Overview

BITCOIN CASH
Original authorSatoshi Nakamoto
Date released01 August 2017
Ticker symbolBCH
AlgorithmSHA-256
Consensus mechanismProof-of-work
HalvingYes, every four years (next halving in 2024)
Block reward 6.25 BCH
Block time10 minutes
Supply limit21 million

There are many different spin-offs from the world-famous Bitcoin, though Bitcoin Cash is one of the most significant. You may be wondering what this cryptocurrency is and why it’s currently the sixth-most traded with a market capitalization value of close to $5.7 billion (as of 26 December 2020, according to CoinMarketCap).

Bcash came into existence for one goal: to be cheaper and faster than its predecessor. A simple tweak in the block size was enough to spark the creation in August 2017. About four months after, Bitcoin Cash’s value was fortunate enough to rise astronomically at the height of the crypto bull run.

The coin peaked at $4355 though it is currently trading at $286 (at the time of writing). So, what’s the difference between Bitcoin and Bitcoin Cash? This article will cover the distinctions between the two, how and why Bitcoin Cash came into fruition, its technical structure, why it’s valuable, and any prospects.

Beginnings

We can summarise the genesis of what became Bitcoin Cash in three words: Bitcoin’s scalability problem. This challenge became more apparent in 2017, where the highest number of Bitcoin transactions per day reached close to 350 000 transactions, drastically increasing waiting times and transaction fees.

Bitcoin’s block size limit still remains at 1MB per block, which proved far less than what it should handle. However, some ‘miners’ and developers wanted to stay faithful to the whitepaper set by Satoshi Nakamoto, Bitcoin’s mysterious creator.

With such a bottleneck in the network, various Bitcoin community members disputed about increasing the block size. The solution was creating a fork or spin-off that retained much of Bitcoin’s features, aside from the block configurations.

Bitcoin can only handle up to 2000 transactions per block (or between three and seven transactions per second). On the other hand, Bitcoin Cash can handle at least 32 times these figures (block size going from 8MB to now 32MB), resulting in a cryptocurrency with quicker transaction times and cheaper fees.

How does Bitcoin Cash work?

Bitcoin Cash performs like any decentralized cryptocurrency through a peer-to-peer blockchain network. Like its ancestor, there will be a finite supply of 21 million BCH, with about 18.6 million presently circulating.

Fortunately, BCH is readily available on an ever-growing list of cryptocurrency exchanges where users can trade or store it in a wallet. Although the coin is popular, the number of merchants accepting it is smaller than other larger players. 

A dedicated website called acceptbitcoin.cash lists all the known merchants allowing customers to pay with Bitcoin Cash. However, at least a total of 1600 brick-and-mortar and online retailers presently accept the cryptocurrency.

Bitcoin Cash’s ledger

Bcash’s ledger is near identical to Bitcoin, with very little separating the two. Both coins use the NSA-designed SHA-256 hash function in a proof-of-work timestamping scheme. PoW (proof-of-work) requires that miners, using advanced computers, solve complex hash calculations for each block. 

The current block reward for Bitcoin is 6.25 BCH. The blockchain forms a BCH block roughly every 10 minutes. Like its antecedent, Bitcoin Cash is a favorite amongst ASIC (application-specific integrated circuit) machine owners. 

Due to the inherent complexity of Bitcoin, ASIC devices have become the standard, with any inferior technology proving futile when factoring electricity costs and competition. Another vital attribute of Bitcoin Cash is its halving structure. 

Quadrennially, miners will see their rewards halved. Bitcoin Cash experienced halving recently in May 2020, with the next halving date estimated to occur on the first April week of 2024. The new block reward after this point would be 3.125 BCH.

What makes Bitcoin Cash valuable?

Although several hard forks preceded, Bitcoin Cash is one of the most notable and the most popular Bitcoin-branded one. The value proposition of Bcash is to scale and ensure a more reliable cryptocurrency that can meet global demands. 

It is clear how BCH can achieve this objective. By facilitating significantly more transactions per second and faster than Bitcoin, Bcash can drastically minimize payment delays and unexpected high fees. The principal value proposition of Bitcoin Cash is a more efficient version of Bitcoin that works well as a transactable currency and is still a worthwhile storer of value or investment.

Future of Bitcoin Cash

Bitcoin Cash experienced halving in May 2020. Historically, cryptocurrencies employing halving of mining rewards tend to grow massively in value over time. Therefore, this conclusion is one of the reasons for any investor to be bullish on the coin. 

For a vast number of cryptocurrencies, 2020 has been a relatively good year. Despite a slow quarter, the coronavirus pandemic certainly boosted the value of coins like Bitcoin Cash as investors flocked to safe-havens. Depending on whether the recession will continue for much or all of 2021, analysts naturally expect Bitcoin Cash’s price to rise.

Some of the future developments developers have mentioned include greater merchant adoption from the likes of Amazon and PayPal, improved scaling, oracles, and meetups, among other things.

Conclusion

The hard fork resulting in Bitcoin Cash signified an overwhelming majority of Bitcoin miners and developers who were strict in being faithful to Nakamoto’s whitepaper. 

Having the split was a natural and appropriate progression since Bitcoin Cash serves its purpose of really being more of a cash-like digital currency not plagued by long transaction times and the occasional high transaction fees.