Bitcoin Cash is a hard fork of Bitcoin. The fork occurred in August 2017. The initial implementation of the Bitcoin Cash protocol was called Bitcoin ABC and was unveiled at the Future of Bitcoin conference. The launch was set for August 1st, 2017. Once the protocol launched, it took on the transaction history of the bitcoin currency on that date, but kept all transactions going forward separate. The first Bitcoin Cash block was 478559.
Within a very short period of time, the cryptocurrency was more profitable to mine on the original chain. With the introduction of a new algorithm used by the cryptocurrency, mining has seen some challenges with the most profitable chain moving back and forth from Bitcoin Cash and the incumbent Bitcoin. Within a short period of time following the fork, there were more blocks being mined on the Bitcoin Cash chain than the original.
Eventually, Bitcoin Cash became widely accepted by a variety of digital currency exchanges including Kraken, Shapeshift, Bitfinex and others.
Like other cryptocurrencies, Bitcoin Cash is designed to act as a decentralized peer-to-peer electronic payment system. Transactions using Bitcoin Cash can be performed in seconds, and confirmed within minutes, on account of larger block sizes (8mb vs. Bitcoin’s 1mb). The network can be used to send funds anywhere in the world at a very low cost and with a great degree of convenience. The network also features robust security features that may help prevent fraud.
Although cryptocurrencies like Bitcoin Cash are accepted by some merchants, they are from from being considered mainstream. That could change, however, as more and more users participate in the network and as the digital currencies build a longer history of reliability and security.
Cryptocurrencies like Bitcoin Cash have become popular trading vehicles, as both speculators and long-term investors look to get in on the action. While cryptocurrencies may exhibit a large degree of price volatility until trading volumes grow, many believe that the long-term outlook for this asset class could be quite compelling. In fact, some are investing in cryptocurrencies for the long run, and numerous analysts expect higher Bitcoin Cash prices to come.
If you are considering Bitcoin Cash as a long-term investment, you may want to consider a Bitcoin Cash IRA. This type of IRA is a self-directed IRA account, in which the account holder can invest in non-traditional asset classes. A self-directed IRA can be used to invest in real estate, metals, managed futures and even cryptocurrencies.
Purchasing Bitcoin Cash within an IRA can have numerous potential advantages. The biggest potential advantage of a Bitcoin Cash IRA is the possibility of tax-deferred growth. You can buy Bitcoin Cash and simply hold it, or trade in and out of the asset class as you see fit. Any gains that are made are non-taxable until distributions are made provided that all applicable rules and guidelines have been followed.
Another great possible advantage of this type of IRA account is the potential for a tax education and savings. You can invest up to the maximum allowed by law, and potentially deduct those contributions from your taxes. Any tax related questions or concerns, however, should be directed to your tax professional. Contact us with any questions or to get started today.