The first few blocks of Bitcoin Cash are fresh off the chain. As an owner of the original BTC, you’re also an owner of Bitcoin Cash. Today, we’re teaching you what it means to be a Bitcoin Cash owner.
Bitcoin Cash launched on August 1. The currency is using the tickers BCC or, in some cases to avoid confusion with Bitcoin Connect, it’s using the ticker BCH.
If you held bitcoin at 12:20pm UTC on August 1, you should have an equivalent amount of BCH attributed to your Bitcoin private key. Assuming, of course, you followed everyone’s instructions and retained control of your private keys by moving your bitcoin off an exchange.
Even if your bitcoins were stuck on an exchange, you may still be able to claim your Bitcoin Cash. Some exchanges announced support for Bitcoin Cash, while others did not.
So how do you turn your Bitcoin Cash into something you can actually use? Obviously, this is a very fluid situation, and nobody knows what the future will hold. This process also involves a lot of risks, and there are no guarantees BCH or BTC will be worth anything in the future.
How to Claim, Send, Receive & Spend Bitcoin Cash?
Got it? Good. Now, let’s look at your options.
You Don’t Need to Do Anything
I suspect the vast majority of users will subscribe to the “hold” strategy. Most users will be perfectly happen to retain control of their private keys, then wait for the dust to settle. If your bitcoin is stored in your own wallet, and you retain control of your private keys, then it’s perfectly okay to continue holding your bitcoin and waiting to see what happens.
If you don’t care about Bitcoin Cash, and want to continue using Bitcoin, then you can continue doing so as normal. Nothing really changed for hardcore BTC users.
What about those who care about BCH and want to hold onto their Bitcoin Cash? keep reading.
It’s Not Easy or Safe to Claim your BCH Right Now
It’s August 1, and we live in an uncertain time for bitcoin’s future. Right now, it’s not safe or easy to claim your BCH. The process of claiming your BCH requires some technical know-how, and those who aren’t careful could accidentally expose their private keys while attempting to claim their BCH.
Exposing your private keys is an obvious issue – but maybe not for the reasons you think. If your private keys are exposed, then you could hold your BCH in your wallet as normal while somebody is spending the equivalent amount in BTC.
As our friends at BitcoinMagazine succinctly explained it,
“You almost certainly stand to lose much more from losing your BTC than you stand to gain from, say, selling your BCH fast.”
At this point, it’s a risky process – especially since your BCH isn’t going anywhere, and the markets have remained relatively stable for now.
How to Claim your Bitcoin Cash
If you’re okay with the risk of Bitcoin Cash, then here are the ways to claim your BCH:
Use a Full Node Wallet
The best way to claim your BCH is to use a full node wallet like Bitcoin Core or Bitcoin Knots. Unlike a light wallet, you’ll need to download all 125+ GB of the bitcoin blockchain to run these clients. After installing the full node wallet, you can use it to store your private keys in a dedicated folder on your computer called wallet.dat (ideally, you encrypted that wallet with a passphrase). You can make a backup of your private keys using the menu in your wallet.
After doing this, you can claim your Bitcoin Cash by importing the backup of your private keys into a Bitcoin Cash full node. Bitcoin ABC is your best option right now. It’s a full node wallet designed specifically for Bitcoin Cash.
We already gave you warnings up above, but here are some more. Bitcoin ABC is new software that was developed in a short period of time. It didn’t go through the same peer review process as traditional bitcoin upgrades. It also hasn’t been tested by a lot of users. That means there’s risk when giving the software your private keys.
Another problem is that Bitcoin Core and Bitcoin ABC may be incompatible with one another. Experts recommend that you don’t install the two node clients on the same computer.
Use a Splitting Tool
NBitcoin developer Nicolas Dorier created a splitting tool allowing you to split your BTC from your BCH. You can find that splitting tool on Github.
This option is only for those with technical experience and basic programming knowledge. You’ll need to work in the command line of your OS to use this splitting tool.
Alternatively, outside of the software world, you can always use a paper wallet to store your bitcoin – regardless of whether you’re using BTC or BCH.
Electrum is one of the few wallets that support direct imports of your private key. Electrum has a BCH version called Electron Cash that supports this function. However, even their official website warns you against using it with largest amounts of BCH. It also discourages users from running Electrum and Electron Cash at the same time on the same computer.
If you choose the paper wallet option, move your BTC from your paper wallet to a new bitcoin address with a new private key (like a new paper wallet) before moving forward. So even if the Electron Cash wallet glitches and steals your private keys, your damage should be limited, because the private keys don’t hold any BTC.
Hardware wallets may be the easiest and safest way to access your BCH. I’m not going to get into all of the details, but both Ledger and Trezor have published great tutorials on how to manage BCH in your hardware wallet.
You can view Trezor’s tutorial for managing BCH on your hardware wallet here.
You can view Ledger’s tutorial for managing BCH on your hardware wallet here.
Digital Bitbox is another popular hardware wallet. They’ve published a FAQ for how to access your BCH from your Digital Bitbox wallet. However, they still recommend using Electron Cash.
Meanwhile, KeepKey has not yet announced support for BCH at this time, although you can keep an eye on their blog for the latest updates.
Wait for Other Wallets to Announce Support
If your bitcoin is held in any other wallet, then you can still claim your BCH – you just might want to wait for the wallet to officially support it – or for good official BCH wallets to emerge.
Most wallets use a recovery phrase, which means you can recover your private keys from anywhere. If your bitcoin is held in a wallet right now, and you have the recovery phrase, then you can install a BCH wallet and use that recovery phrase to claim your BCH.
How to Use or Sell your BCH
So you’ve claimed your BCH and it’s sitting in your wallet. What should you do now?
You can use your BCH just like you would use any altcoin. You can trade it on an exchange that supports BCH trading, spend it, or move it between wallets.
There are some risks with exchanging BCH. First, since your addresses for BTC and BCH are identical, you’re revealing your BCH and BTC addresses by sending your BCH to an exchange. This can divulge sensitive information about your wallet – like your current holdings and your past/future transactions. It can also show whom you’ve transacted with. Right now, you can’t sell BCH without giving up your data. You’re exposing your keys no matter what you do.
Spending from a BCH or BTC address doesn’t reveal your private key. But it does reveal your public key. This isn’t that big of a deal. However, it strips away one layer of security from your bitcoin account, and may be a concern.
One final issue is that when you’re moving BCH to or from an exchange, you’ll need to use BCH software, and there’s no BCH software right now that’s been confirmed as stable or safe.
All of these issues can enhance the threat of replay attacks, where someone can essentially steal your money.
Bitcoin Cash Conclusion
Ultimately, if you hold your private keys, you can ignore everything above. You can continue holding bitcoin. You can wait for the dust to settle, wait for the BCH software to improve, and wait for the market to find the right price. There’s a lot of risk involved in Bitcoin Cash at the moment.
Of course, where some see risk, others see opportunity. Your BTC/BCH is your money, and I’m not going to tell you how to spend it. Feel free to do whatever you like.
At this point, BCH trading is risky, complicated, and unrewarding. However, that may change in the future. Stay tuned. We’re living in interesting times for bitcoin.