Bitcoin Cash is a cryptocurrency that is designed to function as digital cash, but little is known about it. Read on to learn everything there is to know about bitcoin cash and how it works.
Bitcoin Cash (BCH) is a proof-of-work blockchain network and cryptocurrency that is both faster and less expensive than Bitcoin (BTC). The asset was created through a hard fork of the Bitcoin blockchain network and has since grown in popularity. Bitcoin Cash, like its predecessor, is accepted at certain merchants, can be purchased through PayPal, and represents a new way to transact value.
BCH was designed to address many of Bitcoin’s long-standing issues, but it caused a schism in the crypto community. Continue reading this article to learn everything there is to know about Bitcoin cash and how it works.
What is Bitcoin Cash?
Bitcoin Cash is intended to be a transactional cryptocurrency that can be used to make electronic cash payments. It is intended to address Bitcoin’s perceived scalability issue while also providing more utility in everyday life — it is intended to be spent rather than held as a store of value. The primary distinction between BCH and BTC is the larger block size of its native blockchain, which allows BCH transactions to be completed much faster and at a lower cost.
One of the most well-known forks of the original Bitcoin blockchain is Bitcoin Cash. The cryptocurrency arose as a result of dissatisfaction with the direction Bitcoin was taking, as the major coin was deviating from Satoshi Nakamoto’s vision of digital cash.
Bitcoin Cash was designed to function more like a currency than a store of value, igniting a fierce debate between those who believed Bitcoin was correct and those who believed Bitcoin needed to be faster and cheaper.
As previously stated, Bitcoin Cash is one of the largest and most well-known Bitcoin forks, but it is not the oldest. Bitcoin Cash, which was created just before Bitcoin reached its previous all-time high of $20,000 at the end of 2017, increased the size of the blocks in the chain to allow for more transactions to be completed at a faster rate.
How does Bitcoin Cash work?
To process transactions more quickly, Bitcoin Cash uses a larger block size (which is 4-8 times larger than BTC, depending on the use of Segregated Witness). These transactions are fast enough that you could use BCH to make a quick retail purchase (such as a cup of coffee), but if you were making a large purchase, such as a car or a house, you might prefer a slower, more secure cryptocurrency, such as BTC.
As a result, BCH and BTC play distinct roles. Not every cryptocurrency is a store of value, and not every cryptocurrency requires fast data processing to function as a credit card
Finally, while BCH is faster and has lower processing fees than BTC, it is still used less frequently because everyday cryptocurrency payments have yet to gain widespread acceptance. Many believe that increased awareness, as well as complementary technological advancements and innovations, will pave the way for BCH to become a leader in cryptocurrency payments over time.
How to invest in Bitcoin Cash
If you’re thinking about investing in Bitcoin Cash, keep in mind that it’s a currency. This means that it does not behave like a stock or a bond. Instead of purchasing Bitcoin Cash shares, you are exchanging your currency for Bitcoin Cash currency.
Today, $1 is worth approximately $449 in Bitcoin Cash. The goal is for the value of Bitcoin Cash to rise, at which point you will be able to exchange your coins for dollars (from someone willing to do the exchange).
So, where can you do this? Unfortunately, you cannot invest in Bitcoin Cash through your stockbroker. You’ll need a digital wallet instead. Coinbase is the best digital wallet for US citizens that we’ve found. Coin base’s app allows you to buy and sell Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
You can use Coinbase to buy, sell, send, and receive Bitcoin Cash because it is also a digital wallet (for example, using Bitcoin Cash to pay for goods or services online). Another option for investing in Bitcoin Cash is eToro, a full-service brokerage that also allows cryptocurrency investment.
How to use Bitcoin Cash
BCH is listed as an asset that you can buy, sell, and trade on many popular exchanges. Signing up for an exchange is generally simple, though doing so anonymously may not be possible, as most major exchanges require Know Your Customer and Anti-Money Laundering verification in the form of a photo ID, as well as address and income verification in some cases.
Otherwise, the asset can be obtained from specific cryptocurrency ATMs. If you choose this option, you should look for some in your area. In addition, depending on your location, PayPal may accept Bitcoin Cash.
What is Bitcoin Cash used for? To begin with, using BCH is simple. If you have it, all you need to do is send the assets to a wallet using a wallet address. The recipient could be someone else or a business.
Various merchants worldwide accept Bitcoin Cash, as well as other cryptocurrencies, as payment. There are also travel, goods and services, e-commerce, and other websites that may accept the asset. However, BCH holders and supporters should be aware that the asset is simply not as popular as Bitcoin. Merchants who accept Bitcoin are far more likely to be found than those who accept Bitcoin Cash.
Is Bitcoin Cash the same as Bitcoin?
Bitcoin (BTC) and Bitcoin Cash (BCH) have more in common than just their names. Bitcoin was the first cryptocurrency to be created, and it is often referred to as “gold 2.0” or “digital gold.” The cryptocurrency is regarded as a store of value and a hedge against inflation.
Bitcoin Cash, on the other hand, is a cryptocurrency designed to function as digital cash, with supporters attempting to keep it affordable and simple to use. BCH was created as a result of a hard fork of BTC, which means the two assets share a transaction history, a common code base, and other similarities.
A hard fork is a significant upgrade to the open-source software that powers the blockchain of cryptocurrencies such as Bitcoin. It happens when there is a permanent divergence from the most recent version of a blockchain and some of the computers running the network no longer meet consensus. This causes a fork in the blockchain, with one side adhering to the old rules and the other adhering to a new set of rules.
This is what happened in August 2017 to the Bitcoin blockchain. To understand why some members of the community decided to change the blockchain in this way, it’s worth taking a step back and looking at the scaling debate in Bitcoin.
Overview of Bitcoin and Bitcoin Cash
Bitcoin’s ability to scale effectively has been questioned since its inception. Transactions involving the digital currency bitcoin are processed, verified, and stored on a blockchain, which is a digital ledger. Blockchain is a game-changing ledger-recording technology. It makes ledgers far more difficult to manipulate because the reality of what has occurred is verified by majority rule rather than by a single actor. Furthermore, this network is decentralized; it is present on computers all over the world.
The issue with blockchain technology in the Bitcoin network is that it is slow, particularly when compared to banks that handle credit card transactions. Visa Inc. (V), for example, processes nearly 150 million transactions per day, averaging approximately 1,700 transactions per second. At 65,000 transaction messages per second, the company’s capability far exceeds that.
How many transactions per second can the bitcoin network handle? Seven. Transactions may take several minutes or longer to complete. Waiting times have increased as the network of bitcoin users has grown because there are more transactions to process without a change in the underlying technology that processes them.
Ongoing discussions about bitcoin’s technology have focused on the central issue of scaling and increasing the speed of the transaction verification process. Two major solutions to this problem have been proposed by developers and cryptocurrency miners:
- The first involves reducing the amount of data that must be verified in each block, resulting in faster and cheaper transactions.
- The second step entails increasing the size of data blocks so that more information can be processed at once.
This solution resulted in the creation of Bitcoin Cash (BCH). It should be noted that the primary distinction between Bitcoin and Bitcoin Cash is philosophical. Bitcoin, as proposed by Satoshi Nakamoto, was intended to be a peer-to-peer cryptocurrency used for daily transactions.
Bitcoin evolved from a currency to an investment vehicle over time as it gained mainstream traction and its price rose. Its blockchain experienced scalability issues as a result of the increased number of transactions. The confirmation time and fees for a transaction on bitcoin’s blockchain have increased significantly. This was primarily due to bitcoin’s 1MB block size limit. Because blocks could not handle the increase in transaction size, transactions were queued and awaiting confirmation.
Bitcoin Cash proposes to address the issue by increasing the size of blocks to between 8 and 32 MB, allowing for more transactions to be processed per block. At the time Bitcoin Cash was proposed, the average number of transactions per block on Bitcoin was between 1,000 and 1,500.
During a stress test in September 2018, the number of transactions on Bitcoin Cash’s blockchain increased to 25,000 per block. Major Bitcoin Cash supporters, such as Roger Ver, frequently use Nakamoto’s original vision of payment service to justify increasing the block size. According to them, the change in bitcoin’s block size will allow it to be used as a medium for daily transactions and help it compete with multinational credit card processing organizations like Visa, which charge high fees to process cross-border transactions.
Bitcoin Cash is also distinct from bitcoin in that it lacks Segregated Witness (SegWit), another solution proposed to accommodate more transactions per block. Only information or metadata relating to a transaction in a block is retained by SegWit. Typically, a block contains all of the information about a transaction.
Aside from ideological and block size differences, Bitcoin and Bitcoin Cash have several similarities. To mine new coins, both use the Proof of Work (PoW) consensus mechanism. They also collaborate with Bitmain, the world’s largest cryptocurrency miner. The supply of Bitcoin Cash is limited to 21 million units, which is the same as the supply of Bitcoin.
Bitcoin Cash, too, began with the same mining difficulty algorithm—technically known as Emergency Difficulty Adjustment (EDA), which adjusts difficulty every 2016 block, or roughly every two weeks.
Miners took advantage of this similarity by alternating between mining Bitcoin and mining Bitcoin Cash. While profitable for miners, the practice was detrimental to the market’s increasing supply of Bitcoin Cash. As a result, Bitcoin Cash’s EDA algorithm has been revised to make it easier for miners to generate the cryptocurrency.
How Bitcoin Cash differs from Bitcoin
As developers on each network worked toward different goals, the number of differences between Bitcoin and Bitcoin Cash grew over time. The disparity between the two cryptocurrencies has grown to the point where they are now regarded as completely distinct assets in the community.
The difficulty adjustment algorithm added to BCH is one of the main differences between Bitcoin and Bitcoin Cash. Because both networks use the same SHA-256 hashing algorithm, Bitcoin miners can switch to the Bitcoin Cash network when it becomes more profitable to mine on it.
This means that, depending on market fluctuations, the computing power behind the network can vary greatly. The difficulty adjustment algorithm ensures that blocks are generated at a consistent rate every 10 minutes by either halving difficulty if they are behind schedule or doubling difficulty if they are ahead of schedule.
Block size differences
The primary distinction is related to the block size of each network. While Bitcoin retains its 1 MB block size, Bitcoin Cash has increased block sizes to 32 MB. This means that BCH transactions are now less than a penny, and it can process up to 200 transactions per second.
Because Bitcoin Cash hasn’t processed enough transactions to fill up its extra block space, the blockchain’s size hasn’t grown exponentially, as predicted. Bitcoin SV (BSV), a cryptocurrency created through a fork of Bitcoin Cash, is attempting to increase its block size to 1 TB, and its blockchain is now much larger than Bitcoin’s.
Smart contracts and decentralized finance
According to Square CEO Jack Dorsey, Bitcoin does not support smart contracts, but work is being done to help build decentralized finance (DeFi) services on top of it. In the meantime, Bitcoin Cash has begun to use smart contract languages such as Cashscript to enable more complex functions on it.
Cashscript intends to introduce DeFi to Bitcoin Cash to help it compete with Bitcoin and Ethereum (ETH). Cash Shuffle and CashFusion are two tools that have already been developed to improve network privacy.
To create tokens on top of the Bitcoin blockchain, projects must use the Omni layer, which is a platform for “creating and trading custom digital assets and currencies.” Although Omni transactions are Bitcoin transactions with “next-generation features,” the layer’s adoption has primarily focused on stablecoins.
Bitcoin Cash, on the other hand, has developed the Simple Ledger Protocol (SLP). The protocol enables developers to create tokens on top of BCH in the same way that tokens are created on top of the Ethereum blockchain.
Some assets have been issued as Omni layer tokens as well as SLP tokens. The fact that it exists on multiple blockchains makes it easier for users to select the network they prefer. However, the adoption of both solutions has been somewhat sluggish.
Non Fungible Tokens (NFTs) that can be distinguished from one another are also supported by the SLP protocol. However, when compared to Ethereum or other blockchains, their use on BCH has been limited.
Replace-by-fee (RBF) is a Bitcoin network feature that allows someone to get a transaction that is “stuck” without being processed, and then replace that unconfirmed transaction with a different version with a higher transaction fee attached.
RBF can be used when transactions must be processed as quickly as possible, but its detractors argue that it makes it easier for malicious actors to spend the same funds twice. They contend that an attacker can use RBF to send a transaction with a very small fee as payment for a good or service. If the recipient does not wait for enough network confirmations, they can send the same transaction with a higher fee to a wallet they control.
The network would first confirm this second transaction before dropping the transaction that paid the merchant for their goods or services. To avoid this, most RBF versions require that the transaction include all of the same outputs. Furthermore, because the transaction has been confirmed, RBF becomes impossible if the recipient waits for a few network confirmations.
Nonetheless, Bitcoin Cash has abandoned this feature, rendering unconfirmed transactions irreversible on its network. Despite its higher transaction throughput, double spending with RBF would be much more difficult because transactions are confirmed faster.
Different visions, same monetary policy
At the time of the hard fork, Bitcoin Cash had an 8 MB block size, which has since been quadrupled. The network openly accepts new hard forks and strives to innovate as much as possible in order to increase its usability and ability to be used as cash.
Bitcoin, on the other hand, is more cautious in pushing out upgrades and is viewed as more of an inflation hedge and store of value. Its scaling plans have resulted in the implementation of SegWit as well as the development of the Lightning Network.
The Lightning Network, in essence, adds an extra layer on top of the cryptocurrency’s blockchain where transactions are quick and fees are minimal. This layer is made up of payment channels created by users. It has the potential to handle up to 15 million transactions per second, but adoption has been slow.
Bitcoin has also attempted to protect users’ anonymity with upgrades such as Taproot, which allows complex transactions such as timelock releases or multi-signature components to be viewed as simple transactions. A transaction that creates a Lightning Network channel and a simple transaction are indistinguishable from Taproot.
Bitcoin supporters place a higher value on decentralization and censorship resistance than on transaction throughput. The ability of Bitcoin to withstand attacks from any entity imaginable is critical to its role as a store of value.
The vision of Bitcoin Cash as peer-to-peer electronic cash is based on its low transaction fees and faster speeds. Some projects built on BCH, such as social media platforms where every post is published on the blockchain, would be impossible to build on Bitcoin.
Bitcoin Cash maintains privacy through a different method: coin mixing. Coin mixing occurs when multiple BCH users’ transactions are bundled together to obscure the origin of users’ coins. This is a contentious practice that is thought to aid cybercriminals in concealing their tracks.
Both networks’ monetary policies remain unchanged. On each blockchain, only 21 million coins will ever be created, and the issuance of new coins is halved every 210,000 blocks or roughly every four years. The last BTC and BCH will be mined in 2140, according to projections.
Both cryptocurrencies were created to guard against monetary confiscation, censorship, and devaluation caused by higher-than-expected inflation. Both blockchains are transparent and open to the public, and they cannot be altered by a single entity.
Bitcoin Cash Price History 2017 through 2020 to Today
Bitcoin Cash was one of the top ten coins by market cap for the majority of its history, but it recently fell out of the top ten. The coin does not trade anywhere near the price of Bitcoin — even at its peak, it only managed to reach $3,643, just days after Bitcoin surpassed the $20,000 mark.
Bitcoin Cash had a wild ride in terms of price swings and volatility during its first year, but the price has been less volatile but mostly in a downward trend since the end of 2018. Bitcoin Cash began its price history around $573 in August of 2017, and it reached its all-time high within two months.
Following that $3,000+ high, Bitcoin Cash fell to a low of $77 per BCH, recovering slightly by the end of 2020 to around $350. Today it is trading at $541, but it has returned to over $1,600 at 2021 high thus far.
Bitcoin Cash price predictions by experts
Because Bitcoin Cash has a lot of potential in a world that is increasingly looking to digital payments and cryptocurrencies as the next era, predicting how the coin’s price will rise is important and worth investigating.
Price predictions also vary greatly, as some believe Bitcoin Cash is the real Bitcoin and should be treated as such, while others believe it is a squandered cryptocurrency that is not as effective as it is portrayed to be.
Wallet Investor, one of the most respected prediction websites on the planet, predicts that Bitcoin Cash will be worth $1,587 in the next five years. This implies that the 2021 peak will be high for the next several years.
The Economy Forecast Agency
The Economy Forecast Agency predicts that Bitcoin Cash will fall to as low as $1.06 in 2023. Perhaps Bitcoin Cash will continue to have problems within its community and will fade into obscurity in comparison to the original Bitcoin.
What is the future of Bitcoin Cash?
|2021||$500 – $7,000|
|2022||$7,000 – $2,000|
|2023||$4,500 – $3,500|
|2025||$5,000 – $12,000|
The future of Bitcoin Cash is intriguing, as the coin was designed to be the next version of Bitcoin, addressing its shortcomings as a currency. However, the evolution of Bitcoin has made it more popular as an asset rather than a currency. Having said that, there is a growing desire for cryptocurrencies to behave more like functional currencies. Bitcoin Cash has the same name and history as Bitcoin and can be viewed as the coin’s next version after it forked.
However, the way Bitcoin Cash has been operating since August 2017 has been fraught with controversy. Many people are dissatisfied with how the emphasis has shifted away from advancing the coin and toward demonizing Bitcoin.
Having said that, Bitcoin Cash does present a great opportunity for investors and traders to profit due to its volatile nature, potential to enter the discussion more in the future, and the need for a more functional Bitcoin.
To take advantage of Bitcoin Cash and begin investing and trading in cryptocurrency, it is worthwhile to look for a suitable platform. PrimeXBT is one of the more comprehensive and user-friendly platforms for trading and investing in cryptocurrency. This platform has received recognition for its user-friendly interface as well as its bank-grade security.
Concerns about Bitcoin Cash
Bitcoin Cash promised several enhancements over its predecessor. However, it has yet to deliver on its promises.
The most important is in terms of block size. The average size of blocks mined on the Bitcoin Cash blockchain is significantly smaller than that of the Bitcoin blockchain. Because of the smaller block size, its main thesis of allowing more transactions through larger blocks has yet to be tested technically. Bitcoin transaction fees have also decreased significantly, making it a viable daily use competitor to bitcoin cash.
Other cryptocurrencies with similar goals of becoming a medium for daily transactions have added another wrinkle to Bitcoin Cash’s original goals. They have established projects and collaborations with organizations and governments both at home and abroad. Litecoin, for example, announced partnerships with event organizers and professional associations, and others, such as Dash, claim to have already gained traction in troubled economies such as Venezuela, though such claims are debatable.
While the split from Bitcoin was fairly public, Bitcoin Cash is largely unknown outside of the crypto community and has yet to make significant announcements about adoption. Bitcoin maintains a sizable lead over its competitors in terms of blockchain transaction levels. The second fork in Bitcoin Cash’s blockchain also reveals issues with the currency’s developer pool management.
The fact that a sizable portion of the pool believed Bitcoin cash was diluting its original vision is concerning because it opens the door to future splits. Smart contracts are a necessary component of all cryptocurrencies. It remains to be seen, however, whether Bitcoin Cash will pivot to become a platform for incorporating smart contracts for transactions or simply for payment systems.
Bitcoin Cash, too, lacks a well-defined governance protocol. While other cryptocurrencies, such as Dash and VeChain, have innovated and outlined detailed governance protocols that assign voting rights, Bitcoin Cash appears to be centralized with its development teams. As a result, it is unclear whether investors who do not hold significant amounts of cryptocurrency have voting rights or a say in the cryptocurrency’s future direction.
Bitcoin Cash is one of the most recent cryptocurrency options for consumers. While it is new, it is built on Bitcoin, one of the oldest. However, it has grown in popularity because it has suddenly become more accessible – so keep that in mind. If you’re thinking about investing in Bitcoin Cash, keep in mind that there’s a lot of risks involved. The only way you “make money” is if the price rises, implying that more people want to buy it from you.