What is Bitcoin Cash?
In August of 2017, Bitcoin, the original digital currency, was split during a hardfork into two coins: Bitcoin (BTH) and Bitcoin Cash (BCH). Both coins retain the original purpose of cryptocurrency, a peer-to-peer electronic cash system, but the blockchain technology of Bitcoin Cash struck out in a new direction.
The original Bitcoin has long faced problems surrounding transaction time and scalability to a global market. Bitcoin could only process 7 transactions per second. A single transaction could take up to 10 minutes to process. To contrast, the average credit card can handle 1,000 transactions per second.
The Bitcoin community argued on how to handle the slow transaction problem which would prevent Bitcoin from competing with the traditional currency market. Approximately 80 percent of the community agreed to include a technology called SegWit2x to shrink the amount of data needed to verify each block and ultimately speed up the process. However, without complete consensus Bitcoin was ultimately split and Bitcoin Cash was born.
The main difference Bitcoin Cash has from Bitcoin is the blocksize limit. Bitcoin Cash has an 8MB blocksize limit allowing for approximately two million transactions to be processed per day. Although Bitcoin Cash and Bitcoin have an equal hashrate, the protocol BCH uses allows for more transactions per second, which means faster payments and a lower cost.
Bitcoin Cash vs. Bitcoin
- BCH is a fork of BTC ledger- The fork occurred because a group of miners were disappointed with the limitations and lack of software updates that Bitcoin was providing. Developers and miners had been having a disagreement for a while. Some felt as though the blocks needed to be smaller to avoid hackers while other felt that they wanted the blocks to be bigger to have a quicker network.
- Improved transaction speed- The hardfork was initiated with an increase in block size of 8MB to accelerate the transaction time.
- SegWit2X vs. No SegWit- SegWit2X increased Bitcoin’s block size from 1MB to 2MB. Because of the increase to 8MB that occurred with the creation of Bitcoin Cash, there was no need to include SegWit to improve the block size and network speed.
The Future of Bitcoin Cash
Following the hardfork, the original Bitcoin has skyrocketed in value. Bitcoin reached an all-time high value of $5,000 in September of 2017. Bitcoin Cash can be thought of an entirely new coin and thus it is just starting up the mountain of growth. While its current value is far below its predecessor, it is not to be discounted as an investment. Bitcoin Cash’s blockchain technology has put it in a position to succeed and savvy investors are getting in on the ground floor.