In 2017, Bitcoin split over different ideas for developing the oldest cryptocurrency, giving rise to the so-called Bitcoin Cash hard fork. This project did not receive much media attention for a long time, but it quietly sits among the top 15 cryptos. Let’s take a look at Bitcoin Cash (BCH).
Bitcoin Cash (BCH) is a renowned cryptocurrency that emerged as a fork of Bitcoin in 2017. It was initiated to address some scalability issues inherent to the original Bitcoin (BTC) protocol. The hallmark feature of Bitcoin Cash is its increased block size, initially expanding to 8 MB, compared to Bitcoin’s 1 MB, and later upgraded to 32 MB. Much like its predecessor, Bitcoin Cash operates on a decentralized peer-to-peer network, ensuring that no central authority or institution holds sway over the network’s operation or the currency’s value.
What is Bitcoin Cash (BCH)?
You may be surprised to learn that the first cryptocurrency, Bitcoin (BTC), has had more than 100 hard forks since its inception. This is because all the creators may agree on cryptocurrencies’ decentralized nature. Still, differences arise in further development. Well, not all of these forks have led to new blockchain networks, but some have. And Bitcoin Cash (BCH) is the most famous of them. As a hard fork of the original Bitcoin (BTC), Bitcoin Cash (BCH) has created its own unique blockchain in the world of cryptocurrencies and is differentiated by its main goal: to serve as a fast, cheap and reliable form of electronic peer-to-peer.
BTC vs. BCH
- Block size: this is probably the most important difference. In the Bitcoin network, each block is 1 MB in size. Right after the Bitcoin Cash fork, the Bitcoin Cash block size was 8 MB, which is eight times larger than in the Bitcoin network. In May 2018, Bitcoin Cash increased the block size again, this time to 32 MB. This means that Bitcoin Cash can now process 32 times more information per block than Bitcoin.
- Adoption philosophy: BTC and BCH diverge significantly in their perspectives on adoption. BTC has metamorphosed into a “digital gold,” serving as a store of value not predominantly utilized for routine transactions. It predominantly acts as a conduit for substantial transfers and stands as a preferred asset for long-term investment. Conversely, BCH identifies itself as “electronic peer-to-peer cash,” due to its enhancements in scalability.
- Security and decentralisation: The augmented block sizes of BCH carry potential disadvantages. They necessitate enhanced computing power for mining and validation processes, potentially leading to centralization as the network could fall under the dominance of a select group of powerful entities. In contrast, the diminished block size of BTC renders the mining and validation processes more inclusive, amplifying its decentralization and fortifying its security.
- Market capitalization and adoption: Bitcoin is the original cryptocurrency with a first-mover advantage. It has the highest market capitalization and is widely accepted on many platforms worldwide.
History
Bitcoin Cash was born out of contention and ideological divergence within the Bitcoin community. 2017 was marked by escalating debates over Bitcoin’s scalability issues, primarily its block size limit.
A faction within the community advocated for increasing block size to accommodate more transactions and alleviate network congestion, while the opposing group vouched for off-chain solutions like Segregated Witness (SegWit). So, the whole idea for Bitcoin Cash was proposed by a group of Bitcoin developers. Today, however, the person most directly connected to the currency is Roger Ver, an early crypto follower and Bitcoin investor.
Delving into their shared origins is indispensable to comprehend the distinctions between Bitcoin and Bitcoin Cash. Bitcoin emerged in 2009, a brainchild of the enigmatic entity, Satoshi Nakamoto, marking the inception of cryptocurrency. Its revolutionary nature lies in its promise of a decentralized monetary system exempt from governmental oversight. However, by 2017, a contentious discourse on scalability engulfed the Bitcoin community. The original Bitcoin was constrained by a 1 MB block size limit, initially instituted to thwart unnecessary transactions. This limit, however, morphed into a bottleneck, culminating in protracted transaction times and escalating fees. With the quickly gaining popularity and expanding user base of Bitcoin, this restriction increasingly manifested as untenable.
On August 1, 2017, the blockchain experienced a hard fork, leading to the genesis of Bitcoin Cash. BCH increased the block size limit to 8 MB, aiming to facilitate faster transactions, lower fees, and a more scalable network. The block size was later escalated to 32 MB in May 2018. This enhancement was not merely a quantitative increase but a qualitative leap. It enables the incorporation of smart contracts and token creation on the BCH network, broadening its utility and appeal.
Fork of a Fork
November 2018 witnessed another hard fork within the BCH community, resulting in the creation of Bitcoin SV (BSV). The split was fueled by disagreements over the implementation of technical features and the future trajectory of BCH. While BSV aimed to restore certain technical features of the original Bitcoin protocol and maintain a stable protocol, BCH continued its journey focusing on adaptability and enhancement.
Historical Milestones
- June 2017: A group of Bitcoin developers and miners presented a proposal called Bitcoin ABC. They wanted to increase the size of the BTC block.
- August 2017: Bitcoin Cash (BCH) was created with a hard fork from Bitcoin (BTC) to increase the block size limit from 1 MB to 8 MB, solving scalability issues and reducing fees.
- March 2018: Bitcoin Cash payments are accepted on BitPay.
- May 2018: Network upgrade increases the maximum block size to 32 MB and adds new features, including re-enabling the set of opcodes for smart contracts.
- November 2018: The Bitcoin Cash network splits into two competing chains, Bitcoin Cash ABC (BCH) and Bitcoin SV (BSV).
- February 2019: Bitcoin Cash introduces Schnorr signatures before Bitcoin, improving privacy and efficiency.
- January 2020: Bitcoin.com, one of Bitcoin Cash’s main advocates, launches the Bitcoin Cash Registry app to promote BCH acceptance by merchants.
- June 2021: SmartBCH, a Bitcoin Cash side chain, is launched.
- May 2023: Cashtokens integration, enabling smaller transactions, P2SH32, limiting transaction variants.
- June 2023: EDX, the digital asset exchange backed by Wall Street giants Fidelity, Citadel and Charles Schwab, announces that it will list BCH on its exchange.
How Does Bitcoin Cash (BCH) Work?
On a technical level, Bitcoin Cash works the same way Bitcoin does. Both Bitcoin Cash and Bitcoin have a hard supply cap of 21 million coins, use nodes to validate transactions and use a proof-of-work (PoW) consensus algorithm. PoW means that miners validate transactions using computing power, and are rewarded for their contributions in BCH.
The heartbeat of Bitcoin Cash’s operational mechanics is its enlarged block size. Initially forked with an 8 MB block size, it was subsequently expanded to 32 MB. This augmentation allows for a greater number of transactions to be processed within each block. It reduces fees and bolsters the network’s transaction throughput, thereby addressing the scalability concerns that plagued Bitcoin. This coin is therefore much more suitable for smaller transactions, such as buying a cup of coffee with cryptocurrency. Bitcoin Cash does support smart contracts and apps such as CashShuffle and CashFusion.
Bitcoin Cash Ecosystem and Usage
The coin has created a diverse and thriving ecosystem over time. The cryptocurrency is listed on a number of cryptocurrency exchanges and crypto wallets. Also, more and more businesses are accepting it as payment, encouraging its use as a de facto medium of exchange. In addition, Bitcoin Cash has introduced various features such as tokenisation and smart contract capability through protocols such as Simple Ledger Protocol (SLP) and CashScript. These functionalities have increased the possible use cases of BCH and allowed it to compete with other blockchain platforms that support decentralised applications (dApps) and smart contracts.
Where Can I Buy Bitcoin Cash (BCH)?
Like buying most cryptocurrencies, BCH can be exchanged for fiat currencies such as the euro and stored in crypto wallets. As BCH is among the top 20 cryptocurrencies by market capitalization (at the time of writing, it is ranked 14th). You can trade the cryptocurrency on all major crypto exchanges such as Binance, Coinbase, Kraken, Bitstamp, and KuCoin.
Here is an example of how you can buy BCH on Binance:
- Create a Binance account: Navigate to the Binance website or app and sign up for an account by providing your email address and creating a secure password. Verify your email by clicking on the link sent to your inbox. Finally, complete the KYC (Know Your Customer) process by submitting the required identification documents.
- Deposit funds: Once your account is verified, log in and deposit funds into your Binance account. Click on “Wallet” and then “Deposit.” Choose whether you want to deposit fiat currency like USD, EUR, or GBP or deposit cryptocurrency.
- Go to trading section: After depositing funds, navigate to the “Trade” section and select “Convert.” Use the search bar to find BCH and select the trading pair corresponding to your deposited currency.
- Buy BCH: Once you are in the trading section for BCH, decide whether you want to place a market order (buying at the current market price) or a limit order (setting a specific price at which you want to buy). Enter the amount of BCH you wish to purchase and click on “Buy BCH.”
- Congratz, you own BCH! You tokens are automatically deposited on your Binance account.
Where Can I Store My BCH Tokens?
There are a number of crypto wallets available. Each crypto exchange automatically creates a wallet for you when you register.
Why is Bitcoin Cash Trending Recently?
Bitcoin Cash has been on the scene for 6 years, but it has never been as popular as it is recently, when in just 1 week it has seen a price increase of around 100% and is on the radar of all crypto enthusiasts. The reason for the incredible price hike is that the new crypto exchange EDX Markets, backed by the major players on Wall Street – Fidelity Digital Assets, Charles Schwab and Citadel Securities – has listed Bitcoin Cash (BCH) on its exchange. The coin has thus been placed alongside Bitcoin, Litecoin, and Ethereum, making it one of the best cryptocurrencies to buy. Discussions on social networks about BCH have risen to their highest level in three years. Also, trading volumes have reached a record.
The listing on EDX Markets seems like a success as the exchange is affiliated to Wall Street and can be expected to play by the regulators, which removes a certain level of regulatory risk that the harsh crypto winter has brought to some of the big players on the scene such as FTX, Three Arrows Capital, Coinbase and Binance.
What is BSV?
If you’re in crypto, you might have noticed a coin called BSV. Bitcoin SV, or Bitcoin Satoshi’s Vision, is a direct offshoot of Bitcoin Cash. Proponents of BSV, led by figures like Craig Wright (who, by the way, claims to be Satoshi Nakamoto), championed a return to what they believed were Bitcoin’s original principles. They advocated for a significant block size increase, aiming to scale the blockchain substantially on-chain. BSV’s name itself, “Satoshi’s Vision,” reflects this desire to adhere closely to what they interpret as the original intent of Bitcoin’s mysterious creator, Satoshi Nakamoto.
Post-fork, BSV made several notable changes:
- Block Size Increase: BSV increased its block size limit to a staggering 128 MB immediately after the fork, with aspirations to boost it even further. This was done with the intent to accommodate a massive number of transactions, aiming for enterprise-level usage.
- Protocol Restoration: BSV aimed to revert certain technical aspects back to their original states from the Bitcoin whitepaper, emphasizing the restoration of original Bitcoin opcodes and removing certain BCH-specific changes.
Bitcoin Cash: Pros
- Enhanced Scalability: At the heart of BCH’s inception was the quest for scalability. With an initial block size of 8 MB, later expanded to 32 MB, Bitcoin Cash can process a significantly higher number of transactions per block compared to Bitcoin. This scalability ensures faster transaction processing, making BCH a practical choice for everyday transactions.
- Lower Transaction Fees: One of the standout advantages of BCH is its commitment to keeping transaction fees minimal. The increased block size means that more transactions can be accommodated in a single block, reducing the competition and consequently the fees. For users, this translates to cost-effective transactions, especially beneficial for microtransactions.
- Swift Confirmations: Thanks to its larger block size, transaction confirmations on the BCH network are swift. This speed is crucial for merchants and users who prioritize quick settlements, making BCH a preferred choice for real-time transactions.
- Versatility with Smart Contracts: Beyond being a medium of exchange, BCH has ventured into the realm of smart contracts. With the introduction of features like the Simple Ledger Protocol (SLP), BCH supports the creation of tokens, paving the way for decentralized applications (dApps) and a broader spectrum of use cases.
- Commitment to Peer-to-Peer Electronic Cash Vision: BCH remains true to the original vision of Bitcoin as a peer-to-peer electronic cash system. Its focus on scalability, low fees, and usability underscores its commitment to serving as a decentralized currency for the masses.
Bitcoin Cash: Cons
- Controversial Origins: BCH’s birth was a result of a contentious hard fork from Bitcoin. This divisive origin has led to skepticism and criticism from certain quarters of the crypto community, impacting its overall perception.
- Vulnerability to Centralization: The larger block size, while advantageous in many ways, could lead to centralization. Storing and processing bigger blocks require more resources, potentially sidelining smaller miners and leading to mining centralization.
- Price Volatility: Like many cryptocurrencies, BCH is subject to significant price volatility. This can deter potential users and investors who seek stability in their digital assets.
- Competing with Bitcoin: Being a derivative of Bitcoin, BCH often finds itself in the shadow of its predecessor. This competition can hinder its standalone recognition and adoption to some extent.
- Further Forks and Splits: BCH itself has undergone forks, most notably leading to the creation of Bitcoin SV (BSV). Such splits can create confusion, dilute community focus, and impact investor confidence.
Conclusion
In the grand scheme of cryptocurrencies, Bitcoin Cash is proof that blockchain technology is community-oriented. Born out of a desire to stay true to Bitcoin’s original vision, BCH has evolved into a powerful project in its own right, rivalling the biggest on the crypto scene. Its emergence from the hard fork has demonstrated the self-determination of the crypto community and its ability to find alternative solutions when faced with scalability issues. The move to larger block sizes underlines BCH’s commitment to delivering faster transaction times and lower fees, making it a viable choice for everyday transactions, from buying coffee to sending money transfers across borders.
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FAQ
What is Bitcoin Cash (BCH)?
Bitcoin Cash (BCH) is a cryptocurrency that was created as a hard fork of Bitcoin in August 2017. It was developed as a solution to Bitcoin’s scalability problems by increasing the block size to allow more transactions and lower fees.
What is the main difference between Bitcoin (BTC) and Bitcoin Cash (BCH)?
The main difference between Bitcoin and Bitcoin Cash is the block size. Bitcoin Cash has a higher block size limit (initially 8 MB, later increased to 32 MB) compared to 1 MB for Bitcoin. This allows Bitcoin Cash to process more transactions per block, which means faster transaction times and lower fees.
Can you use Bitcoin Cash for everyday transactions?
Yes, Bitcoin Cash is a good choice for everyday transactions, from buying coffee to sending money transfers across borders, thanks to faster transactions and lower fees.
Where can I buy Bitcoin Cash (BCH)?
You can obtain Bitcoin Cash by buying it on a cryptocurrency exchange, accepting it as payment for goods or services, or mining it.
Where can I use Bitcoin Cash?
Many businesses around the world accept Bitcoin Cash as a form of payment. In addition, BCH is also accepted by various online marketplaces and service providers. It is advisable to check with the individual company or service provider what their specific rules are.
