When making a dense and fudgy American-style chocolate butter cake three types of chocolate can be used: cocoa powder, unsweetened chocolate, dark chocolate (semisweet or bittersweet) or a combination thereof?  All three of these chocolates make delicious butter cakes but having a basic understanding of them will help you in choosing a recipe or to simply explain why one chocolate cake recipe is different from another. 

When used alone in cakes, cocoa powder imparts a full rich chocolate flavor and dark color.  Cocoa powder can also be used in recipes with other chocolates (unsweetened or dark) and this combination produces a cake with a more intense chocolate flavor than if the cocoa wasn't present.   Most recipes call for sifting the cocoa powder with the flour but to bring out its full flavor it can be combined with a small amount of boiling water.  (If you want to try this in a recipe, substitute some of the liquid in the recipe for boiling water.)  Often times, you may notice that more butter and leavening agent are used in recipes containing cocoa powder.  This is to offset cocoa powder's drying and strengthening affect in cakes.  There are two types of unsweetened cocoa powder: natural and Dutch-processed and it is best to use the type specified in the recipe as the leavening agent used is dependent on the type of cocoa powder.   Some prefer using Dutch-processed cocoa as a slight bitterness may be tasted in cakes using natural cocoa and baking soda.

Unsweetened chocolate imparts an intense pure chocolate flavor in cakes.  This is chocolate in its purest refined form which has no sugar added hence its strong and bitter flavor that cannot be eaten out of hand.  Mainly used in American style cakes and in recipes that contain lots of sugar and fat.  Sometimes it is combined with dark chocolate or cocoa powder in recipes to further intensify the chocolate flavor in the cake.  The most common and readily available unsweetened chocolates are found in grocery stores (Bakers and Hershey's).

Dark chocolate gives a less intense chocolate flavor in butter cakes than unsweetened chocolate and cocoa powder.  The flavor of the chocolate in a cake is  dependent on the brand used as each has its own unique formula (type of beans, processing technique, amount of sugar added).  In making an American style layer cake where there are so many other competing flavors, brands found in grocery stores (Baker's, Hershey's, or Ghirardelli) are adequate.  The more expensive American brand (Scharffen Berger) or European brands (Lindt, Callebaut, Valrhona, Cacao Barry) have such depth and nuances of flavor that are better showcased in cakes or tortes that have less ingredients that won't diminish or mask their fine taste.  I would recommend saving the expensive chocolate for the cake's filling and/or frosting where you can appreciate the smooth and creamy texture and complexity of flavors.

No matter what chocolate you choose for your chocolate butter cake, good ingredients and proper technique will always ensure excellent results.