What is Bitcoin Cash (BCH)?

Bitcoin Cash (BCH) is a cryptocurrency that was developed to return the original idea of cryptocurrencies. It resulted from a change that took place in late 2017 and is referred to as a “hard fork,” where the blockchain splits into two. Bitcoin Cash can facilitate more transactions per block than Bitcoin, which makes the cost of the transactions low and the duration of the time that it takes for the transactions to be confirmed to be less.

The main goal of developing Bitcoin Cash is to use it as a means of payment with lower fees compared to its predecessor. It has a much lower transaction fee than Bitcoin, and the confirmation time usually takes only a few seconds, not hours. The development of Bitcoin Cash, the initial Bitcoin blockchain faced challenges of coping with increasing traffic, resulting in slow transaction processing time and high charges per transaction.

This issue was chiefly due to the 1MB block size of the blockchain that could not handle the traffic on the Bitcoin network. Therefore, the transactions were perpetually stuck waiting for confirmations because the capacity of the blockchain was congested. Bitcoin Cash was formed in 2017 after a disagreement by the developers on the best solution that would enable Bitcoin to solve new problems with the blockchain.

Bitcoin Cash (BCH) is an experimental digital currency that has emerged as an effort to reinstate the true meaning of a cryptocurrency. It grew out of a ‘hard fork’ that took place in 2017 – this is when a blockchain divides into two chains. Bitcoin Cash allows more transactions per block than Bitcoin, and that minimizes transaction fees and the time required to verify them.

Like its predecessor, Bitcoin, Bitcoin Cash is intended to be a universally accessible means of making transactions. It is also cheaper, with lower transaction fees and much faster transaction confirmation time compared to Bitcoin, which may take minutes or sometimes even hours.

The History of Bitcoin Cash

The first Bitcoin blockchain was unable to deal with the increasing traffic of transactions, resulting in increased confirmation time and associated costs. The leading cause of this problem was the blockchain's 1MB block size, which could not handle lots of traffic in the network. Consequently, due to numerous confirmations that overwhelmed its capacity, the transactions were held up as they waited for confirmation.

After disputing how to solve new problems with the blockchain through Bitcoin, developers created a hard fork, leading to the formation of Bitcoin Cash in 2017. chain. From 2009 to 2016, transaction charges kept increasing. By June 2017, these charges reached over $5, then rose sharply and peaked at over $54 in December.

Bitcoin Cash was developed and is currently managed by a dedicated group of programmers. These programmers believed that Bitcoin Cash was essential as a different option to Bitcoin, arguing that Bitcoin had shifted its focus more towards being an investment tool rather than a means of payment.

Comparison between Bitcoin Cash and Bitcoin

Bitcoin Cash expanded the block size to a maximum of 32 MB, allowing for more transactions to occur within each block. Additionally, Bitcoin Cash differentiates from Bitcoin from another perspective in that it does not even have a Segregated Witness (SegWit); this is another proposed solution aimed at increasing the number of transactions within a block. SegWit reduces the size of signatures from certain parts to contribute to expanding the block’s transaction limit.

Understanding Bitcoin Cash Works

In fact, despite being two different digital currencies, it is similar to Bitcoin in its programming and operation process. It also has similar functions.

However, what makes a difference is how one is selected to cater to the scaling requirement of the other. Bitcoin wants technologies that enable it to grow without the necessity of bloating its blocks, while Bitcoin Cash, on the other hand, prefers larger block sizes with new scaling technologies.

Further, Bitcoin Cash has the same consensus algorithm as Bitcoin, which is called proof of work, using a secured hash algorithm like that of Bitcoin.

Who Founded Bitcoin Cash?

A group of miners and developers got dissatisfied with extensive discussions regarding how the system could be optimized and decided to become fixers of the problem by releasing a new code and thus creating a Bitcoin hard fork.

The software, known as Bitcoin ABC, which would eventually lead to the creation of Bitcoin Cash, was first shown to the public in June 2017. Following its completion of testing, it was made available to everyone on August 1, 2017.

The number of people who consider Roger Ver one of the most significant promoters of Bitcoin Cash is substantial. However, he did not create Bitcoin Cash; he only supported it because he agreed with the decisions made after this Bitcoin split.

What further differentiates Bitcoin Cash?

Litecoin is a fork of Bitcoin and is targeted to be its addition, whereas Bitcoin Cash is more of a direct competitor. Its main difference is in scaling, which adopts increased block sizes compared to SegWit or Lightning Network. Presently, Bitcoin Cash can accommodate up to 61 transactions per second, out-competing the maximum number of transactions possible on Bitcoin.

How is the Bitcoin Cash Secured?

The value of Bitcoin Cash is based on the finite number of coins to be created, all of which will be in circulation at a constant rate once the 21 millionth coin is produced. Moreover, the increasing need to have digital currencies that enable quick and cheap transactions boosts the value of Bitcoin Cash even more.

Which Precautions Are Taken in Order to Secure the Bitcoin Cash Network?

The mechanisms of protecting the Bitcoin Cash network remain the same as those that have been applied to the Bitcoin network. It means that both are governed by the same set of rules and employ the exact consensual mechanism. The foundation of Bitcoin Cash’s security is the proof-of-work system and the miners who use the algorithm to validate transaction requests.

Being principally a payment protocol, Bitcoin Cash is well suited for micropayment use case scenarios. However, cryptocurrency has yet to make much progress in terms of usage in various sectors, such as merchan acceptance. However, Bitcoin Cash continues to strive towards its goal of becoming a decentralized electronic payment network.

Choosing a Bitcoin Cash wallet

With numerous options available for Bitcoin Cash storage, the selection process is determined by individual requirements for security and functionality. Kriptomat exchange stands out as an excellent choice for BCH storage due to its exceptional functionalities (such as purchasing, selling, and exchanging with different cryptocurrencies) while maintaining a high level of security.

Getting Started with Bitcoin Cash

Bitcoin Cash is accessible through various cryptocurrency platforms, such as Binance, Coinbase, Kraken, and KuCoin. Since it originates from Bitcoin, the mining process is identical. However, this method has certain limitations. Bitcoin Cash can be mined using personal computers equipped with powerful graphics processing units (GPUs).

Similar to Bitcoin and other cryptocurrencies capable of mining, the mining of Bitcoin Cash is mainly led by major mining companies and groups. Joining a group allows you to have a better chance at securing a block reward, though these rewards are distributed among the members. The size of the group and the contributions of other members may result in receiving a relatively small share.

Alternatively, one can invest in a specialized device known as an application-specific integrated circuit (ASIC) miner, which is capable of mining Bitcoin Cash. These devices are significantly more efficient than personal computers in mining, yet they come with a steep price tag. Older models are available at more affordable prices, although their performance tends to be reduced, and determining their condition can take time and effort.

Concerns Over Bitcoin Cash

The Bitcoin Cash community is convinced that it needs to stay independent and accessible to be recognized as the top currency globally. In the immediate future, the initiative has concentrated on creating a quick, dependable, and cost-effective network, along with "setting up a professional mining node that takes into account feedback and implements significant enhancements."

However, this differs from the original vision of its creators, as BCH has gained favor among investors, reaching #25 in terms of 24-hour trading volume and #16 in market capitalization. Its value on May 15, 2024, soared to $445, marking a more than 270% rise from its value of $188 the previous year. Although this increase in value might be positive for those invested in BCH, it could pose challenges for the community aiming to keep cryptocurrency as a means of payment.

FAQs

Should You Consider Bitcoin Cash?

Your perspective on the market, how much risk you're comfortable with, and how you like to invest play a significant role in deciding if Bitcoin Cash is right for you. It saw a big jump in value from mid-2024, but it still needs to be guaranteed it will keep going up.

Is It Safe to Put Money into Bitcoin Cash?

It's crucial to remember that all digital currencies are volatile, meaning you're okay with the chance of losing a lot as well as the opportunity to make a lot. It's a good idea to talk to a financial expert about your financial situation to determine if Bitcoin Cash fits into your investment strategy.

What Are the Risks of Bitcoin Cash?

Similar to other splits or cryptocurrency ventures, Bitcoin Cash operates on a smaller network than Bitcoin and some others, making it more vulnerable to cyber-attacks. However, this risk is shared among all blockchains until it becomes too costly for hackers to bother with.