What is Bitcoin Cash?
Bitcoin Cash is a forked version of Bitcoin that focuses on improving transaction efficiency between peers and businesses. It has consistently remained among the top 50 cryptocurrencies by market cap. In the second quarter of 2023, the price of Bitcoin Cash increased by 104%, which may be due to its listing on the EDX market.
Summary of key points
Bitcoin Cash is a forked version of the Bitcoin Core blockchain. It bills itself as the cash version of Bitcoin and claims to have flexibility features that make it more suitable for everyday financial transactions, which is what Satoshi originally envisioned.
The forking activity of Bitcoin Cash and the resulting conflicts led to the split of the Bitcoin community into three, and the Bitcoin SV community also split from Bitcoin Cash. Bitcoin Cash has always maintained its status as the most successful Bitcoin fork.
Bitcoin Cash continues to see positive price developments in June 2023, largely due to its listing as one of the first four assets on the EDX market. Bitcoin, Ethereum, and Litecoin also made the list.
The EDX market plans to introduce traditional financial practices into the crypto space, connecting top players on both sides and bridging the relatively large mainstream financial space with the crypto space.
The Bitcoin community formed a strong and cohesive group during its initial phases, a period during which the community explored the usefulness of the Bitcoin blockchain and the cryptocurrency it supports, and achieved impressive growth.
However, Bitcoin’s growing community soon splintered into factions with slightly different ideologies about Bitcoin’s function and the extent to which the original Bitcoin met these criteria. Bitcoin’s era as a currency with a single united community ultimately ended seven years later with the famous fork and creation of Bitcoin Cash (then known as Bitcoin ABC).
History of Bitcoin Cash
The Bitcoin Cash community, led by Roger Ver, identified Bitcoin’s limited capabilities as the main reason for the split network and immediately set out to develop a more efficient network after rejecting the introduction of Segwit as part of BIP 91. From their perspective, Bitcoin’s speed of only seven transactions per second was simply not enough for the growing adoption rate, and was not efficient enough for a technology designed to support everyday financial activities.
According to the Bitcoin Cash faction, the idea of introducing Segwit (reducing data size by removing data signatures) was not enough to solve the usability problem of the Bitcoin blockchain, and ultimately led Bitcoin away from the vision of its original creator. The original Bitcoin was moving towards becoming a means of value storage rather than an electronic form of digital cash, which was what Satoshi proposed. Bitcoin ABC was renamed Bitcoin Cash to reflect the goal of creating a more usable electronic digital cash.
In simple terms, Bitcoin Cash is a more flexible version of Bitcoin. It improves more efficient transactions between peers and aims to enable businesses to adopt decentralized payment systems. It is worth mentioning that the Bitcoin Cash community split further a year later, and the faction led by Craig Wright founded Bitcoin SV in November 2018.
How does Bitcoin Cash work?
Bitcoin Cash retains many of the features of the original Bitcoin blockchain. It retains the Proof of Work consensus mechanism, and most of the miners in the initial network came from the original Bitcoin network. The fork of the Bitcoin blockchain also resulted in Bitcoin holders receiving a 1:1 airdrop of Bitcoin Cash on the new network. The total supply of Bitcoin Cash (BCH) was also set at 21 million. However, in order to achieve a faster and more flexible system, Bitcoin Cash took some different approaches. These include:
Increased block size
At the time of the fork, the Bitcoin blockchain had a block size of just 1MB, which meant that each block could only hold about 1,200 transactions and only 7 transactions could be confirmed per second. To improve this, Bitcoin Cash introduced a larger block size, initially 8MB, which has been continuously improved over time, with the current block size being 32MB. This block size supports over 25,000 transactions and enables the Bitcoin Cash blockchain to confirm about 100 transactions per second, 14 times faster than the Bitcoin blockchain. Bitcoin Cash also offers a cheaper way to do P2P transactions, with transaction fees as low as a fraction of a cent.
Smart Contracts
With the advent of regular NFTs and BRC-20 tokens, the original Bitcoin blockchain can operate like other smart contract blockchains, although they are very different from regular smart contracts. Bitcoin’s second-layer Lightning Network is also considered a smart contract application because it uses a native smart contract scripting language to implement off-chain transactions.
But the Bitcoin Cash network has already developed smart contract functionality before this, supporting smart contracts and sidechains. Smart contracts on Bitcoin Cash are developed using CashScript, a smart contract language developed specifically for building applications on the Bitcoin Cash network.
SmartBCH, a sidechain of Bitcoin Cash, is compatible with Ethereum’s EVM and allows developers to create smart contract applications on the Bitcoin Cash ecosystem, although it is not currently directly interoperable with Ethereum.
SmartBCH uses a proof-of-stake consensus mechanism, where validators on the network are elected by miners on the parent Bitcoin Cash network. It uses high throughput to ensure that transaction fees remain cheap even with a large number of users.
Bitcoin vs. Bitcoin Cash
Although Bitcoin Cash exited the Bitcoin community six years ago, the network and community still stand out as a contrast to the original Bitcoin. However, they are two different assets. Let’s take a look at the differences between Bitcoin and Bitcoin Cash.
The rise of Bitcoin Cash
On the last day of June 2023, Bitcoin Cash hit its highest point of the year, reaching $320, an increase of nearly 200% from the opening price of $110 at the beginning of the same month. The market value of Bitcoin Cash also exceeded $6 billion during this period. Daily trading volume also increased from an average of $52 million to more than $1 billion at the end of the month, an increase of more than 20 times. June was an interesting month for the Bitcoin Cash community and investors.
On-chain metrics are showing a similar growth trend, with a relative increase in the number of holders and other statistics. During this time, the number of Bitcoin Cash holders exceeded 22 million. On the network, the mining difficulty has also increased to over 390G, and on June 30, the computing power exceeded 3.1EH/s. However, Litecoin, Bitcoin, and Bitcoin SV also saw growth during this time. The main factors leading to the significant growth of these related asset classes have been the subject of speculation. While this needs further clarification, the most likely main driver is the launch of the EDX market.
EDX Markets listed four crypto assets when it opened; these assets include Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Being listed on EDX Markets is a positive development for Bitcoin Cash. First, it confirms that Bitcoin Cash, as a relevant crypto asset, is likely not a security, distinguishing it from the ongoing debate about whether cryptocurrencies are securities, thereby reassuring native and mainstream investors.
On the other hand, the EDX market is a great exposure opportunity for the asset, especially when compared to other assets, as there are currently only three assets that can share the exposure from this high-profile institution. But what is the EDX market and why is it so important?
What is the EDX Market?
EDX Markets is a novel cryptocurrency trading platform that has been backed by well-known mainstream financial institutions, including Fidelity Digital Assets and Citadel Securities. EDX Markets hopes to bring the crypto space into traditional finance (TradFi) and is focused on developing a trading platform that complies with regulatory requirements.
By doing so, EDX Markets claims to protect users from the consequences of investing in securities and other asset classes that are not compliant with regulations. Investors in the crypto space often encounter situations where assets are entangled with regulatory issues. A common example is Ripple’s ongoing dispute with the U.S. Securities and Exchange Commission (SEC).
In recent developments, exchanges such as Kraken, Binance, and Coinbase have also become the focus of the regulator, while Ripple continues its litigation with the organization. Kraken reportedly paid a $30 million fine for its involvement in crypto staking. The regulator’s filings with Coinbase and Binance cited trading in assets that would be classified as securities as one of the main reasons for cracking down on these institutions.
Due to the complexity of these regulatory issues, investors are often caught in a dilemma between taking a risk in the crypto space or staying away, as it is difficult to distinguish between securities and non-securities.
In a 2018 video, current SEC Chairman Gary Gensler was quoted as saying:
“Over 70% of the crypto market is Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Why do I mention these four? They are not securities.”
These four cryptocurrencies are also currently traded on EDX Markets.
With traditional big names like Blackrock planning to launch spot exchange-traded funds (ETFs) for Bitcoin and other crypto assets, a trusted cryptocurrency exchange becomes essential. If EDX successfully develops a regulatory compliant platform for these ETFs to conduct spot trading, it will benefit from it. It is this situation that has triggered the huge boom that EDX Markets (and the first assets listed on the platform) have enjoyed.
If EDX Markets continues with their current compliance, they will likely proceed with the asset listing process very cautiously and the number of assets listed on the platform may be limited.
But this may not be a big problem, as the top four assets listed on the platform already account for 67% of the total cryptocurrency market cap. For Bitcoin Cash, it is uncertain whether its price development will continue along its current trajectory. Therefore, always do your own research before deciding to invest in any asset.
Final Thoughts
With traditional big names like Blackrock planning to launch spot exchange-traded funds (ETFs) for Bitcoin and other crypto assets, a trusted cryptocurrency exchange becomes essential. If EDX successfully develops a regulatory compliant platform for these ETFs to trade spot, it will benefit from it. It is this scenario that has triggered the huge boom that EDX Markets (and the first assets listed on the platform) have enjoyed.
If EDX Markets continues with its current compliance, they may proceed with the listing process of assets very carefully and the number of assets listed on the platform may be limited. But this may not be a big problem as the top four assets already listed on the platform already account for 67% of the total cryptocurrency market cap.
For Bitcoin Cash, it is uncertain whether its price development will continue along its current trajectory. Therefore, always do your own research before deciding to invest in any asset.