Bitcoin Cash is one cryptocurrency launched in August of 2017 as a fork of Bitcoin. Bitcoin Cash added more blocks, allowed for the processing of more transactions, and improved the capacity of transactions.
The cryptocurrency went through another fork in November 2018. Then it was split into two parts: Bitcoin Cash SV(Satoshi Vision) and Bitcoin Cash ABC. Bitcoin Cash is guided to as Bitcoin Cash because it uses the actual Bitcoin Cash client.
· Bitcoin Cash resulted from a Bitcoin hard fork in August of 2017.
· Bitcoin Cash was developed to allow for a bigger block size than Bitcoin and for more transactions to be contained in a single block.
· Despite their differences in philosophy, Bitcoin Cash and Bitcoin have many technical similarities. They both use an identical consensus process and have been able to limit their supply to 21 million.
· Bitcoin Cash itself underwent a split in November of 2018, and it was divided into Bitcoin Cash SV (Satoshi Vision) and Bitcoin Cash ABC. Bitcoin Cash ABC is known as Bitcoin Cash at present.
Understanding Bitcoin Cash
The distinction between Bitcoin the Bitcoin Cash is philosophical.
According to Bitcoin creator Satoshi Nakamoto, Bitcoin was meant to be a cryptocurrency that could be used peer-to-peer, intended for use in daily transactions. As it gained traction in the mainstream and the price of Bitcoin soared, Bitcoin became an investment vehicle rather than being a currency. Its blockchain was plagued by scalability issues due to its inability to manage the increase in transactions. The time to confirm and the fees for transactions on bitcoin’s blockchain soared. This was primarily due to bitcoin’s block size of 1MB limitation. Transactions were queued up waiting for confirmation due to blocks being unable to handle the increasing length of the transactions.
Bitcoin Cash proposes to resolve the issue by increasing the size of blocks, which ranges between 8 between 32 and 8 MB, making it possible to process more transactions per block. The amount in transactions for each block for Bitcoin as of the date Bitcoin Cash was proposed was 1,500 and 1,000. The number of transactions processed on Bitcoin Cash’s Blockchain during the stress test in September. 2018 jumped to 25,000 transactions per block.
Prominent advocates for Bitcoin Cash, such as Roger Ver, frequently cite Nakamoto’s original concept of a payment platform as a motive to increase the size of the block. As per their claims, the increase in bitcoin’s block size will allow bitcoin to function as a payment method for everyday transactions and help it compete with international credit card processing companies, including Visa, who have high costs to process transactions across borders.
Bitcoin Cash differs from bitcoin in another way since it doesn’t include Segregated Witness (SegWit) as a second option that is being considered to allow more transactions in a block. SegWit keeps only the data or metadata related to transactions in the block. In general, all information about a transaction is saved in the block.
Block size and ideological differences aside, there are many similarities between Bitcoin and Bitcoin Cash. Both utilize their own proof of work (PoW) consensus process for mining new currencies. They also use their services with Bitmain, the most prominent cryptocurrency mining company. The quantity of Bitcoin Cash is limited to 21 million, which is the same number as Bitcoin. Bitcoin Cash was also launched with the same mining algorithm known as emergency Difficulty Adjustment (EDA), which adjusts the difficulty of each block in 2016 roughly twice a week.
Miners profited from this similarity by switching their mining activities with Bitcoin or Bitcoin Cash. While this practice proved profitable for miners, this practice was harmful to the growing quantity of Bitcoin Cash on the market. This is why Bitcoin Cash has revised its EDA algorithm to enable miners to mine the cryptocurrency.
History of Bitcoin Cash
In 2010 the average size of a Bitcoin block blockchain was just under 100 KB. The average transaction fee was only two cents. This left its blockchain vulnerable to hacks, which mainly comprised of transactions that cost a few cents, which could lead to the system’s collapse.
To avoid a situation, the size of a block on bitcoin’s blockchain was restricted to 1MB. Each block is created each 10 min, which allows the space and time between each transaction. The limit on the size and the time needed to create a block was another layer of protection to bitcoin’s blockchain.
But these security measures were a problem as bitcoin gained traction due to increased awareness of its capabilities and the enhancements made on its platforms. The size of an average block was doubling to 600K by January. 2015. The volume of transactions made with Bitcoin has increased dramatically, resulting in increased unconfirmed transactions. The average time required to confirm a transaction also shifted upwards. The cost for transaction confirmation has also increased, reducing the case that bitcoin is a viable alternative to costly credit processing systems for cards. 9 (Fees for transactions processed on bitcoin’s blockchain are determined by the users. Miners generally push transactions that have more expensive fees to the top of the line to increase profits.)
Developers suggested two options to address the issue: either raise the average size of a block or exclude specific parts of transactions to allow more information into the blockchain. The Bitcoin Core team, responsible for creating and maintaining the bitcoin algorithm, was able to block the plan to increase the size of blocks. In the meantime, a new cryptocurrency with a swathe of block sizes was developed. However, the new coin, which was dubbed Bitcoin Unlimited, was hacked and could not gain traction, which led to questions about its use as a currency used for everyday transactions.
The original proposal also provoked wide and varied responses from bitcoin enthusiasts. Mining giant Bitmain was reluctant to accept Segwit implementation in blocks since it could impact the sales of the AsicBoost miner. It was a patent-pending mining technology that provided the possibility of a “shortcut” for miners to create hashes for crypto mining with lesser electricity. 10 However, Segwit makes it more costly to mine Bitcoin with the machine as it is challenging to reorder transactions.
Amid a battle of words and staking out of positions from miners and other participants in the cryptocurrency community, Bitcoin Cash began to be launched in August of 2017. Each Bitcoin owner received a similar quantity of Bitcoin Cash, which increased the amount of Bitcoin Cash. Bitcoin Cash came out on exchanges for cryptocurrency for an enthralling $900. Big crypto exchanges such as Coinbase and itBit have resisted Bitcoin Cash and didn’t include it in their conversations.
It also received crucial assistance from Bitmain, the world’s largest bitcoin mining company. It ensured a steady supply of coins that could be traded on exchanges for cryptocurrency in the year Bitcoin Cash was introduced. Amid the cryptocurrency boom, Bitcoin Cash’s price soared to $4,091 by December 2017.
It’s a bit of a paradox that Bitcoin Cash itself underwent a split a little over an entire year later because of the same reason that led to it splitting from Bitcoin. In November 2018, Bitcoin Cash split into Bitcoin Cash ABC and Bitcoin Cash SV (Satoshi Vision). This time, the dispute was caused by proposed protocol updates that included the implementation of smart contracts on bitcoin’s blockchain and made it more significant for blocks.
Bitcoin Cash ABC uses the initial Bitcoin Cash client but has added several modifications to its cryptocurrency, such as the Canonical Transaction Ordering Route (CTOR), which reorders blocks of transactions according to a particular order.
Bitcoin Cash SV is led by Craig Wright, who is believed to be the founder of Nakamoto. He was against using smart contracts for a platform designed for transactions in payment. The tension before the most recent hard fork was like the one that preceded the fork of Bitcoin Cash from Bitcoin in 2017. However, the outcome was a pleasant one, as more money has entered the cryptocurrency industry due to the forking, and the amount of coins that investors can purchase has increased. Since the beginning of their existence, both cryptocurrencies have been able to earn respectable valuations on cryptocurrency exchanges.
Concerns About Bitcoin Cash
Bitcoin Cash promised several improvements over its predecessor. But it’s still not delivering the promises it made.
The most important aspect is related to the size of the blocks. The block size average using Bitcoin Cash’s Blockchain is significantly smaller than the Bitcoin Blockchain. The smaller block size indicates that the primary idea behind making it easier to conduct transactions with larger blocks has yet to be verified technically. Bitcoin’s transaction fees have dropped dramatically, making Bitcoin a feasible alternative to bitcoin cash for everyday usage.
Other cryptocurrencies aspiring to the same goals of becoming a medium to conduct daily transactions have added an additional aspect to Bitcoin Cash’s initial plans. They have also scouted collaborations and projects with companies and governments in the US and abroad. For instance, Litecoin announced partnerships with professional associations and event organizers. Others, like Dash, claim to have gained momentum in economically troubled countries such as Venezuela; however, such assertions are not confirmed.
Although its separation from Bitcoin was a significant event, Bitcoin Cash is mostly unnoticed by the crypto community and has yet to announce its adoption. Based on the number of transactions recorded in the Blockchain, Bitcoin still has an impressive advantage over its competitors.
The second fork of Bitcoin Cash’s Blockchain also highlights difficulties in managing the developer pool. A significant portion of the collection believed that Bitcoin cash was diluting its original goal is troubling as it could lead to further splits shortly. Smart contracts are a fundamental element of all cryptocurrencies. It remains to be determined if Bitcoin Cash pivots to become an application platform that incorporates intelligent contracts to facilitate transactions or just to be a payment system.
Bitcoin Cash also does not have a clear governance policy. While other cryptocurrencies such as Dash and VeChain have pushed the boundaries and developed detailed governance guidelines that grant voting rights. The development and design of Bitcoin Cash seem to be centralized by the teams that create it. As a result, it’s unclear whether investors with no substantial cryptocurrency holdings have the right to vote or even participate in Bitcoin Cash’s direction.