Introduction

When politics happens on blockchains, hard forks can instigate new projects. Bitcoin Cash (BCH) was created by a group of developers, investors, entrepreneurs, and miners who were dissatisfied with Bitcoin's development plans. Created in August 2017, Bitcoin Cash is a peer-to-peer electronic cash system that focuses on greater scalability and low transaction fees. The project is also known as Bitcoin ABC (adjustable block size limit).


Blockchain Scalability

In 2017, Bitcoin suffered from long transaction confirmation times and increasing transaction fees, which detracted from its initial premise of being almost instant payments with very low fees. Prior to the creation of Bitcoin Cash, there was strong debate in the Bitcoin community about the implications of increasing the block size limit.

Since Bitcoin is decentralized, the proposed changes to the protocol require widespread agreement. Therefore, all nodes in the network must reach a consensus when making changes and updates to the Bitcoin software.

Bitcoin Cash was presented as a more scalable cryptocurrency, with reduced transaction fees and confirmation times. The BCH community argues that the project is more in line with Satoshi Nakamoto's proposal for a peer-to-peer electronic currency. Mainly because the altcoin offers a faster and cheaper payment system that could be more suitable than Bitcoin for everyday use.

Shortly 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). Such an update was created in 2015 by Bitcoin developer Pieter Wuille. It was implemented 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 believed that SegWit was an inferior alternative to increasing the block size limit. The Bitcoin Cash fork of Bitcoin was supported by some notable members of the blockchain industry, including Jihan Wu (co-founder of Bitmain) and Roger Ver (CEO of Bitcoin.com).


How does BCH work?

The Bitcoin Cash fork was made directly from the original Bitcoin source code, so there are many similarities. Both networks run a Proof of Work consensus mechanism and are open for anyone to join and contribute. Additionally, any address that held BTC before the fork received an equal amount of BCH after the fork (same address chain, but on different networks).

Like Bitcoin, BCH also has a target block time of 10 minutes and a maximum supply of 21 million coins. The BCH issuance 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 more transactions to be included in each block. The block size limit was initially increased from 1 MB to 8 MB and then increased again in 2018 to 32 MB.

However, in practice, the average block size of BCH has only exceeded 1MB a few times since 2017. We can see a comparison between the average block size of BTC and BCH on BitInfoCharts.com.


Both Bitcoin and Bitcoin Cash adjust their mining difficulty through the so-called difficulty adjustment algorithm (DAA). However, Bitcoin adjusts the difficulty every 2,016 blocks, while Bitcoin Cash's mining difficulty adjusts after each block.

In the past, Bitcoin Cash also implemented an emergency difficulty adjustment algorithm (EDA) to lower mining difficulty and incentivize miners to join the network. However, the algorithm was later removed due to instabilities. 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 alternative algorithm that changes the way digital signatures are used. Schnorr's signature scheme is simple, secure, and allows for more privacy and scalability than the ECDSA scheme currently used by Bitcoin.


BCH Key Features

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

  • Supply is limited to 21 million.

  • Like the Bitcoin fork, 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 the spirit of BCH aligns more closely with Satoshi's original plans.

  • The BCH mining difficulty is adjusted after each block through the difficulty adjustment algorithm (DAA).

  • BCH did not implement SegWit.

  • BCH implemented Schnorr Signatures in 2019.

  • Integrated smart contract development as a later update.


Daily payments

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

While there are stores and merchants that accept Bitcoin Cash payments, it does not appear to be a widespread practice yet. As of June 2021, Bitcoin.com Map points out thousands of stores that accept BCH, but a large portion of them currently do not mention or provide such a payment option, suggesting that the map is inaccurate or outdated.


How to store Bitcoin Cash (BCH)

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

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

It is important to note that BTC and BCH run on different blockchain networks. You cannot send Bitcoin to a Bitcoin Cash wallet address or 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 of 2 GB.

The contentious hard fork was supported by Craig S. Wright and Calvin Ayre and the event became known as The Hash War. However, BSV was unable to gain widespread support from the crypto community. The lack of support and adoption is likely related to Craig S. Wright's false claims about being Bitcoin inventor Satoshi Nakamoto.


In conclusion

Among the thousands of cryptocurrency projects that have forked Bitcoin, BCH is one that managed to remain relatively relevant. While it may not have experienced the same heights and notoriety as Bitcoin, you can still find stores that accept BCH as payment, particularly due to its lower transaction fees and faster confirmation times.

Still, larger block sizes also raise concerns about network security and as such, Bitcoin is still considered the most secure blockchain network. Additionally, Bitcoin is still the most popular cryptocurrency, meaning BCH has lower liquidity and market adoption than BTC.