What is Bitcoin Cash?
There are a number of currencies in this world used for trading amenities. Rupee, Dollar, Pound Euro, and Yen are some of them. These are printed currencies and coins and you might be having one of these in your wallet. But bitcoin is a currency you can not touch, you can not see but you can efficiently use it to trade amenities. It is an electronically stored currency. It can be stored in your mobiles, computers, or any storage media as a virtual currency. Bitcoin is an innovative decentralized digital payment system. It is an example of a cryptocurrency and the next big thing in finance.
What is Bitcoin Cash?
- Bitcoin Cash is a type of fork of Bitcoin which has lower transaction costs than Bitcoin. Bitcoin Cash originated in 2017 and is split into two different cryptos – Bitcoin Cash and Bitcoin SV.
- The main purpose of creating Bitcoin Cash was to make a block of larger size in the Blockchain of 8 MB to 32 MB for acquiring more transaction records into a single block than the original Bitcoin.
- Later in November 2018, Bitcoin Cash went to a fork itself creating- Bitcoin Cash ABC and Bitcoin SV.
- Although Bitcoin Cash is an improved version of the original Bitcoin, both of them share common many technical properties. Their supply volume is capped at 21 Million Bitcoins. Both of them use the Proof-of-Work mechanism for tracking to mine new Bitcoins and generate transactions.
History of Bitcoin Cash
- In 2010, Bitcoin has started its Blockchain which was highly malicious and vulnerable to attacks by hackers. At that time, its transaction fees were also very less in cents and it could store transaction records in blocks up to 100 KB only.
- Also, the time to mine new Bitcoins was quite large as compared to other cryptocurrencies 10 minutes. So, the original Bitcoin was lagging in every department.
- This limitation of Block size and mining time helped to somehow enhance the security of its Blockchain.
- But, by 2015, the average block size of its blockchain grew up to 600 K due to which Miners tend to maximize their profits by charging more transaction fees, thereby decreasing the efficiency of the system.
- Due to so many problems, folks decided to create a new fork in Bitcoin in August 2017 – Bitcoin Cash. Bitcoin Cash made its debut at an amazing price of $900.
- Later in November 2018, Bitcoin Cash had its two forks – Bitcoin SV and Bitcoin Cash ABC.
Bitcoin Cash Core Features
The most important features of Bitcoin Cash are:
- Decentralized: It is completely decentralized and works with the help of distributed ledger Blockchain system. There is no third party involved in the transaction process.
- Secure and Transparent: All the transactions are carried out securely and transparently. All the transaction records are available for everyone to see and hence, it eliminates the possibility of financial fraud and attacks.
- Protocols-based: All the transactions follow a certain set of protocols that are set up by the Blockchain. No one can manipulate the transaction processes.
- Fixed supply: Similar to the original Bitcoin, the maximum supply volume of Bitcoin Cash is capped at 21 Million Bitcoins.
- Low transaction fees: Bitcoin Cash favors low transaction fees irrespective of the locations around the world.
- Proof-of-Work Consensus: Similar to Bitcoin, it also uses a Proof-of-Work mechanism for processing the transactions, by adding new blocks to the Blockchain. It also helps to enhance the security of the Blockchain.
- Immutable: Once the transaction records are made, no one can change them after the transaction is processed from the Blockchain.
- Pseudonymous: Bitcoin cash is free to use by anyone as the transactions are not tied to identities.
- Distributed: The blockchain public ledger is stored voluntarily by nodes on the network. This helps to ensure the longevity of information.
- Low fees: Bitcoin cash enables fast, reliable, safe, and affordable transactions regardless of location. This makes it an effective alternative to payment networks like MasterCard, Visa, etc.
What is Bitcoin Cash Used For?
- One can use Bitcoin Cash for storing long-term values. In the decentralized network, the members tend to store the transaction records inside the blocks since the 21 Million supply volume remains constant throughout.
- Bitcoin Cash is a better way of transfer of currency than normal Cash or even Credit Cards.
- They charge about a penny of transaction fees and we don’t require an asset even for it. The process takes less than seconds and it can be used for even cross-border trade.
- Unlike other national currencies, it provides security during the transaction along with censorship, devaluation due to inflation, and confiscation of currencies.
How Bitcoin Cash is Different From Bitcoin?
The original Bitcoin is different from Bitcoin Cash in the following ways:
- Due to the slow speed of transactions in Bitcoin, Bitcoin Cash was created in December 2017 by the hard fork technique to increase the number of transactions that can be initiated per second.
- The main reason behind this movement was to enhance the future of cryptocurrency and enhance its scalability. Therefore, Bitcoin Cash (BCH) is a completely new cryptocurrency and has a whole different blockchain.
- By using the Hard Fork Technique, Bitcoin Cash had an increased block size of about 8 MB – 32 MB to provide faster transaction rates per second and provide transaction details within each block.
- Bitcoin Cash is a peer-to-peer blockchain cryptocurrency that is completely decentralized and requires no third party to initiate it.
- Bitcoin Cash has a completely different hash algorithm which finally eliminates the possibility of transaction failures. Due to the Fork technique, the blockchains exist simultaneously without any disruption.
- Bitcoin Cash on average can process about 116 transactions per second while Bitcoin can only process only 7 transactions per second due to its smaller block size.
|Maximum block size||The Block size is 1 MB.||The Block size is 32 MB.|
|Smart contract support||Developers can only create smart contracts that allow only basic transactions.||Developers can use smart contract languages like Cashscript to enable more complex functions.|
|Token issuance||No new bitcoins will be released after the 21-million coin limit is reached.||Developers can issue new tokens that can live on the Bitcoin Cash blockchain.|
|Non-fungible token||Bitcoin cannot be used to buy NFT.||The Simple Ledger Protocol also supports NFT (Non-Fungible Token).|
|No Replace-by-fee||This allows transactions in Bitcoin to be canceled or double-spent while unconfirmed.||The lack of this feature in Bitcoin Cash makes it more secure as unconfirmed transactions are irreversible.|
|Schnorr Signature||Bitcoin’s current signature scheme is ECDSA, but in the near future, it will adopt the Schnorr signature scheme.||Bitcoin Cash protocol transactions adopt Schnorr signatures and consume less space, making them less expensive.|
|Difficulty adjustment algorithm||The bitcoin difficulty algorithm is programmed to keep the entire system stable by maintaining a 10-minute duration for finding new blocks.||Bitcoin Cash uses a difficulty adjustment algorithm called aserti3-2d. This helps to ensure that the new blocks are generated at a stable rate even if there is high price volatility|
How to Buy Bitcoin Cash?
Bitcoin Cash is widely available for purchase on cryptocurrency platforms like Coinbase, Kraken.
- One can set up an account, deposit cash and use it to buy cryptocurrencies like Bitcoin Cash.
- One can also buy Bitcoin Cash on platforms like PayPal.
- Once Bitcoin Cash is purchased then exchange them for other coins and use them for transactions.
Advantages of Bitcoin Cash
Below are some of the advantages of using Bitcoin Cash:
- Less expensive transactions: Bitcoin cash can be a viable payment option as the transaction cost is less than one penny and the network can process over 100 transactions per second.
- More scalable: Bitcoin’s larger blocks allow for increased scalability, lower fees for the user, and make it more transactable.
- Decentralized money: Bitcoin Cash offers a currency-like system with more decentralization.
- Accessibility: Bitcoin cash can be purchased through major exchanges. It is more affordable than trying to buy a single bitcoin.
Disadvantages of Bitcoin Cash
Below are some of the disadvantages of bitcoin cash:
- Low rate of adoption: There is still less population of people that are using Bitcoin Cash than Bitcoin. It may struggle to grow as an accepted medium of exchange.
- Environmental impact: Bitcoin cash still uses the PoW consensus algorithm, even though it uses less electricity than Bitcoin but still comes at a high environmental cost.
- Weaker security: Bitcoin Cash processes transactions more quickly and much lower cost. This makes the system less secure.
Challenges To Bitcoin Cash
- In 2017, the supporters of BCH were divided into two halves. The Bitcoin Cash supporters wanted to use it as a medium of exchange in goods and commerce, while others just wanted it for value-storing purposes.
- So, in 2018, it split to form another crypto – Bitcoin SV.
- The split originated as a clash between the two Bitcoin cash camps.
- The first party was supported by Roger Ver and Jihan Wu of Bitmain, who wanted to maintain its block size to 32 MB. The second party was supported by Steven Wright and Calvin Ayre who formed Bitcoin SV, which had a block size of 128 MB.
Bitcoin Cash – Ease of Use
- Bitcoin Cash (BCH) has the lowest transaction fee at about $0.28.
- The transaction fees apply when we transfer the cryptocurrency to someone other’s address. Due to this reason, Bitcoin Cash is the most popular cryptocurrency.
- The reason for its low transaction costs is that the block size can store vast transaction details due to its large size.
- Also, Bitcoin Cash (BCH) is capable of 116 transactions per second while the original Bitcoin can process only 7 transactions per second. Due to the high speed of BCH, it is more popular among people for faster, more secure, and transparent transactions in our daily lives.