Introduce

When politics happen to blockchains, hard forks can spur new projects. Bitcoin Cash (BCH) was created by a group of developers, investors, entrepreneurs and miners who were unhappy with Bitcoin's development plans. Created in August 2017, Bitcoin Cash is a peer-to-peer cryptocurrency system, designed to focus on increasing scalability and keeping transaction fees low. This project is also known as Bitcoin ABC (Adjustable Blocksize Cap).


Blockchain Scalability

In 2017, Bitcoin suffered from long transaction confirmation times and increasing transaction fees, undermining the initial premise of near-instant payments, with very low fees. Before Bitcoin Cash was created, there was a fierce debate in the Bitcoin community about the impact of increasing the block size limit.

Because Bitcoin is decentralized, proposed changes to the protocol require widespread consensus. Therefore, all network nodes need to reach consensus, before making changes and updates to the Bitcoin software.

Bitcoin Cash was introduced as a more scalable cryptocurrency, with reduced transaction fees and confirmation times. The BCH community argues that this project will be closer to Satoshi Nakamoto's proposals for a peer-to-peer cryptocurrency. Mainly because this altcoin offers a faster and cheaper payment system that may be more suitable for everyday use than Bitcoin.

Immediately after the Bitcoin Cash fork, the original Bitcoin blockchain underwent a long-awaited soft fork upgrade, to implement a technology known as SegWit (Segregated Witness). One such upgrade was created in 2015, by Bitcoin developer Pieter Wuille. It is deployed on the Bitcoin network to address network congestion and other scalability issues.

The SegWit soft fork was planned before the BCH hard fork. But Bitcoin Cash proponents believe that SegWit is an ineffective alternative to increasing the block size limit. Bitcoin Cash has been supported forking from Bitcoin by several notable members of the blockchain industry, including Jihan Wu (co-founder of Bitmain) and Roger Ver (CEO of Bitcoin.com).


How does BCH work?

Bitcoin Cash was forked directly from the original Bitcoin source code, so it has many similarities to Bitcoin. Both networks run a Proof of Work consensus mechanism and are open to anyone to participate and contribute. Additionally, any addresses that had BTC before the fork received an equivalent amount of BCH after the fork (same chain of addresses, but on different networks).

Similar to Bitcoin, BCH also has a target block time of 10 minutes and a maximum supply of 21 million coins. BCH's emission rate halves every 210,000 blocks (approximately every four years). The current block reward is 6.25 BCH per block.

Unlike Bitcoin, Bitcoin Cash has an increased block size limit, allowing for more transactions per block. The block size limit was initially increased from 1 MB to 8 MB and then further raised to 32 MB in 2018.

However, in reality, since 2017, BCH's average block size has only surpassed 1 MB a few times. We can see a comparison between the average block sizes of BTC and BCH at BitInfoCharts.com.


Both Bitcoin and Bitcoin Cash adjust mining difficulty through a difficulty adjustment algorithm (DAA). However, Bitcoin adjusts its difficulty every 2016 blocks, while Bitcoin Cash's mining difficulty adjusts every block.

Previously, Bitcoin Cash also implemented an emergency difficulty adjustment (EDA) algorithm to reduce mining difficulty and incentivize miners to join the network. However, this algorithm was later abandoned due to its unstable performance. The implementation of EDA is one of the reasons why the BCH blockchain is thousands of blocks ahead of Bitcoin.

In 2019, Bitcoin Cash implemented a technology called Schnorr Signatures, an algorithm that replaces the use of electronic signatures. The Schnorr Signatures scheme is simple and secure, allowing for more privacy and scalability at the same time than the ECDSA scheme currently used by Bitcoin.


Other key features of BCH

  • The BCH source code is based on the original Bitcoin protocol.

  • Supply is limited to 21 million.

  • As a fork of Bitcoin, BCH also uses the Proof of Work (PoW) consensus mechanism to issue new coins.

  • Increased block size from 1 MB to 32 MB.

  • The community argues that BCH's characteristics are more consistent with Satoshi's original plan.

  • BCH mining difficulty is adjusted after each block via a difficulty adjustment algorithm (DAA).

  • BCH has not implemented SegWit.

  • BCH launched Schnorr Signatures in 2019.

  • Smart contract development is built into a future update.


Daily payment

The Bitcoin Cash community asserts that BCH is designed to be used as everyday money. You can use it to send and receive money quickly to anyone with a BCH wallet, and it's suitable for both individuals and businesses. With fast transaction times and low fees, using BCH for everyday payments may be more suitable than Bitcoin, especially when making small payments.

While there are stores and merchants that accept Bitcoin Cash payments, it is not yet widely available. As of June 2021, Bitcoin.com's map flags thousands of stores that accept BCH, but the majority of them currently do not mention or offer payment options as such. This indicates that the map is inaccurate or outdated.


How to Store Bitcoin Cash (BCH)

We recommend using Trust Wallet. There are hundreds of other cryptocurrency wallets that support BCH, such as Ledger, Trezor, and Cobo Vault hardware wallets. You can also store BCH on a desktop wallet like Electrum Cash.

Some Bitcoin Cash proponents recommend using Bitcoin.com or Coinomi wallets to store BCH. Both software wallets are available on Windows, Mac, Linux, Android, and iOS.

Of particular note is that BTC and BCH run on separate blockchain networks. So you cannot send Bitcoin to a Bitcoin Cash wallet address and vice versa.


Bitcoin SV

In 2018, part of the Bitcoin Cash community forked the protocol to create another cryptocurrency called Bitcoin Satoshi Vision (also known as Bitcoin SV or BSV), which has an even larger block size limit. larger, at 2 GB.

This controversial hard fork is supported by Craig S. Wright and Calvin Ayre, and the event is known as Hash War. However, BSV has not received widespread support from the cryptocurrency community. This lack of support and acceptance is believed to be related to Craig S. Wright's claims of claiming to be the inventor of Bitcoin, aka Satoshi Nakamoto.


summary

Among the thousands of cryptocurrency projects that forked from Bitcoin, BCH is the one that has managed to remain relatively relevant. Although this project may not be as well known both positively and negatively as Bitcoin, you can find stores that accept payments in BCH, because of its lower transaction fees and fast confirmation times. than.

However, larger block sizes also bring many cybersecurity concerns and therefore, Bitcoin is still considered the most secure blockchain network. Additionally, Bitcoin still maintains its position as the most popular cryptocurrency. That means BCH has lower market liquidity and adoption than BTC.