What is Bitcoin Cash? (BCH)
Bitcoin Cash (BCH) is a cryptocurrency that emerged in 2017 as a result of a hard fork from the original Bitcoin blockchain. A hard fork is a radical change in a network’s protocol that splits the blockchain into two incompatible paths, necessitating nodes and users to upgrade to the latest version of the protocol software. BCH was created to reestablish decentralization in the cryptocurrency landscape and address the growing concerns about transaction fees and confirmation times associated with Bitcoin.
Designed as a more efficient and affordable payment system, Bitcoin Cash aims to fulfill the original vision of Bitcoin as a peer-to-peer payment network that eliminates regulatory authorities and third-party intermediaries from financial transactions. With transaction fees typically less than $0.01 and confirmation times occurring within seconds, BCH offers a faster and cheaper alternative to Bitcoin, which has increasingly become more of an investment instrument than a practical payment system.
The development and maintenance of Bitcoin Cash are driven by an active community that believes in its necessity as a viable alternative to Bitcoin. BCH operates on the Bitcoin Cash Node, an ecosystem that powers the network and facilitates transactions, essentially serving as the virtual machine that runs the Bitcoin Cash blockchain.
What is Bitcoin Cash?
Bitcoin Cash (BCH) was developed in 2017 as a response to the growing concerns surrounding the Bitcoin blockchain, particularly transaction fees and processing times. Between 2009 and 2016, transaction fees rose considerably, reaching a peak of $54.64 in December 2017. These issues emerged due to the 1 MB block size limitation on Bitcoin’s blockchain, which resulted in queued transactions waiting for confirmation.
In the case of BCH, its creators aimed to resolve scalability issues by increasing the block size within the blockchain to accommodate more transactions, thereby reducing transaction fees. However, not all developers agreed with this approach, leading to the creation of a fork from the Bitcoin blockchain. At the time of BCH’s inception, Bitcoin processed between 1,000 and 1,500 transactions per block.
History of Bitcoin Cash
The creation of BCH stemmed from a heated debate within the Bitcoin community regarding the best solution to address the scalability problem. Some members proposed increasing the block size, while others wanted to keep it the same and instead reduce the size of transactions. This disagreement led to a split in the blockchain, resulting in two separate chains and cryptocurrencies: Bitcoin (BTC) and Bitcoin Cash (BCH).
The split was described as a “civil war” between two competing Bitcoin Cash camps. The first camp, supported by entrepreneur Roger Ver and Jihan Wu of Bitmain, promoted the software entitled Bitcoin ABC (short for Adjustable Blocksize Cap), which would maintain the block size at 32 MB. The second camp, led by Craig Steven Wright and billionaire Calvin Ayre, put forth a competing software version called Bitcoin SV (short for “Bitcoin Satoshi Vision”), which would increase the block size limit to 128 MB.
Bitcoin Cash itself experienced a few forks along the way. Bitcoin Satoshi Vision (BSV) forked from Bitcoin Cash and Bitcoin Cash became Bitcoin Cash ABC (BCHA) in 2018. In 2021, it changed its name to eCash. It is worth noting that the Bitcoin SV blockchain is the largest of all Bitcoin forks, exceeding 2.5 terabytes in size.
Throughout its history, Bitcoin Cash has aimed to increase the size of the blocks on the blockchain to accommodate more transactions. In 2018, its block size was 8 MB, and in June 2022, the block size increased again to 32 MB. These changes were implemented to address the scalability issues that the original Bitcoin blockchain faced as it struggled to handle the increasing number of transactions, resulting in higher fees and longer confirmation times.
Controversy
In 2017, the Bitcoin community was divided into two factions: those who supported large blocks and those who preferred small blocks. The Bitcoin Cash faction advocated for the use of its currency as a medium of exchange for commerce, while the Bitcoin-supporting faction viewed Bitcoin’s primary use as a store of value. Bitcoin Cash is sometimes referred to as Bcash, and its detractors label it as “Bcash,” “Btrash,” or even “a scam.” However, its supporters argue that it is the pure form of Bitcoin.
The hard fork that created Bitcoin Cash has been likened to a software upgrade by stock analyst Bryan Kelly. He explained that software upgrades usually receive unanimous agreement, but in this case, not everyone agreed on the changes. This disagreement has led to animosity between the Bitcoin and Bitcoin Cash camps.
Samson Mow from Blockstream pointed out that Bitcoin Cash’s use of the “Bitcoin” name contributed to the tensions between the two groups. Meanwhile, Emin Gün Sirer, a professor at Cornell University, stated that Bitcoin Cash focused on practical use, while Bitcoin was “enormously” concentrated on serving as a store of value. This fundamental difference in perspectives continues to fuel the ongoing debate and controversy surrounding Bitcoin Cash.
What is the BCH Token?
Bitcoin Cash (BCH) was created to serve as a cryptocurrency for day-to-day transactions, as its name implies. The BCH community believes that its ethos aligns more closely with Satoshi Nakamoto’s original vision for a peer-to-peer electronic cash system. With faster, cheaper transactions, BCH is more practical for everyday use, as transactions are usually confirmed in the next block, often with fees being just a fraction of a cent.
The BCH source code is based on the original Bitcoin protocol, and its supply is capped at 21 million coins. As a fork of Bitcoin, BCH also uses the Proof of Work (PoW) consensus mechanism to issue new coins. One of the key differences between Bitcoin and Bitcoin Cash is the increase in block size from 1 MB to 32 MB, allowing for more transactions per block and reducing congestion.
Bitcoin Cash did not implement Segregated Witness (SegWit), a proposed solution to Bitcoin’s scalability problem. Instead, BCH implemented Schnorr Signatures in 2019, an alternative method for improving scalability and privacy. The BCH mining difficulty is adjusted after each block through the difficulty adjustment algorithm (DAA), ensuring a more stable and responsive mining experience.
In addition to its enhanced transaction capabilities, BCH also supports smart contracts. While not as widespread as Ethereum, BCH’s smart contract functionality has the potential to introduce new use cases for the platform, such as decentralized finance (DeFi) applications. Smart contract development was built-in as a later update, paving the way for further innovation on the Bitcoin Cash blockchain.
Bitcoin Cash offers several unique features and use cases, including faster and cheaper transactions, increased block size, smart contract capabilities, and a focus on aligning with Satoshi’s original vision for a digital cash system.
The future of BCH
Despite not achieving the same level of prominence as Bitcoin, Bitcoin Cash has managed to remain relevant among the numerous cryptocurrency projects that forked from the original. BCH is accepted by a number of merchants and businesses for everyday transactions, primarily due to its lower transaction fees and faster confirmation times.
However, concerns regarding network security persist, as larger block sizes can potentially pose risks. As a result, Bitcoin is still considered the most secure blockchain network. Additionally, Bitcoin’s continued popularity means that BCH faces lower market liquidity and adoption in comparison to its predecessor.
The future of BCH will depend on its ability to distinguish itself from other cryptocurrencies, further enhance its platform, and achieve broader acceptance. While it may not completely dethrone Bitcoin, its unique features and ongoing developments make it a noteworthy project within the ever-evolving world of digital currencies.
Is BCH a Good Investment?
When considering investment opportunities in the cryptocurrency market, it is vital to analyze the unique properties and use cases of each digital asset. Bitcoin Cash offers potential value to those who prioritize faster and more affordable transactions or have an interest in a Bitcoin platform enhanced with smart contract capabilities. Additionally, the ongoing developments within the Bitcoin Cash ecosystem and its potential for growth could make it an attractive option for investors.
However, it is important to note that the cryptocurrency market is notoriously volatile, and all investments come with inherent risks. Diversification is a key strategy for managing these risks and ensuring a balanced investment portfolio. As with any investment, thorough research and a deep understanding of the market are crucial for making well-informed decisions. It is also advisable to consult with a financial expert or a cryptocurrency investment advisor to gain a comprehensive understanding of the potential risks and rewards associated with investing in Bitcoin Cash or any other digital asset.
News & Curiosities on Bitcoin Cash
Bitcoin Cash (BCH) emerged with the aim of addressing some of Bitcoin’s most pressing issues. However, its creation sparked a divide within the cryptocurrency community, with many enthusiasts debating whether Bitcoin or Bitcoin Cash would become the asset of the future.
Interestingly, Bitcoin Cash has also given birth to its own forks, including Bitcoin Cash ABC (BCHA) and Bitcoin Satoshi Vision (BSV). BCHA is quite similar to Bitcoin Cash, with only a few minor differences. The BCHA fork is more developer-friendly, as it reinvests 8% of each block reward into network innovation. Meanwhile, BSV’s primary focus is on providing greater stability by producing larger block sizes.
Despite its advantages, BCH has not achieved the widespread adoption it initially hoped for, and its blocks are rarely larger than 1 MB. Critics argue that the increased block size is a short-term solution to scalability and could pose security risks in the long run.
In November 2018, Bitcoin Cash underwent its own fork, resulting in the creation of Bitcoin SV (Satoshi’s Vision). This new cryptocurrency increased the block size even further, up to 128 MB, but did not support smart contracts.
How can you Own BCH Coins?
To own BCH, you can use the services of a centralized crypto exchange. Start by creating an account on a reputable exchange that supports the trading of BCH, such as Gate.io. Then, get your account verified and funded with your desired currency. Once your account is set up, you can go through the steps to buy BCH on the exchange. Remember to do your research and compare prices across different exchanges before buying, and also make sure to store it in a safe and secure wallet.
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