bitfinex. This seems simple, but there can be several drawbacks. You must rely on the exchange to credit the new coins, which can be a slow process, and you may be unable to withdraw the new funds immediately, as Kraken users are currently experiencing.

Some exchanges also apply a discount to the amount of bitcoin cash that’s credited, like Bitfinex, which offers 0.85 bitcoin cash for every bitcoin. The discount was applied because the exchange claimed customers were manipulating its peer-to-peer margin financing system to inflate the amount of bitcoin cash they would receive.

 


Read this next: Bitcoin cash is already the third most valuable cryptocurrency

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