The most well-known cryptocurrency, Bitcoin (BTC), nevertheless has issues. Its utility for payments is specifically limited by the low number of transactions it permits per second.
In order to solve this problem, Bitcoin Cash (BCH) was created in 2017. It provides a quicker and less expensive method of processing payments. Since then, Bitcoin Cash has developed into one of the top 25 cryptocurrencies available today.
What Is Bitcoin Cash?
A cryptocurrency called Bitcoin Cash was created using the same blockchain as Bitcoin. On August 1, 2017, a purported “hard fork” of the Bitcoin network saw the coin go live.
To enable Bitcoin to handle a higher volume of transactions, several Bitcoin blockchain users recommended changing the rules. The majority of nodes rejected modifying the rules, leading to the hard fork that produced two blockchain routes with a shared history: Bitcoin and Bitcoin Cash.
Henrik Gebbing, co-founder and co-CEO of Finoa, a digital asset custodian, remarked, “It seemed almost like the disintegration of a religion.” The choice of which chain to focus on, whether or not to allow trading of the newly forked currency on exchanges, and whether or not market players had any interest in the new currency and what its fair price should be were all decisions that had to be made.
How Does Bitcoin Cash Work?
Blocks, which are collections of transactions added to the blockchain simultaneously like in Bitcoin, have a higher size in Bitcoin Cash than in Bitcoin.
Since blocks in Bitcoin are limited to 1 MB, there can only be roughly 7 transactions per second. With a block size increase from 8 MB to 32 MB, Bitcoin Cash can now handle more than 100 transactions per second.
Apart from block size and transaction speed, Bitcoin Cash and Bitcoin function quite similarly. It is a decentralised, open-source digital ledger. By utilising cryptography to solve equations, miners verify and add transactions to the blockchain. In exchange for their labour, they are rewarded with Bitcoin Cash coins. The coins can then be sold to other people. Like Bitcoin, Bitcoin Cash will only ever issue a total of 21 million coins.
Bitcoin vs. Bitcoin Cash
As mentioned, the block size is the primary distinction between Bitcoin and Bitcoin Cash. This modification enables Bitcoin Cash to have transactions that are both cheaper and faster. A Bitcoin transaction typically costs $59, however a Bitcoin Cash transaction just costs one cent.
However, because everything is processed more quickly, it might be less safe than Bitcoin. Less miners are required to process and confirm transactions, which could make it simpler to breach Bitcoin Cash’s security.
According to Daniel R. Hill, president of Hill Wealth Strategies in Virginia, “Bitcoin cash might be better for something like a cup of coffee, whereas a larger transaction, such as a car or house, may require a slower and more secure cryptocurrency like Bitcoin.”
The size of the markets also differs. The market capitalization of Bitcoin Cash as of this writing is approximately $7.1 billion. This is a tiny portion of the $881 billion market value of Bitcoin.
Advantages of Bitcoin Cash
cheaper, quicker transactions. Bitcoin Cash has the capacity to handle over 100 transactions per second at a cost of less than one penny, making it a viable payment platform. Bitcoin Cash still has a ways to go because the Visa network only handles 2,000 transactions per second.
scalability compared to Bitcoin. Larger blocks in Bitcoin Cash provide a blockchain with more scalability, lowering user fees and increasing transaction volume.
Decentralized currency Bitcoin Cash offers a currency-like system that is decentralised and not controlled by any one body for those concerned about banks and central governments exerting too much concentrated control over the financial system.
Accessibility. Among the tens of thousands of cryptocurrencies available, Bitcoin Cash is one of the most well-known and is accessible through most significant exchanges, unlike less well-known rivals. It’s also more cheap than attempting to purchase a single Bitcoin because the BCH/USD price is just roughly $370 per coin.
Disadvantages of Bitcoin Cash
Adoption rates are comparatively low. According to Russell Star, head of capital markets at DeFi Technologies, “While most of the argument has centred on such technological debates around processing times and security, I think there is one significant factor overlooked but maybe most crucial with emerging technologies: adoption.” Any network, currency, or technology depends on its users to function successfully. Since fewer individuals use Bitcoin Cash than Bitcoin, it might find it difficult to become a popular investment or form of exchange.
weaker protection. Because it uses less mining power to verify new blocks, Bitcoin Cash processes transactions more rapidly and cheaper than Bitcoin. The system is consequently less secure than Bitcoin.
Branding issues. There was a competition to determine which coin would gain more popularity after the fork. Since Bitcoin has been the undisputed victor, Bitcoin Cash has a difficult time standing out, especially given how similar their names are.
effect on the environment. The blockchain proof-of-work technique that Bitcoin Cash continues to use requires miners to run computers in order to solve cryptographic equations, which consumes a lot of energy. Despite the fact that Bitcoin Cash uses less electricity than Bitcoin, this system still has a significant negative impact on the environment.
How to Buy Bitcoin Cash
On significant cryptocurrency exchanges like Coinbase and Kraken, Bitcoin Cash is freely accessible. After opening an account and funding it with money, you may use that to purchase cryptocurrencies like Bitcoin Cash. Purchasing Bitcoin Cash was also possible through services like PayPal.
Once you’ve bought Bitcoin Cash, you can use your coins for transactions, retain them as an investment in a crypto wallet, or trade them for other currencies.
Be aware that there have been some concerns with Bitcoin Cash’s branding. For instance, the cryptocurrency exchange OKCoin delisted Bitcoin Cash at the beginning of 2021 because it was worried that it might confuse investors by allowing them to trade two currencies on the same platform.