What is Bitcoin Cash (BCH)?
Bitcoin Cash (BCH) was developed as a hard fork from the main Bitcoin (BTC) blockchain. It’s a peer-to-peer (P2P) electronic cash system that offers fast transactions with low fees. The system is entirely trustless, allowing users to send BCH to each other directly without any third-party intermediaries like central banks.
Bitcoin Cash is one of the most successful Bitcoin hard forks. It follows an altered version of the Bitcoin protocol that introduces a significantly bigger block size. In 2018 and 2020, it underwent two more hard forks, splitting into Bitcoin Cash, Bitcoin SV, and Bitcoin ABC (now eCash). The goal of Bitcoin Cash is to increase the day-to-day utility of cryptocurrencies.
How Was Bitcoin Cash Developed?
Bitcoin Cash was not built from scratch like many blockchains. Instead, it originated from a hard fork – a change to the network protocol that splits one chain into two. In 2017, the Bitcoin community split into two groups – those that supported a move towards bigger block size and those that wanted to stick with the smaller blocks.
The hard fork event centered around the Segregated Witness (SegWit) update to the Bitcoin blockchain. Some users found that this update wouldn’t be efficient enough to solve the issues related to the network’s size limitation.
The forking of Bitcoin was supported by the community members on the bigger block size side. There is no single entity at the front of the moment, and it was instead a group effort. The hard fork officially occurred on August 1st, 2017, at block #478559. Each Bitcoin holder received an equal amount of Bitcoin Cash coins after the split.
Given the frequent BCH price fluctuations, it can be considered to be a volatile asset. However, compared to Bitcoin, this cryptocurrency is much cheaper. For a more detailed analysis of the differences between BCH and BTC, see the comparison section below.
The volatility of Bitcoin Cash has been noted in its market performance. In late December 2017, the BCH price rapidly climbed up from about $1,300 to $4,355. However, a month later, the value was down to about $2,000. Several similar, albeit smaller-scale, market fluctuations have occurred since.
What Are the Main Features of Bitcoin Cash?
Much like the initial Bitcoin protocol, the BCH coin supply has a hard cap of 21 million. Given its deflationary supply, it’s expected that the Bitcoin Cash price is going to rise as the resource becomes more scarce. The issuance is designed to halt at BCH 20,999,999.9769.
Bitcoin Cash is decentralized and uses the Proof-of-Work (PoW) consensus mechanism to produce new blocks. Each block has a higher capacity to store transaction information compared to Bitcoin.
The increased block size means that the network nodes require more storage for the blockchain data. Furthermore, the processes of auditing are also pricier on this network. The additional costs related to storage and auditing may be among the reasons why this cryptocurrency is not as popular despite the comparatively lower BCH price.
Bitcoin Cash ensures transaction security and privacy by employing CashFusion. This privacy solution makes all network transactions difficult to track by mixing them. The process of mixing incurs additional charges. All transactions can occur regardless of the sender and recipient’s location.
Bitcoin Cash is primarily utilized for digital payments. Fees can be as low as $0.01 and the large block size allows for financial operations to be processed more swiftly. Given the fast transaction speed and the low fees, this cryptocurrency can be used to conduct small-scale payments for goods and services.
Another common use of Bitcoin Cash is peer-to-peer transactions. As an open network, Bitcoin Cash allows direct transactions that are recorded on-chain and immutable. BCH is not subject to governmental regulations and the assets cannot be frozen or seized thanks to network decentralization.
How Does Bitcoin Cash Differ from Bitcoin (BTC)?
Bitcoin Cash emerged as the result of a hard fork and runs on a separate blockchain from Bitcoin proper. As a consequence, two separate cryptocurrencies emerged – the original version of Bitcoin and the new Bitcoin Cash coin. For the purposes of the fork, the BCH crypto protocol was altered.
The core difference between Bitcoin and Bitcoin Cash is tied to the transaction capacity. All information regarding on-chain transactions is logged into blocks. Initially, the size of a single BCH block was 8 MB. However, it was later increased to 32 MB. This makes the block size significantly larger than Bitcoin’s 1 MB.
The increased block size allows for faster transaction speeds and lower transaction fees. It also makes the new blockchain more scalable. This was seen as one of BCH coin’s biggest advantages, as the scalability issues may hinder BTC’s growth.
The Bitcoin Cash price is generally susceptible to market trends that are set up by Bitcoin as the biggest cryptocurrency in the world. Although the BCH coin is cheaper, there is a significant difference in market capitalization between the two assets.
What Is the Difference Between Bitcoin Cash and Bitcoin SV (BSV)?
In 2018, another hard fork involving Bitcoin Cash occurred. In this instance, the Bitcoin Cash community separated from the Bitcoin SV group due to their differing attitudes toward what the block size should be. SV stands for Satoshi Vision, referring to the creator of the original Bitcoin blockchain, Satoshi Nakamoto.
The supporters of the SV group believed that Bitcoin Cash was beginning to stray from the initial mission of Bitcoin. The Bitcoin Cash/Bitcoin SV hard fork led to the latter network adopting a block size of 128 MB. This is the core difference between each Bitcoin-related network involved in the hard forks.
Unlike the Bitcoin Cash coin, Bitcoin SV is a token as it doesn’t run on its own separate blockchain. It also adheres to other key aspects of the initial Bitcoin protocol, such as the Proof-of-Work consensus mechanism and the hard cap of 21 million tokens. The BSV block size has been extended several times since, standing at 4 GB as of June 2022.
Compared to BSV, the Bitcoin Cash price is higher. However, BSV is the more volatile asset. In general, the two assets rank relatively similarly based on market capitalization.
What Is the Difference Between Bitcoin Cash and eCash (XEC)?
2020 marked the next significant hard fork to the Bitcoin Cash blockchain, leading to the creation of Bitcoin ABC (BCHA). The fork occurred at block #661647. In July 2021 BCHA rebranded as eCash (XEC).
XEC runs on its own separate blockchain. The new network introduced an 8% charge on newly mined coins which are redistributed to the BCHA development team. The decision to redistribute a portion of the assets to the fund development wallet was not perceived positively by the community, leading to the network split.
One of the biggest differences between Bitcoin Cash and eCash is that the latter uses Proof-of-Stake (PoS) as its consensus algorithm. This makes the platform more energy efficient. After the rebranding, the BCHA:XEC conversion rate was 1:1000000. The overall supply of XEC is capped at 21 trillion.
The Bitcoin Cash crypto performance has so far been more impressive than that of its new branch. BCH maintains a higher market capitalization.
