Bitcoin

What is Bitcoin Cash?

Bitcoin

Since its inception almost nine years ago, Bitcoin is now as strong as ever. As it stands now, it is not only the world’s first digital currency, but also the most stable, expensive, and popular.

However, it is not perfect. Scalability has always been one of the gravest problems for the digital currency. More precisely, it’s been the size of a block of transactions, which has been limited to one MB upon the creation of Bitcoin. This limit creates ample delays in times required to process transactions, and it limits the number of transactions that can be processed on the network.

So, what is bitcoin cash? Bitcoin Cash was a separate story. It stands out amidst the other versions in that in allowed the increase of the block size to eight MB from one MB. Its primary goal is to improve the number of transactions that can be executed and processed by the network, believing that Bitcoin Cash will be able to contend with the volume of transactions that financial giants like Visa and PayPal can currently process.

In August 2017, Bitcoin Cash was launched and has since grown to be Bitcoin’s most flourishing offshoot.

The story of the hard fork

The one MB limit for the size of each block was initially used to lower the possibility of possible DDoS and spam attacks. While there were not that many transactions taking place in the network, the limit wasn’t having any effect at all.

The limit started creating blocks to pile up, as Bitcoin grew more and more popular, which needlessly increased the transition times. The condition got out of hand in May 2017, when some users claimed to have waited up to four days for confirmation.

Users could pay higher charges on their transactions to speed up the confirmation, but this strategy basically made Bitcoin unusable as a payment method, particularly regarding smaller transactions. For example, paying for a cup of coffee or a sandwich with Bitcoin simply doesn’t make sense, as a $3 cup of coffee will incur a transaction fee of over $15. Otherwise, the trader will get an unspendable little sum.

The Bitcoin community arrived at two viable resolutions to this situation: Segregated Witness (SegWit) and Bitcoin Unlimited.

Bitcoin Unlimited would discard the block size limit completely. A lot of miners supported this solution, as the absence of block size limit would not only stop blocks from stacking up but also increase the overall miner’s fee for each block.

However, many developers were not in support this proposal, estimating that its implementation will cause small miners to go out of business, which, in turn, could lead to a centralization of the whole network by large mining corporations.

A Segregated Witness solution proposed storing some of the data in different files outside of the Blockchain. Developers declared that it would free up much storage space, the blocks will fit in more transactions and the confirmation time will significantly diminish. But, many people thought it was just a more complex temporary substitute when matched with the Bitcoin Unlimited approach.

Thus, an agreement protocol called SegWit2x was generated. Launching this protocol meant storing some of the data outside of the Blockchain as well as doubling the limit of the block size to two MB. Following a vote in which 95 percent of miners voted for the proposal, the SegWit2x protocol was implemented on Aug. 1, 2017. Nevertheless, the network didn’t notice any immediate improvement in the block size limit. To many people, this meant postponing a problem instead finding a lasting solution.

Besides, this decision appeared to cater for those who use Bitcoin as an investment opportunity rather than a payment system it was designed to be.

Then, during the Future of Bitcoin colloquium in Arnhem, Netherlands, Bitcoin ABC, the first implementation of the Bitcoin Cash protocol was announced by a former engineer at Facebook, Amaury Séchet.

Séchet and his team of developers chose to drop the SegWit2x protocol and improve the block size limit to eight MB. As such radical changes required their creation to break from the original Bitcoin network, a hard fork was then set for August 1, 2017.

For those uninformed, a hard fork is currently the only known way for developers to update Bitcoin software. Developers divide the network and basically create a new Blockchain with modified rules.

The primary and the forked version of the digital currency have similar Blockchains all the way up to the block when the split happened. Starting from that point, the two networks exist separately.

Following the split, everyone who owned Bitcoins before the hard fork got the equivalent in Bitcoin Cash tokens.

The new digital currency was instantly adopted by investors, as by the end of the first day of its existence Bitcoin Cash became the third digital assets, with only Bitcoin and Ethereum ahead of it regarding market capitalization.

Is Bitcoin Cash cheaper to use than Bitcoin Core?

The short answer is yes. The ever-increasing fees connected with Bitcoin transactions were one of the primary purposes for the creation of Bitcoin Cash. To address this bitcoin vs bitcoin cash issue, a very hands-on test, carried out in December 2017, revealed that a Bitcoin Cash transaction was 99.56% cheaper than the similar transaction on the main Bitcoin network.

At the end of 2017, people were paying $28 charges on average in transaction fees to transfer their Bitcoin tokens. Someone has even alleged to have paid a $16 fee to send $25 worth of Bitcoin, which is a 40% commission.

Hard fork critics

A hard fork is always really a troubling event in the cryptocurrency world. Many people think that it goes against the very policy of the immutability of the Blockchain technology and opposes the ‘code is law’ principle.

Concerning this particular fork, many experts are worried that the processor strength needed to process larger blocks will be too expensive for people with smaller equipment, which might lead to the decision-making authority being centralized in the hands of large companies that can afford more and high-grade devices.

In fact, it did lead to a circumstance comparable to double spending, as it made it possible to conduct two transactions from a single wallet using the same set of keys.

Who is Roger Ver?

Roger Ver is a famous investor and an early adopter of Bitcoin. He invested over a million dollars into several developing Bitcoin startups, like Ripple, Blockchain.com, Bitpay, Purse.io, ZCash, and Kraken. Ver is also the CEO of Bitcoin.com, and he is one of the five founders of the Bitcoin Foundation, to which he has also given over $1 million worth of BTC. Ver views Bitcoin as a mean of attaining economic freedom. He is also known as Bitcoin Jesus in the in the cryptocurrency community.

These days, however, Roger Ver is supporting Bitcoin Cash. In a recent interview, Ver called Bitcoin Cash ‘the real Bitcoin,’ claiming it will have the bigger trade volume, market cap, and user base in the future. He has also been cited saying that he holds the most of his digital assets in Bitcoin Cash, which is, probably, the most significant indicator of his faith in the future of bitcoin cash.

Is bitcoin cash worth investing?

Bitcoin Cash has established itself as an extremely strong cryptocurrency, even though it hasn’t been around for very long.

Currently, it’s the world’s fourth cryptocurrency regarding market capitalization, behind the industry stalwarts Bitcoin, Ripple, and Ethereum. Also, as of Jan. 22, 2018, it is the world’s second most valued digital currency at $1,623 for one BCH.

To cryptocurrency users, Bitcoin Cash became the solution to all the problems of the original Bitcoin, and it keeps gaining new followers every day.

Generally, all types of investment and trading move involve a particular level risk; you should conduct proper research when making a decision.

Does Bitcoin Cash price depend on Bitcoin price?

Bitcoin Cash is an entirely independent digital currency, so its price is not affected by that of the original Bitcoin. Nevertheless, it is worth noting that Bitcoin is still the world’s number one digital currency, so if it increases or decreases, most of the other cryptocurrencies are very likely to do the same.

Where can I buy Bitcoin Cash?

Not every major exchange supports Bitcoin Cash of yet, as it is a relatively new cryptocurrency. Some exchanges which support BCH and can let you trade it for a fiat currency or another cryptocurrency include Kraken, Cex.io, Poloniex, Coinbase, and Bittrex.

Who accepts Bitcoin Cash?

Most cryptocurrency exchange platforms have now taken steps to include Bitcoin Cash in their asset listing, so you can now buy, sell, send and receive, the cryptocurrency.

It’s highly possible that merchants will start to do the same, as Bitcoin Cash proceeds in its growth. However, as of now, Bitcoin Cash isn’t accepted by the most vendors, even those that accept the original Bitcoin. Therefore, currently, the primary use of Bitcoin Cash is as an investment.

Jacob Lucas

Jacob Lucas

Jacob has been active in the cryptocurrency markets since 2010, specializing in Bitcoin. He received education as Certified public accountant, specializing in taxes and cost management. Looking for alternative sources of income due to some personal struggles Jacob discovered Bitcoin 2010, showing some commitment and first to learn and get all the basics. Jacob made his fists investment in bitcoin in 2011 and has been successful in the field. Writing in the field is part of Jacob’s commitment to share knowledge with others.

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