Bitcoin Cash origins
Bitcoin’s block size was initially set to 1 MB limit to reduce the risk of spam and DDoS-attacks. But as more users started to join the network, it encountered issues with the high volume of transactions. This lead to transaction confirmation times of hours, even days, which hindered the blockchain’s activity.
Bitcoin Cash resulted from a conflicted which arose within the Bitcoin community regarding the network’s scalability. After a lot of debate, two camps were formed: one militating for increasing the block size of the blockchain, while the other wanted to implement a change in the existing blocks.
This split led to the creation of Bitcoin Cash, which on 1 August 2017 was traded at around $240, while Bitcoin had a price of $2,700.
All Bitcoin holders on the day of the fork automatically received Bitcoin Cash a ratio of 1:1.
How is Bitcoin Cash different from Bitcoin?
The main difference between Bitcoin Cash and its parent blockchain is its block size. By increasing the block size from 1MB up to 8MB, this allows one block to have a greater processing capacity of transactions in the BCH blockchain.
With a larger processing capacity, transactions can be confirmed at much faster rates and incur lower fees. BCH also lack Segregated Witness (SegWit) integration, which is a protocol for block space management which removes certain parts of the transaction.
The two currencies also feature different mining difficulty levels. Bitcoin Cash’s difficulty depends on the number of miners which contribute to the network.
Bitcoin Cash Features
Bitcoin Cash presents some important core features:
The Bitcoin blockchain faced many criticisms for having a majority of its supply controlled by a centralized group of core developers, manipulating the market to meet their own private interests. Centralization is in contradiction with the philosophy on which Bitcoin Core was originally built. Bitcoin Cash states that it promotes “decentralized development” as a feature and that it intends on staying true to the original Nakamoto concept.
Bitcoin Cash has made its block size limit permissive to further adjustments, the default value being set at 8 MB. There is on-going research done by developers regarding major future increases in scalability. BCH developers claim that they have come with a solution to the scalability issue with their on-chain.
Emergency Difficulty Adjustment (EDA)
BitcoinCash.org states that EDA is a reactive proof-of-work difficulty adjustment protocol which “allows miners to migrate from the legacy Bitcoin chain as desired, while providing protection against hashrate fluctuations.”
Faster transaction times and Lower Fees
Bitcoin Cash’s technology allows for transactions to be completed in a matter of seconds and confirmed within minutes, and it also features lower transaction fees.
New Transaction Signatures
The transactions made on the Bitcoin Cash blockchain are signed with a new SigHash type which ensures replay protection and enhances the security of hardware wallets. This type of signature also solves the issue of having to deal with quadratic hashing.
Bitcoin Cash trading is supported on over 70 cryptocurrency exchanges, including Binance, UpBit, Bitstamp, Coinbase Pro, Gemini, Kraken, Huobi, OKEx and ShapeShift. The highest volumes are held by Binance and UpBit, at the time of writing. The coin is listed with the BCH ticker, but on some exchanges, it is listed as BCC or BCHABC.
The OKEx exchange removed on 26 March 2018 all Bitcoin Cash trading pairs save for BCH/BTC, BCH/ETH, and BCH/USDT because according to them, liquidity was insufficient.
In November 2017, Bitcoin Cash had dropped to around $300 from highs of nearly $900, which was a consequence of people selling off the free Bitcoin Cash given to them when the forked occurred.
On December 20, 2017, it peaked at its all-time high of $4,355.62, the price later dropping with 88% to $519.12 by August 23, 2018. BCH is currently ranked as the sixth cryptocurrency according to market cap, currently trading at $133.75.
In spite of having many avid supporters and developers backing it up, Bitcoin Cash is still experiencing far lower rated than Bitcoin in terms of exchanges, and its network traffic is so small that it doesn’t justify the block size increase yet.