The prices of cryptocurrencies keep reaching new record levels. And with so many new cryptos appearing almost daily, it’s becoming difficult to keep up. You’ve heard of Bitcoin, but what is Bitcoin Cash?
No Treasury for These Coins
Bitcoin is a peer-to-peer digital currency independent of any government or bank. It was invented in 2008 by an anonymous person under the pseudonym Satoshi Nakamoto. Bitcoin and other cryptocurrencies have since become popular for paying goods, trading, and even gambling, for example, on online blackjack, poker, or dice sites.
Bitcoin Cash went separate (forked) from Bitcoin in 2017 as a cryptocurrency that uses improved blockchain technology. Bitcoin Cash forked again in November 2018 into Bitcoin Cash ABC and Bitcoin Cash SV (Satoshi Vision). Bitcoin Cash is the Bitcoin Cash ABC now. If you come across the abbreviation “BCH” and start wondering: “What is BCH?” you should know that is the acronym for Bitcoin Cash.
Just like Bitcoin, Bitcoin Cash uses blockchain technology to document, verify, and store transactions. Blockchains are unique databases that store data in interconnected blocks. New data is encrypted into a new block, and when this block fills with data, it’s connected to previous data blocks in a chronological manner. Once encrypted and stored, the data cannot be erased. No individual owns these data blocks, and users called miners regulate and update the BCH blockchain.
25,000 per Block
Now that we’ve covered the basics let’s delve into details of what Bitcoin Cash brings to the table and how. Before the arrival of BCH, Bitcoin couldn’t cope with the increased popularity and the sheer number of transaction requests. There was also internal strife within the Bitcoin community if this cryptocurrency should be better used as a transaction currency, not just as a digital investment. Later on, it would be one of the main reasons for Bitcoin Cash vs. Bitcoin. But other issues had to be resolved first.
Bitcoin had two problems that prevented it from becoming a global currency, both of them connected to blockchain technology. The first hurdle was that Bitcoin was limited in block size to 1 MB. Because of their limited size, blocks couldn’t keep up with the ever-growing number of transactions. It has caused transaction queues and increased waiting times for transaction confirmation. As the Bitcoin value increased, this caused more problems.
Another problem that initiated the change from Bitcoin to Cash was that the Bitcoin network was too slow, managing only seven transactions per second. For comparison, the Visa credit card system had around 150 million transactions per day. If put under pressure, Visa could process 65,000 transaction messages per second. As Bitcoin’s user network expanded, the waiting times got longer due to the constant increase in the number of transactions that had to be processed.
The solution to these problems was to develop Bitcoin Cash that would have bigger blocks, from 8 MB to 32 MB in size. More people in the cryptocurrency community got interested and started inquiring: What is Bitcoin Cash? Although the average number of transactions was 1,000-1,500 per block, stress tests have shown that Bitcoin Cash can handle up to 25,000 transactions per block, which is a vast improvement. Developers who designed Bitcoin Cash performed a hard fork from Bitcoin. As a result, Bitcoin Cash took over the spotlight in the crypto mining community.
Despite the disagreements in the cryptocurrency community, Bitcoin Cash was released in August 2017. Its popularity among users, including those who use it to bet on Bitcoin sportsbooks, has been increasing. Bitcoin holders got the same amount in Bitcoin Cash for their Bitcoin, and the price of BCH on the cryptocurrency market started at $900. Not all agreed on whether and why Bitcoin Cash should be supported. Its launch was tarnished by the lack of support from itBit and Coinbase, prominent cryptocurrency and Bitcoin exchange rate platforms.
Bitcoin Cash got the much-needed boost from Bitmain, the largest crypto mining center, in December 2017, at the peak of the crypto mining craze. As Bitmain assisted with the coin supply that was used on exchange platforms, Bitcoin Cash reached $4,091.
A Fork in the Road
After Bitcoin Cash’s stellar entry into the cryptocurrency market, in November 2018, BCH was separated into Bitcoin Cash SV (Satoshi Vision) and Bitcoin Cash ABC. This time, with the Bitcoin Cash block size problem fixed, a dispute arose because of the blockchain’s smart contracts and the expanded block size.
Australian computer scientist and businessman Craig Wright led the Bitcoin Cash SV and disagreed with the smart contract implementation. As a follower of the Nakamoto design, he deemed the smart contract feature unnecessary for transactions.
On the other side, Bitcoin Cash ABC introduced new technologies, like CTOR or Canonical Transaction Ordering Route. CTOR changed the transaction order in a block to enhance speed and simplify the system. These technologies are used today, among other things, on Bitcoin lotto sites.
Over time, the matter of how to use Bitcoin Cash was settled among these two groups. The technological advancements brought more capital to the cryptocurrency (including Bitcoin) market and more coins to investors. And Bitcoin Cash ABC would become Bitcoin Cash (BCH). The price it had to pay: Bitcoin Cash has become popular as a payment method, while Bitcoin is the preferred currency for storing funds.
The two most significant strengths of Bitcoin Cash are that it’s used primarily for payments and that it helped drastically reduce transaction fees. But as other cryptocurrencies are gaining traction, people are starting to wonder: What’s the next Bitcoin Cash?
New cryptocurrencies are using various strategies and partnerships to increase their market share. Litecoin is working with event organizers and associations. Dash has boasted it has become popular in poverty-stricken countries like Venezuela, a claim that’s still to be proved.
Despite its incredible popularity on launch, Bitcoin Cash remains largely unknown outside the crypto mining groups. Bitcoin still is the most prominent crypto out of the bunch. Some experts are worried that the fork of the Bitcoin Cash blockchain might cause another fork and further splits in the community. Even though other cryptocurrencies widely use the smart contracts it introduced, the verdict is still out on Bitcoin Cash. What is it? Is it worth investing in?
Bitcoin Cash’s development and overall direction remain a mystery to investors outside the cryptocurrency community. In contrast, other cryptocurrencies, such as VeChain and Dash have published governance protocols and give voting rights, which makes the whole process of their development more transparent.
Two Sides to a Coin
Fragments of the original Bitcoin philosophy are visible in the Bitcoin Cash design, such as the supply limit of 25 million BCH. But Bitcoin Cash has also brought significant technological improvements from which the entire cryptocurrency community has benefited. It remains a strong presence in the crypto market.
When did Bitcoin Cash start?
Bitcoin Cash split from Bitcoin in 2017. Bitcoin Cash forked again in November 2018 into Bitcoin Cash ABC and Bitcoin Cash SV (Satoshi Vision).
What is Bitcoin Cash used for?
Bitcoin Cash is mostly used for transactions. It’s favored as a payment method over Bitcoin due to low transaction fees and quicker transaction times.
How does Bitcoin Cash work?
Bitcoin Cach uses improved blockchain technology to store transaction data in blocks more quickly than Bitcoin.
What is the difference between Bitcoin and Bitcoin Cash?
As we’ve explained in more detail in this “What is Bitcoin Cash?” article, Bitcoin Cash is predominantly used for payments due to its bigger block size and improved transaction verification. In contrast, Bitcoin is used more often for storing funds.
Can Bitcoin be converted to cash?
Yes, you can convert Bitcoin to cash. You can use Bitcoin ATMs or trade your bitcoins for fiat money on Bitcoin trading platforms.