Bitcoin Cash, the Hardfork of BTC
The genesis of Bitcoin Cash originates from a divergence of views. According to the project description provided by Coinmarketrate.com , it arose as a result of the hard fork of Bitcoin in 2017. As it should be in such circumstances, each Bitcoin holder received an equivalent amount of BCH.
What are the reasons for the disagreements that led to the hard fork? It’s the same as always: part of the Bitcoin community voted for a second-tier solution, the Lightning Network, and the implementation of the SegWit update in August 2017 to solve Bitcoin’s scalability issues that were a victim of its success. Segwit optimizes the space between blocks so that more transactions can be included in them by moving the signature data to a separate database. Bitcoin Cash supporters, on the other hand, preferred a direct increase in block size to 8 MB at that time, and 32 MB from May 15, 2018, compared to 1 MB for the BTC network.
Bitcoin and Bitcoin Cash have the same transaction history before August 1, 2017 during the hard fork. Currently, these two cryptocurrencies operate on two different and completely separate blockchains. The maximum Bitcoin Cash offer is limited to 21 million BCH, inspired by its illustrious elder.
In the early days of its existence, Bitcoin Cash was supported mainly by mining pools, such as ViaBTC, which mined the first block of BCH, as well as by ASIC manufacturer, Bitmain, which controls Antpool and BTC.com , the two largest mining pools in terms of hashing power.
The splinter team of the Bitcoin Cash project
The developers of Bitcoin XT and Bitcoin Unlimited, as well as the lead developer of Bitcoin Core, Gavin Andersen, also supported the project.
Quirky Roger Ver (sometimes known as “Bitcoin Jesus”), CEO of the company Bitcoin.com , is now the most prominent figure in Bitcoin Cash. Bitcoin.com — this is an information site, as well as a wallet that supports BTC and BCH, a blockchain explorer and a mining pool. The resource regularly promotes Bitcoin Cash by sponsoring events and implementing various projects.
What is the purpose of creating Bitcoin Cash
Like Bitcoin, Bitcoin Cash is a P2P transaction system based on blockchain, and completely decentralized. Unlike the traditional monetary and financial system, transactions can be carried out without the intervention of a trusted third party.
Thus, Bitcoin Cash pursues the same goals as Bitcoin, while trying to solve the scalability problems of the cryptocurrency created by Satoshi Nakamoto, in particular, without the need to create a second level. Bitcoin Cash combines more transactions into one block, which speeds up processing and reduces transaction fees compared to Bitcoin.
Bitcoin Cash mining: algorithm, block reward, halving
Like Bitcoin, Bitcoin Cash uses Proof-of-Work (POW) as a consensus mechanism. It uses the SHA-256 hash function. Miners receive a block reward in BCH, which is currently 6.25 BCH. This award is divided by 2 at halving, which occurs every 4 years. As you can see, everything is like it is in BTC.
The Bitcoin Cash blockchain works on a different principle than Bitcoin. The block is created on average every 10 minutes. Bitcoin Cash has been using the Bitcoin difficulty adjustment algorithm (DAA) since the hard fork, and has also added emergency difficulty adjustment (EDA) to automatically regulate the difficulty of mining on the network. EDA reduces the difficulty by 20% if the interval between mining 6 consecutive blocks exceeds 12 hours.
However, EDA adjustments resulted in thousands of blocks being mined earlier than Bitcoin. Then Bitcoin Cash cancelled DAE to solve this instability problem. He also made changes to the DAA, which came into effect on November 13, 2017. The updated DAA corrects the difficulty of mining after each block, and not every 2 weeks, as during the hard fork. The algorithm estimates the average difficulty level based on a moving average of 144 blocks.
How Bitcoin Cash Price Develops
Bitcoin Cash started its journey with a price of $ 900. It reached an ATH above $4,000 in December 2017. Since then, its price has plummeted. At the time of writing (November 2021), BCH is trading at around $622.
Despite the volatile price, Bitcoin Cash is among the top 30 cryptocurrencies by market capitalization. According to the data Coinmarketrate.com, the market capitalization of Bitcoin Cash currently exceeds $11.7 billion (data as of August 26, 2021).
Bitcoin Cash (BCH) Trading
BCH can be bought and sold on major cryptocurrency exchanges such as Kraken, Coinhouse, Binance, etc.
BCH owners can store their funds in hot wallets such as those offered by exchanges, but this method has serious security flaws.
Advantages of Bitcoin Cash
The benefits of Bitcoin Cash are similar to the benefits of Bitcoin, with some bonuses:
- Performs peer-to-peer transactions 24 hours a day, faster and with lower fees than Bitcoin: the commission is about 1 Satoshi per byte, or 0.00000001 BCH per byte, confirmation in less than 10 minutes. In 2018, the average transaction size of 265 bytes costs approximately 265 Satoshi, regardless of the amount of BCH that needs to be transferred.
- Bitcoin’s flexibility issues, slowness, and increased transaction fees tend to have a positive effect on the price of BCH.
- Bitcoin Cash has an algorithm for adjusting the difficulty of mining, which on paper is more accurate than the Bitcoin algorithm.
- The growing shortage of BCH with limited supply and periodic cuts theoretically guarantees that its value will increase over time.
- Bitcoin Cash supports the execution of smart contracts, which is an important factor for taking advantage of the growth of decentralized finance.
- Bitcoin Cash has a coin mixing protocol that allows you to ensure the confidentiality of transactions.
Bitcoin Cash drawbacks
BCH has 2 main drawbacks that should be considered before investing in it:
- Competition with Bitcoin, which may limit its popularity, plus the growth of other altcoins.
- BCH has a bad reputation among some representatives of the crypto sphere. Indeed, many crypto enthusiasts look down on this project because it looks to them like cryptographic plagiarism. Roger Ver’s personality causes a lot of controversy.
- Low level of acceptance of Bitcoin Cash as a means of payment in business.
Bitcoin Cash has the same mission as Bitcoin originally: to create a decentralized system of P2P transactions. It still largely follows this logic, unlike Bitcoin, which is now seen more as a store of value due to its relatively high price.
Therefore, Bitcoin Cash can potentially be positioned as a blockchain competing directly with the second level of Bitcoin. It has special advantages over Bitcoin – transaction speed and lower fees, and at the same time adopts the main advantages of Bitcoin, including limited supply, halving the reward and regulating the complexity of mining to make BCH, like BTC, a deflationary currency.
However, Bitcoin Cash suffers from insufficient acceptance, compared to Bitcoin, which also overshadows it.
The crypto asset follows in the footsteps of its older brother, but has evolved over time, receiving improvements that allow the project to better fulfill its mission than Bitcoin, as a decentralized, P2P operating payment system.
The hard fork that gave rise to the project has been challenged by many members of the community who still perceive this cryptocurrency as illegitimate. Bitcoin Cash has inherited all the best from Bitcoin, and has also created distinctive benefits for its users.
He was also able to create distinctive advantages with features that Bitcoin does not have. This differentiation, which has been growing over the years, allows BCH to continue to develop in the list of major cryptocurrencies.