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What Is Bitcoin Cash?
Bitcoin Cash, or BCH, is a fork of Bitcoin, which means that both blockchains used to be one and the same before some members of the Bitcoin community decided to split. This happened because many Bitcoin investors and miners had a disagreement about how the transaction speed for Bitcoin should be increased.
All Bitcoin transactions are collected into blocks and then added to a blockchain that is stored on all computers running the network. One block of the Bitcoin blockchain has a size of 1 MB and can only handle a limited number of transactions.
If there are more transactions happening than can be added to one block, the next block to be processed before additional transactions can be added. This makes Bitcoin very slow if a lot of people use it. At some point, BTC transactions took more than 30 minutes, rendering it unusable as a currency for normal everyday purchases.
Because of this, some people thought that the block size should be increased to 8 MB, which would allow the network to handle more transactions at once. Not everyone wanted this, however, so the community and the blockchain forked. The original blockchain where the block size wasn't increased kept the name Bitcoin, and the new chain with larger blocks was named Bitcoin Cash, because it was intended to be more useable as an everyday currency.
Advantages of Bitcoin Cash
The higher block size allows BCH to operate much faster. The main Bitcoin chain has made some improvements since the fork, but transactions still take almost 10 minutes to be completed. Imagine buying groceries and having to wait 10 minutes for the payment to be confirmed. That would be unbearable. A BCH transaction, on the other hand, can be completed within 2 minutes.
Another advantage is that it is far cheaper to send BCH than BTC. The miners that process transactions don't do so for free, which is why most cryptocurrencies have fees. Bitcoin transactions get more expansive the higher the demand is for the transaction to be processed because the number of transactions that can be processed at once is a lot lower. Thus, the fees can very easily skyrocket when many people use the network. Since Bitcoin Cash can handle more transactions at once, the fees are much lower.
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Disadvantages of Bitcoin Cash
You are probably wondering why the community split and why not every Bitcoin user was a fan of the increased block size. Those who preferred the original Bitcoin actually had a very good reason. Every miner needs to store the entire blockchain to participate in processing transactions. With each added block, the blockchains grow in size.
As of July 2021, the Bitcoin blockchain had a size of more than 340 GB, and with each new block, it grows another 1 MB. With a block size of 8 MB, Bitcoin Cash would grows eight times faster. This makes it even harder to be a miner as a normal person. Very large blockchains must depend on large and powerful companies to mine, and such centralization sort of defeats the purpose of cryptocurrency.
While Bitcoin Cash initially had an 8 MB block-size, it was eventually increased to 32 MB. This means that the BCH blockchain grows 32 times faster than the BTC blockchain. Interestingly enough, there are not even enough transactions happening on BCH to really fill most of the 32 MB blocks.
Both Bitcoin and Bitcoin Cash are actually outdated tech in the crypto world. There are many different cryptocurrencies that are faster and have lower transaction fees, like LTC, DASH, and NANO. In Bitcoin's case, that doesn't matter because most people only know about BTC; it is the king of crypto. Bitcoin Cash doesn't have the same level of brand awareness that Bitcoin has. In fact, some think its name makes it sound like it’s a cheap ripoff.
Bitcoin Cash became a thing in August 2017. In the beginning, it grew quickly in popularity as a "better" version of Bitcoin. However, it has since lost many supporters and has never again managed to come close to its all-time high of $3,785. One reason for this could be that it is designed to be spent like an actual currency and not to behold like an asset, which is how many people use Bitcoin.
There is also not much room for BCH in the market because there are many different cryptocurrencies that are even faster and cheaper to use. There are also many second-layer solutions for Bitcoin in development, and these could make Bitcoin transactions much faster and cheaper without increasing block size.
The growing blockchain will also bring many problems in the near future. Bitcoin will eventually face the same problems, but not as soon as Bitcoin Cash. Bitcoin will very likely not be around for much longer, and if it survives the next bear market, it will likely not grow as much in value as its competition.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2021 Krypton Currency