Bitcoin Cash (BCH)
Bitcoin Cash (BCH) was directly derived from Bitcoin’s original blockchain, created with the idea of preserving the core values of Bitcoin’s architecture while making transactions faster when compared to the potential of Bitcoin. The main idea behind the original Bitcoin was to provide a decentralized peer-to-peer currency that would allow users to manage their funds and transactions without intermediaries, i.e. middlemen such as banks and financial institutions. As Bitcoin gained more traction over the years, becoming a valuable investment asset, scalability issues emerged.
Due to the problems with scalability noted in the Bitcoin blockchain, Bitcoin Cash was created as a fork to provide faster transaction times and allow more transactions to be processed within the same timeframe. This goal was achieved by increasing the block size to 8 MB. Although Bitcoin Cash is a faster and cheaper option for completing transactions, BTC still beats BCH in the cryptocurrency markets in its market capitalization because Bitcoin holds more than 60% of the total value of all digital assets. To explain Bitcoin Cash in a single sentence, we would describe it as a peer-to-peer currency and digital asset derived from the original Bitcoin chain as a fork.
What is BCH
Bitcoin Cash is recognizable in the market by the ticker BCH. The average ranking, in the list of all cryptocurrencies, for Bitcoin Cash is the 4th spot by market capitalization, although downtrends have previously taken it lower. BCH is backed by Bitcoin ABC, while Bitcoin SV can be found under the ticker BSV. Bitcoin Cash is mostly used for trading, transacting, while some online retailers and service providers accept BCH as an alternative payment method.
How Bitcoin Cash Works: Protocols and Architecture
Bitcoin Cash was derived from Bitcoin through a hard fork and uses the same protocol as Bitcoin. That means that BCH is operating via a Proof-of-Work protocol. PoW supports the system of mining, which is how transactions are validated, new blocks are generated, and the double-spending of BCH coins is prevented. Miners thus represent the spinning wheel of the Bitcoin Cash Mechanism, the same way as Bitcoin does. This is no surprise because Bitcoin Cash was generated by hard forking BTC blockchain, still using Bitcoin Core protocols and architecture. The only difference between the two mechanisms is the block size which was increased for Bitcoin Cash to enable it to process more transactions in the same amount of time. Every ten minutes a new block is generated, which creates more units of Bitcoin Cash. However, the number of BCH assets is limited the same way as with Bitcoin – the maximum supply of Bitcoin Cash is set at 21,000,000 units. As miners are working on solving complex mathematical equations with computational power, transactions are validated and new blocks are generated. Bitcoin Cash has the potential to process more transactions when compared to Bitcoin as the algorithm has been adjusted to increase the block size and address the problem of scalability. While miners are processing transactions, they are rewarded for keeping the network safe and up and running.
The reward for Bitcoin Cash miners is reduced every four years in the process known as halving.
Bitcoin rewards are halved as well, within the same time period, as the core processes in both architectures remain the same. The rewards for mining BCH by April 2020 will be 12.5 BCH for each generated block. However, after April 2020 (when halving is planned), this reward will be halved to 6.25, leaving miners with less compensation for their work on the network. Halving was created to control the circulation of assets and prevent inflation. Many exchanges consider Bitcoin ABC to be represented in the name of Bitcoin Cash after the latest halving that took place in 2018, although there is another crypto fork in the process.
Bitcoin SV (Satoshi Vision)
Given the fact that the two teams didn’t manage to agree on future updates, both the ABC and SV communities can expect more changes and updates on both blockchains. Based on the public plans both teams have shared within their roadmaps, there will be substantial changes in the architecture of Bitcoin SV. For now, Bitcoin ABC is using the Canonical Transaction Ordering Route (CTOR) on top of Bitcoin Cash's original client, which serves the purpose of placing transactions within blocks in a specific order. Ironically, the name of Bitcoin Cash was first presented as Bitcoin’s hard fork, while the second hard fork initiated by the discussed disagreements created two separate cryptos.
Bitcoin Cash: Origins and History
Since Bitcoin is a decentralized, open-source ecosystem, anyone can make contributions and changes to the blockchain, which shows how the idea of an open-source environment and decentralization works.
Bitcoin Cash first appeared in August 2017, eight years after Bitcoin was created. The main idea was to enable more efficient and effective scaling for the blockchain as Bitcoin showed multiple signs of inefficient scaling. Some of the “symptoms” that define scalability issues are delayed transactions, higher fees for micro-transacting, and network cluster. The more users that joined the network, the slower the network became. Development teams behind Bitcoin Cash wanted to solve this problem by creating an alternative chain that would have an increased block size to speed up the processing time and increase the number of transactions completed within the timeframe needed for a new block to be generated. There were many proponents among Bitcoin and crypto activists who agreed with the idea of increasing the block size to make a hard fork, that would act as a system update - in this case, anyone owning Bitcoin units would get an equal amount of Bitcoin Cash (BCH) as well.
Bitcoin Cash doesn’t have a single contributor as several development teams joined forces to come up with the hard fork that Bitcoin Cash represents. The two main teams that the public is more than familiar with are Bitcoin ABC and Bitcoin SV. Bitcoin ABC is managed by Roger Ver and Bitmain’s Jihan Wu, while the Bitcoin SV team is led by Craig Wright and Calvin Ayre.
Bitcoin ABC (Adjustable Blocksize Cap) created Bitcoin ABC by forking Bitcoin Cash, and the other team Bitcoin SV (Satoshi Vision) created Bitcoin SV. The two teams agreed, although not written and validated, that whichever team turns out to be a better performer, would get to keep the Bitcoin Cash label, which is how the hash wars began aside from another hard fork. Bitcoin SV argued that Bitcoin Cash should work on implementing smart contract infrastructure, alongside increasing block size and changing the infrastructure of the BCH chain. Bitcoin ABC debated on the matter of interoperability, scaling, and increasing the block size without physically changing the entire structure of the blockchain.
Bitcoin Cash Wallets
There are numerous types of digital wallets and wallet brands that support the safe storage of Bitcoin Cash. The official website that supports Bitcoin Cash offers several recommended wallets for iOS, Android, macOS, and Windows, depending on the type of wallet. Recommendations include Bitcoin.com, Jaxx, Bitpay, Exodus, Bitcoin Cash Badger Wallet, and more. Bitcoin Cash can be stored in mobile, desktop, hardware, and paper wallets. It is also vital that the private keys to your wallet are not shared with anyone.
Desktop wallets might be a safer version to use when compared to mobile wallets. However, mobile wallets are great for users who spend their BCH units and who often operate with cryptocurrency funds. For users who are looking for the best way to store BCH and other cryptos, the safest and the most secure wallet to use is definitely a hardware wallet. Paper wallets are also safe for long-term storage and are not prone to cyber attacks as you are holding a form of a physical wallet by choosing to go with paper wallets – be careful not to lose your funds when using a paper wallet.