Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is an altcoin created by a fork of the original bitcoin chain. Bitcoin Cash promises faster block time and lower transaction fees than bitcoins and is currently one of the top 35 cryptocurrencies by market capitalization.
- The fork that resulted in Bitcoin Cash came about because of concerns about Bitcoin's scalability.
- The Bitcoin Cash network has a larger block size and can therefore handle more transactions than Bitcoin.
- Bitcoin Cash transaction fees are also lower than Bitcoin.
What is Bitcoin Cash?
The ongoing debate over Bitcoin's stability led to the split of the cryptocurrency on August 1, 2017, resulting in Bitcoin Cash, a new cryptoproject based on the Bitcoin blockchain. The cryptocurrency issued by this blockchain is also called Bitcoin Cash (BCH).
Bitcoin Cash allows a block size of eight megabytes (compared to bitcoin's 1 megabyte) to increase the number of transactions its registry can handle. Proponents of Bitcoin Cash opted for in-network scaling solutions, such as the aforementioned increased block size, while Bitcoin (BTC) supporters opted for off-network scaling and Layer 2 solutions, such as the Lightning Network.
Based on market capitalization, Bitcoin Cash is among the top 35 cryptocurrencies and is one of the most important altcoins today. However, Bitcoin Cash is not as easy to spend as bitcoin because it does not have the same level of support among sellers.
How does Bitcoin Cash work?
Like Bitcoin, Bitcoin Cache is a decentralized open-source network that uses the Proof of Work consensus mechanism to mine new currency and approve transactions. Miners earn BCH tokens as a reward for their work.
Bitcoin Cash (BCH) and Bitcoin (BTC)
Although Bitcoin Cash is based on the Bitcoin blockchain, there are key differences between the two cryptocurrencies. With a block size of 1 MB, Bitcoin can only process about seven transactions per second. One of the main reasons for the hardforward was that supporters of Bitcoin Cash wanted to increase the block size in order to increase the volume and speed of transactions. Thus, the block size of Bitcoin Cache started at 8 MB and then was increased to 32 MB, meaning that it can now process more than 100 transactions per second.
Another difference between the two is the transaction fee. Bitcoin Cash's fees are lower than Bitcoin's, averaging $0.20 to $0.25 per transaction. Bitcoin, meanwhile, charges an average of $0.4 and $2 per transaction. This figure does not include the period from 2017 to 2018, during which Bitcoin Cash was created, and bitcoin transaction fees briefly rose to $55 at its peak.
What makes Bitcoin Cash even more different from Bitcoin is the fact that Bitcoin Cash does not rely on the Segregated Witness Consensus Layer (SegWit) scaling solution, which both Bitcoin and LightCoin (another Bitcoin hardforward) use to optimize transactions.
How to use Bitcoin Cash?
Bitcoin Cash is designed to pay for goods and services as real digital currency. However, it is sometimes difficult to find users and merchants who actually accept BCH as a currency. In the long term, Bitcoin Cash will have to focus on ubiquitous adoption to fulfill its mission. For now, the option to use BCH is similar to other cryptocurrencies: it can be bought, sold and exchanged on cryptocurrency exchanges, as well as stored in digital wallets as part of an investment strategy.
What are the risks with Bitcoin Cash?
Increased transaction speed can have its disadvantages. In the case of Bitcoin Cash, one of them is security. The blockchain's hash rate depends on the number of attempts by miners to solve a new block, such as how often they try to create and add a block corresponding to the current complexity of the blockchain. The more energy the network consumes, the higher the security of that network. Because bitcoin consumes a lot of energy when mining because of its energy-intensive Proof of Work consensus mechanism, it is considered more secure than other cryptocurrencies. Bitcoin Cash currently has a hash rate of about 5% of bitcoin, making it potentially less secure than bitcoin.
Economic data of the project at the time of writing:
Volume in circulation: 19,220,631
Maximum volume: 21,000,000
Market capitalization: $2,384,470,829