What is Bitcoin Cash?
Bitcoin Cash (BCH) is a cryptocurrency that launched in 2017 as a “hard fork” of the Bitcoin blockchain.
It was founded by Bitcoin miners and developers who were concerned about the cryptocurrency’s scalability.
Bitcoin Cash increased the size of blocks, which allows more transactions in a single block. The result is payments that can be processed cheaper and faster.
Many wallets can store Bitcoin Cash, one example is Kriptomat, which allows you to buy, sell and exchange other cryptocurrencies.
Bitcoin Cash can be used to pay for goods and services, but is not widely accepted by merchants at this time.
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How does Bitcoin Cash work?
Bitcoin and Bitcoin Cash share many technical similarities, they use the same proof-of-work consensus mechanism and have both capped supply at 21 million. Both are open-source and decentralized.
The main difference is that Bitcoin Cash uses a larger block size, which allows more transactions to be processed at a faster speed.
Bitcoin Cash expanded the block size to 8 MB and then again to 32 MB, compared with 1 MB for Bitcoin. Bitcoin’s larger blocks allow it to process more than 100 transactions per second.
Bitcoin prioritizes security over scalability and can process seven transactions per second with each batch taking up to 10 minutes, depending on block timing.
Supporters of Bitcoin Cash point out that when Bitcoin was invented by Satoshi Nakamoto, the vision was for it to be used as a payment service, which is what Bitcoin Cash aims to accomplish.
Bitcoin Cash still cannot process the required transactions per second to be considered a viable payment method, although that could change in the future.
What makes Bitcoin Cash unique?
The uniqueness of Bitcoin Cash lies in its scaling solution, which provides a larger block size than Bitcoin’s SegWit and Lightning Network. Bitcoin Cash currently processes up to 61 transactions per second. This means that Bitcoin Cash’s current network transaction limit is significantly higher than Bitcoin’s.
Bitcoin Cash allows peer-to-peer payments to take place with fees that are usually about a fraction of a cent and settlement that happens almost instantly. For these reasons, it acts like cash but in a digital format and can potentially be useful for daily transactions – something that can’t be said for all cryptocurrencies.
What is the history of Bitcoin Cash?
Bitcoin Cash evolved out of concerns around the scalability of Bitcoin.
As Bitcoin gained traction and popularity, the number of transactions increased dramatically. The time to confirm transactions shot up and so did the fees, which undermined the vision for Bitcoin to serve as an alternative to credit cards.
Developers came up with two potential solutions. One was to increase the average block size, but that idea wasn’t well received by the Bitcoin Core team and others in the community.
A new coin called Bitcoin Unlimited was created with flexible block size, but it struggled after being hacked and wasn’t able to gain traction.
The situation resulted in intense debate in the cryptocurrency community with miners and other Bitcoin stakeholders taking sides.
Bitcoin Cash was controversial when it launched in August 2017 and was boycotted by major exchanges like Coinbase – however it received support by Bitmain, which was crucial to ensuring a supply of coins for trading.
Interestingly, Bitcoin Cash – which came into existence from a fork of Bitcoin – underwent a hard fork itself in 2018, shortly into its existence. BitCoin Cash split into Bitcoin Cash ABC and Bitcoin Cash SV.
Bitcoin SV is an effort to stick close to the original vision for Bitcoin that Satoshi Nakamoto outlined in the Bitcoin white paper, while still trying to allow for increased scalability.
What is the value of Bitcoin Cash?
The value of Bitcoin Cash is derived from its limited supply of 21 million coins. That means there is a flat price it can circulate at until all coins have been mined. BCH is gaining value due to increasing demand for fast, inexpensive cryptocurrencies.
Fiat Currencies Vs. Cryptocurrencies
In the past ten to fifteen years, digital, encrypted currencies, known as cryptocurrencies have come into existence and risen to popularity. Fiat currencies and cryptocurrencies share some similarities. However, there are also many important differences.
How many Bitcoin Cash coins are in circulation?
Bitcoin Cash has a total of 21 million coins, the same number as Bitcoin. The current stock of coins in circulation is just over 18.5 million, which represents 89 per cent of the total. As with Bitcoin, miners are validated and rewarded for their computing power.
Each block adds 12.5 BCH to the total until it reaches 21 million. Bitcoin Cash saw its reward halved in April 2021.The rate at which new coins are added to the circulating supply will gradually drop following a set schedule – the issuance will be cut in half roughly every four years.
How is the Bitcoin Cash network secured?
There is no difference in how the Bitcoin and Bitcoin Cash networks are secured. Both networks are governed by the same set of rules and have the same consensus mechanism. The security of Bitcoin Cash is based on a proof-of-work algorithm and the miners who use it to verify transactions.
However, some experts suggest that the larger block size associated with Bitcoin Cash means security could be compromised when compared with the Bitcoin network.
Conclusion
Bitcoin Cash is a cryptocurrency created from a hard fork of Bitcoin.
Increased block size allows Bitcoin Cash to process more transactions, resulting in payments that are cheaper and faster.
Bitcoin Cash and Bitcoin have many technical similarities, but Bitcoin Cash has a different scaling solution.
Bitcoin Cash underwent its own hard fork in 2018 to create Bitcoin Cash ABC and Bitcoin Cash SV.
While Bitcoin Cash can’t currently process enough transactions per second to be considered a viable payment method, that could change in the future.
