Bitcoin Cash is a quicker, less expensive option to Bitcoin. It originated from a hard fork in the Bitcoin network when an argument within the community forced its blockchain to separate from the Bitcoin blockchain.
Supporters of Bitcoin Cash assert that it effectively carries out Bitcoin’s goal of serving as a decentralized digital currency for direct transactions between individuals.
This article will explain every aspect of Bitcoin Cash, including what it does, how it works, and its benefits.
Key Takeaways
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What Is Bitcoin Cash?
Bitcoin Cash (BCH) is designed to provide an alternative to Bitcoin. It was launched in 2017 by some Bitcoin users who opposed the roadmap proposed by Bitcoin Core, the project’s main developer group. These users argued that additional technological decisions were necessary to expand Bitcoin’s reach to a worldwide audience.
BCH supporters believed Bitcoin needed to be modified to compete with existing payment systems such as Visa and PayPal. They also campaigned for lower transaction fees, preferring to move the expenses to other blockchain sections.
To accomplish this, Bitcoin Cash edited Bitcoin’s code and issued an updated version that no longer supported Bitcoin. After that, it swiftly developed more features, such as boosting the amount of data that can be stored in each block to 32 megabytes.
History of Bitcoin Cash
In August 2017, Bitcoin underwent a significant change called a hard fork, resulting in the birth of Bitcoin Cash. This move increased the block size limit to 8 MB, allowing for more transactions per block compared to Bitcoin’s 1 MB limit.
In November 2017, BCH underwent a protocol upgrade aimed at making its difficulty adjustment algorithm more responsive to changes in network hash rate. The goal was to stabilize block times and ensure consistent transaction confirmation times.
Fast forward to May 2018, another protocol upgrade boosted Bitcoin Cash’s block size limit from 8 MB to 32 MB. This upgrade aimed to further enhance the network’s transaction processing capacity and reduce fees.
However, in November 2018, disagreements within the BCH community led to a contentious hard fork, resulting in a split into two separate cryptocurrencies: Bitcoin Cash ABC (now Bitcoin Cash) and Bitcoin SV (Satoshi Vision). This event dubbed the “hash war,” stemmed from differences over proposed protocol changes and the future direction of Bitcoin Cash.
Moving on to November 2019, BCH introduced Schnorr signatures through a protocol upgrade to improve privacy, scalability, and security. Additionally, a new opcode was activated, allowing for the recovery of funds sent to SegWit addresses on the Bitcoin Cash network.
Now, BCH has experienced growth in infrastructure and adoption, with the development of new wallets, exchanges, payment processors, and initiatives to encourage merchant adoption. These efforts aimed to make Bitcoin Cash more accessible and usable, expanding its potential applications as digital cash.
How Bitcoin Cash Works?
Technically, Bitcoin Cash is identical to Bitcoin. PoW consensus is used, nodes verify the transactions, and a maximum of 21 million assets is set for BTC and BCH. PoW implies miners use computer power to validate transactions and are compensated in BCH for their efforts.
Bitcoin Cash has a bigger block size than Bitcoin, meaning it can process more transactions simultaneously. While Bitcoin caps its blocks at 1 megabyte, allowing around 7 transactions per second.
BCH increased to 8 megabyte blocks at first and later to 32 megabytes, allowing it to handle over 100 transactions per second.
Apart from these differences in block size and transaction speed, Bitcoin Cash functions much like Bitcoin, operating as a decentralized digital ledger based on proof of work. However, it’s far more suited to modest transactions, such as purchasing a cup of coffee using cryptocurrencies.
What Is the Difference Between Bitcoin and Bitcoin Cash?
Since the fork in 2017, many distinct teams of programmers working on the Bitcoin currency protocol have introduced several developments to increase Bitcoin Cash’s usage as a peer-to-peer electronic currency system that promotes economic freedom.
- Block size: The maximum block size for Bitcoin Cash is 32MB instead of 1MB for Bitcoin.
- Transaction speed: BCH can process more than 100 transactions per second, but Bitcoin can only handle 3–7 transactions per second on average.
- Transaction fees: Bitcoin Cash offers lower transaction fees (approximately $0.20 to $0.25 per transaction).
Should I Buy Bitcoin or Bitcoin Cash?
Your decision to buy BTC or BCH is based on your investing objectives, risk tolerance, and awareness of each cryptocurrency’s factors and prospects.
BTC has greater market capitalization and more widespread usage, and it is frequently viewed as an investment of value and inflation hedge. However, its transaction costs might be substantial during peak demand periods, and its scalability is still being debated.
BCH originated in 2017 as a fork of Bitcoin to fix a few of Bitcoin’s scalability difficulties. Because of its bigger block size, more transactions can be made within a block, possibly leading to quicker transaction speeds. However, compared to Bitcoin, it has a lesser market capitalization and lower acceptance.
Bitcoin can be a better option if you intend to invest in the long term with a track record and are willing to accept possibly higher costs and slower transaction times. On the other hand, if you prefer faster transactions and cheaper costs and are ready to accept the increased risk associated with a younger cryptocurrency, Bitcoin Cash may be worth considering.
Bitcoin Cash Pros and Cons
Like any other digital currency, Bitcoin Cash has benefits and drawbacks.
Pros of Bitcoin Cash
- Quick and cost-effective transaction: BCH charges less than one cent for each transaction and can perform more than 100 transactions per second, making it a potentially feasible payment mechanism. However, there’s still a long way to go (the Visa network processes 2,000 transactions per second).
- Decentralization: Bitcoin Cash is a decentralized currency system that operates without a central authority. It minimizes concerns about excessive centralized control by banks and central governments.
- Scalability: BCH, among the multitude of cryptocurrencies available, is highly popular and can be acquired through the most prominent exchanges, unlike its less renowned counterparts. It’s also more economical than attempting to purchase a single Bitcoin, as the price of BCH/USD is just around $370 per coin.
Cons of Bitcoin Cash
- Lower adoption rate: Despite its advantages, Bitcoin Cash has not attained the same kind of mainstream acceptance as Bitcoin. This may make it less useful and acceptable than other, more well-known cryptocurrencies as a means of exchanging or storing wealth.
- Security issues: Security is generally an issue with cryptocurrencies, and BCH is not impervious to flaws or assaults. Users should take care to protect their assets, such as utilizing trustworthy wallets and maintaining good security hygiene.
- Conception: Due to its controversial hard fork from Bitcoin, BCH has occasionally been perceived as a divisive initiative. This view may impact its reputation and acceptance among investors and consumers.
What Is Bitcoin Cash Used For?
There are several usages of Bitcoin Cash in the Bitcoin blockchain in many aspects:
- Electronic payments: One of the main applications of Bitcoin Cash is as an electronic payment medium. Its quicker transaction speeds and reduced fees make it ideal for everyday activities like buying products and services via the web or in person.
- Investment: Like many other cryptocurrencies, BCH has the potential to increase in value over time when held as an investment. Some investors buy and hold Bitcoin Cash in the hope that its value may rise in the future.
- E-commerce: Bitcoin Cash is widely accepted as a payment method by online retailers and enterprises. Its quick and affordable transaction capacity makes it popular for e-commerce transactions.
- Contracts and tokens: BCH can facilitate the implementation of smart contracts and tokens using platforms such as SLP and Wormhole. Because of this, programmers may now release tokens on the Bitcoin Cash network and design decentralized apps (DApps).
The Bottom Line
In summary, Bitcoin Cash is a prominent cryptocurrency in the digital currency market that resolves some of Bitcoin’s scaling problems. It is a competitive alternative for digital payments, e-commerce, investments, and more, with quicker transaction times, lower fees, and improved scalability.
Its decentralized features, as well as its rising adoption among merchants and enterprises, help establish BCH’s status as a versatile and accessible digital currency. As the cryptocurrency market evolves, Bitcoin Cash is a desirable alternative for anyone looking for a simple, cost-effective way to invest in the digital era.
