Cryptocurrency

Is Bitcoin similar to Bitcoin Cash? History and Facts about Bitcoin Cash

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Snapshot:

  • Understanding what is Bitcoin Cash and how it came to being?
  • A sneak-peek into Bitcoin and how Bitcoin Cash was born.
  • How BCH is doing in the crypto space today and what the future holds.

Bitcoin and Bitcoin cash is not the same thing. Bitcoin cash is the solution to the scalability problem that Bitcoin raised among retail investors and traders. This information might sound a little too confusing at first. Most probably a lot of questions are popping up too!

  • What is Bitcoin Cash?
  • How many Bitcoin cryptocurrencies are there?
  • Does having ‘Bitcoin’ within their names make them similar?
  • Are they all limited in availability?
  • Does a rise in the value of BTC equivalent to a rise in the value of BCH?

Bitcoin, which came into being in 2009, grew scalability problems as the transaction rates increased. The cryptocurrency blocks had a limited 1MB space for transactions to take place. This caused an increase in delays for the transaction to process. Along with that, the investors had to also incur increasing transaction fees. All of these hurdles within the Bitcoin ecosystem asked for a solution, thus came Bitcoin Cash.  Read along to find more on BCH and how it came into being.

What is Bitcoin Cash (BCH)?

Bitcoin cash is the cryptocurrency created due to the hard fork of Bitcoin, that took place in 2017. The main outcome of the hard fork was the increased size of blocks; which allowed more transactions to take place within a shorter period of time, improving the scalability. 

Despite the differences in their names and ticker symbols, Bitcoin and Bitcoin Cash have several technical similarities. Both of the coins use the same consensus mechanism (PoW) and both of them have a limited supply of  21 million each. The coin (BCH) itself underwent a fork in November 2018 and got divided into Bitcoin Cash ABC and Bitcoin Cash SV (Satoshi’s Vision). 

Note:  Bitcoin Cash ABC is referred to as Bitcoin Cash.

Why is there more than 1 version of Bitcoin?

The world was introduced to Bitcoin as a free source network, which is open to all. You could see the source codes and modify them. But being a decentralized system, to make any changes, you cannot just do it on your own. The network has to agree to your suggestions to give it a go. As we know it, that does not always happen as we want. 

As Bitcoin was facing scalability issues, some of the miners proposed increasing the block size of Bitcoin. While one set of miners were agreeing to it, the other set of miners wanted the transactions speed and the scalability options as it was. This disagreement led to the hard fork and Bitcoin’s blockchain got separated into Bitcoin (BTC) and Bitcoin Cash (BCH). 

A sneak-peek into Bitcoin Cash

Over the years Bitcoin has garnered more and more popularity. Along with Bitcoin growing into a phenomenon, came the scalability issue. As more and more transactions started being made, the problem started becoming apparent. 

As more people started to use the network, the limited size of the blocks within the blockchain started to become full. This lead to less stable transactions because it took a lot more time and investors had to incur much higher transaction fees, which weakened the ease of use of the entire system. This raised a disagreement within the Bitcoin community, who were conflicted about the scaling issue. 

The developers came up with two options: one was to increase the block size to incorporate more transaction possibilities and two to exclude certain parts of the transactions to include more data into the blockchain. Eventually, the forking happened and we now have BTC and BCH

What is Forking?

Forking, in simple words, implies divergence. This divergence can be temporary or permanent. It happens when a blockchain diverges or splits into a new branch as a result of a change in consensus or software protocols, for example, when a set of miners believe they can enhance the capabilities of the current blockchain. Forks occur on a specific block and every block following that block obeys the new rules implemented by the nodes. Forking means when the laws or the rules governing the blockchain changes. These changes are done by the nodes to increase scalability, speed, or any other quality of blockchain to pass it through an upgrade in its software or implementation. 

What is Hard Fork?

Under Hard Forks, all the previous rules and structure goes invalid. All the users, nodes, and blocks have to comply and upgrade according to the new rules of the Blockchain. If there are two users on a different side of hard forks, they can’t interact with each other. Usually, if there is any change required in the structure of the block, e.g. the hashing algorithm, a hard fork is required. If cryptocurrencies are operating in the blockchain, each coin will split or mirrored.

Differences between BTC and BCH

Bitcoin (BTC) Bitcoin Cash (BCH)
BTC was founded by Satoshi Nakamoto. Bitcoin cash was founded by Bitcoin miners.
It is the digital equivalent of Gold. It is the digital equivalent of cash.
Permanently stuck at 3 transactions per second. Can process more than 100 transactions per second.
The transaction fee differs from $5 – $50. The transaction fee is consistently below $0.01.
Bitcoin blocks are limited to 1 MB. Bitcoin Cash blocks have space up to 32 MB. 

BCH News today

Bitcoin cash, therefore, is not Bitcoin. But one thing remains certain, the original genius, excitement, and the advanced idea of digital cash for the world remains alive with Bitcoin Cash. Tough certain concerns remain within the BCH ecosystem. The most important one is regarding the block size. As there is a significant rise in competition, the major reason for the hard fork is yet to yield some results; enabling more transactions within each block.  

Why was Bitcoin SV created?

Bitcoin Cash was the result of the debate regarding scalability, transaction processing, and blocks. And in November 2018, the Bitcoin Cash network experienced its hard fork, which resulted in the creation of yet another bitcoin derivation called Bitcoin SV (Satoshi’s Vision). Bitcoin SV was created to stay true to the original vision for bitcoin that Satoshi Nakamoto had described in the bitcoin white paper. The BSV vision also included possibilities for modifications to facilitate scalability and more accelerated transactions. 

What is the future of BCH?

BCH has an added advantage over Bitcoin as BCH has faster transfer times as you don’t have to wait the 10 minutes it takes to verify a Bitcoin transaction. BCH provides higher scalability as compared to Bitcoin as the blockchain can handle more transaction per seconds as compared to BTC, a case for a strong future potential. As BitPay started supporting BCH, BCH is on the right track in becoming more acceptable in the world of online payments. BCH block is 8 times bigger than a BTC block, allowing for faster, cheaper and more scalable transactions and is thus being widely adopted by the industry. 

The development team is strongly committed to the original vision of an open, permissionless payment network, as well as the fundamental characteristics of supply, emissions, mining algorithm and low fees that distinguish BCH from its rivals. Many developers are working on BCH for faster transactions and believe that they can vastly increase the chained-transaction limit in 2021. Such a development could be highly beneficial for its growth and could be a game-changing breakthrough for gaming and gambling dApps. In addition to wallet support, the Bitcoin Cash community is also testing a beta Telegram tipping bot – Tipmebchbot that could accelerate its growth. 

How has the response been so far, on BCH?

Launched in 2017 through a Bitcoin hard fork, BCH has emerged as one of the top altcoins on the market. It is the 11th largest cryptocurrency with a market capitalization of $9.9billion.  As per the chart below, BCH price grew from $310 to $ 3656 between 1st August 2017 to 20th December 2017, providing investor’s return of more than 1000% in less than 6 months. 

Source: CoinMarketCap.

Such massive returns compelled major exchanges to list BCH on their exchanges which further boosted their trading volume. The mining profitability of BCH also attracted more miners to the blockchain. Several failed attempts to fork Bitcoin in Nov 2017 made investors believe that Bitcoin Cash was one of the worthiest Bitcoin alternatives. 

However, BCH has been often criticized for being centralized in terms of mining, as opposed to other decentralized cryptocurrencies. BCH faces tough competition from an emerging rising number of cryptocurrency projects such as Litecoin, as it offers 4 times faster transaction speeds when compared to Bitcoin. Other blockchains which also offer the privacy of transactions include Monero and Dash providing competition to BCH.

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