Bitcoin Cash, also known as BCH, is a decentralized cryptocurrency that emerged as a hard fork from the original Bitcoin network in August 2017. The primary motivation behind creating BCH was to address the scalability issues and high transaction fees associated with the original Bitcoin blockchain, which was hindered by its 1 MB block size limit.
The developers of BCH sought to increase the block size limit in order to facilitate faster transaction speeds and lower fees for users. Furthermore, BCH also introduced new features such as replay and wipeout protection and a new difficulty adjustment algorithm. Additionally, Bitcoin Cash community members also emphasize on decentralization, peer-to-peer electronic cash, and global adoption as major use cases for BCH.
Key Takeaways
- Bitcoin Cash, birthed in the month of August in the year 2017, is a byproduct of a hard fork on the Bitcoin blockchain network.
- A hard fork is a significant upgrade that results in the creation of a new version of the network with revised regulations, alongside a new digital currency.
- Despite sharing several similarities with Bitcoin, Bitcoin Cash has certain unique characteristics that make it a more cost-effective option for conducting transactions.
- Bitcoin Cash is designed to be a more robust and scalable variation of Bitcoin, offering faster transaction speeds and reduced fees.
- The development team behind Bitcoin Cash aimed to create a version of Bitcoin that addresses the scalability issues present in the original blockchain network.
A hard fork refers to a significant update to a blockchain network’s protocol that results in the creation of two distinct and separate blockchains. The original blockchain remains unchanged and continues to operate as usual. The upgraded nodes form a new blockchain with its own set of digital assets.
Hard forks are typically initiated by developers representing the cryptocurrency community. Their goal is to introduce new features or capabilities to an existing blockchain protocol. They also represent a way of resolving disputes among different communities.
The Blocksize War
Enter the Bitcoin block size wars. They comprise of a series of disagreements between different parts of Bitcoin’s community over the network’s optimal block size. Taking place between 2015 and 2017, The Block size War ultimately led to numerous Bitcoin hard forks. The most well-know out of these was Bitcoin Cash.
Bitcoin Core representatives believed that the block size should be kept small to preserve the decentralization of the network. On the other hand, Bitcoin Cash supporters believed that the block size should be increased to allow more transactions to be processed and reduce fees.
The counter-argument proposed that larger blocks lead to larger blockchains, which would make it harder for average users to run a node – thus decreasing decentralization. This would lead to the centralization of power in the hands of a few miners or mining pools who have the resources necessary to run large nodes. Additionally, as the block subsidy gets lower, transaction fees become necessary to incentivize miners. If these fees are too high, it could price out many users from using Bitcoin. This would then lead to hindering its widespread adoption.
In contrast, supporters that advocated for increasing the block size argued that larger blocks would help accommodate more users. According to them, this promotes wider adoption. They pointed out the scenario where there would be too much demand but not enough capacity on the blockchain to maintain the network if the current block size wasn’t increased. This would lead to a decrease in usability since transactions could take longer than expected. They would also cost more than desired due to competition for limited space on each block.
What led to Bitcoin Cash?
Created by a group of undisclosed developers, the Bitcoin Cash hard fork is designed primarily as a payment system with low fees, quite like the original intent of Bitcoin.
Bitcoin Cash developers believed that the original Bitcoin blockchain was too limited in terms of its scalability. This is evident from the fact that the Bitcoin network can only handle seven transactions per second. Consequently, they created their own version of the network, designed to be more scalable and user-friendly than the original.
BCH is able to handle an average of 116 transactions per second. These transaction speeds and the lower fees of the Bitcoin Cash network make it an attractive option for merchants. They want to accept payments in digital currency without having to worry about high transaction costs and long wait times.
Bitcoin Cash is seen as an alternative to Bitcoin. While it does share some common features with its predecessor, such as decentralized control and the ability to be used for peer-to-peer transactions, the BCH network excels with speed and efficiency.
How does Bitcoin Cash Work?
Since Bitcoin Cash (BCH) is a hard fork of the original Bitcoin blockchain, it generally operates on the same technology. Except, there’s a couple slight modifications.
Bitcoin Cash uses the same Proof-of-Work consensus mechanism as Bitcoin that secures and grows the network. Miners process and verify transactions that get stored in blocks. Each block has an encrypted piece of data passed on to the next block after it’s mined. Miners are compensated with the native cryptocurrency, which in this case is BCH.
How Is Bitcoin Cash Different From Bitcoin?
Bitcoin Cash does differ from its grandfather Bitcoin in a variety of ways. Below we’ll mainly mention block sizes, and transaction speeds and efficiencies of each.
Block Size
Blocks are basically data chunks that contain transaction history for network users. To maintain an orderly system that prevents spam transactions, a limit to the amount of data mined in each block is needed.
Bitcoin blockchain’s original block size is just 1 MB, while that of the Bitcoin Cash blockchain is increased to 8 MB. This enables the new kid on the block to process more transactions per second than its predecessor.
The 8 MB block size limit allows for more transactions per second. It makes BCH more suitable as a payment system than its predecessor since there are lower transaction fees and faster confirmation times.
Speed and Efficiency
As previously mentioned, the key benefit of BCH is the network’s lower transaction fees compared to Bitcoin. Bitcoin Cash transactions typically cost less than $.01 with significantly faster transaction times that generally complete within seconds. The larger block size limit on Bitcoin Cash allows for these low fees, which in turn makes the network more appealing to users looking for a cost-effective way to transfer funds and make payments.
To prevent Bitcoin Cash miners from manipulating the blockchain, the network’s developers have also changed the difficulty of mining BCH. This makes the network less prone to what the crypto industry refers to as “51% attacks,”. These attacks occur when a single entity controls more than half of the network’s mining power. They can manipulate transactions or even reverse them to increase profits.
Bitcoin Cash Development
The Bitcoin Cash Network itself has had two hard forks: Bitcoin SV (Bitcoin Satoshi Vision) and Bitcoin Cash ABC. This is an important and interesting detail to keep in mind: hard forks can never really have a limit in terms of depth, call it a fork-ception.
Bitcoin SV
Bitcoin SV (Bitcoin Satoshi Vision) is a hard fork of the Bitcoin Cash network that got created in November 2018. The project was led by Craig Wright, who himself claimed to be Satoshi Nakamoto, the creator of Bitcoin. Bitcoin SV implements a larger block size than BCH, as well as other changes that are intended to restore what it sees as the original vision of Bitcoin.
Bitcoin Cash ABC
In order to continue development on the original Bitcoin Cash network, Bitcoin Cash ABC was proposed within the community. It continued building and improving on top of the Bitcoin Cash network, enabling faster transaction times and improved scalability. In July 2021, Bitcoin Cash ABC rebranded to eCash.
Bitcoin Cash FAQ
Frequently asked questions about BCH.
How Can I Buy BCH?
There’s different options available if you’re looking to buy Bitcoin Cash. Be it a peer-to-peer trading platform, or a centralized crypto exchange such as Binance or Kraken, buying Bitcoin Cash is easily done. The same process applies in the case of wanting to sell Bitcoin Cash.
What Is the Total Supply of BCH?
The total supply of Bitcoin Cash is 21 million BCH. As you notice, is the same exact fixed supply as that of Bitcoin.
Why Is BCH Cheaper Than Bitcoin?
Bitcoin Cash is cheaper than Bitcoin because it allows for more transactions to be processed per block and therefore has lower fees.
Price-wise, regardless of the same maximum supply, halving schedules, and very similar circulating supply (mined BCH), the Bitcoin Cash price is still considerably lower than that of Bitcoin. This is because people generally see BCH more as a payment solution instead of a digital value store.
Final Thoughts
Bitcoin Cash is dubbed by the crypto community as a vital alternative to Bitcoin, especially in the case of payments. Speaking of such cases, we are also implementing our very own solution in that regard. In fact, payments will be one of quite a few use cases that we are bringing with DUA. That’s the ticker symbol for our upcoming utility token that conjoins blockchain technology with the dua app ecosystem. Of course, all of it is brought with love, as the word itself: dua. Learn about the DUA token here and follow our Twitter to stay updated!