Cryptocurrencies

What is Bitcoin Cash? The Beginner’s Guide

What is Bitcoin Cash? It is one of the best-known cryptocurrencies in the world. Bitcoin Cash is also the only Bitcoin fork, which has gained significant success. This article is a beginner’s guide to Bitcoin Cash. We’ll go through the history, future, and the tech behind it.

Bitcoin Cash is a traditional cryptocurrency

Bitcoin Cash is a cryptocurrency in the true meaning of the word. It is designed to be P2P electronic cash. These are the words Satoshi Nakamoto used in the title of the Bitcoin white paper.

While Bitcoin’s narrative has shifted towards digital gold and store-of-value, Bitcoin Cash is designed to be a currency with fast and cheap transactions. It is competing with coins such as Litecoin, Dash, and Digibyte.

bitcoin.com

Bitcoin Cash is a hard fork of Bitcoin.  There have been many cryptocurrencies forked out of Bitcoin, but Bitcoin Cash is the only one reaching significant success.

You might have heard about forks such as Bitcoin Gold, Bitcoin Private, or Bitcoin Diamond. They’ve had close to no impact on the market while Bitcoin Cash has been one of the biggest cryptocurrencies (by market cap) since its inception.

The ticker of Bitcoin Cash is BCH in crypto exchanges.

Next, we’ll go through the history of Bitcoin Cash. Why was this currency created in the first place?

The history of Bitcoin Cash

The scaling debate of Bitcoin was going on for years. The discussion was all about increasing Bitcoin’s transaction capacity. Bitcoin can still handle less than 10 TPS (Transactions Per Second), while more advanced platforms can reach thousands of TPS.

Bitcoin’s poor TPS number is a result of its technical limitations, which were decided by Satoshi Nakamoto over 10 years ago. It is all about the block size and the block confirmation time.

Each block is a list of Bitcoin transactions. The smaller the block, the fewer transactions it can contain. You could bypass this bottleneck by having faster block confirmations, but this would decrease the level of security.

The scaling debate was all about increasing the block size. Things got really heated in 2017 when the SegWit upgrade was decided. This was the first step towards Layer 2 scaling, which was the alternative for the block size increase.

Eventually, the Bitcoin community was split in half. A group of people left and hard-forked their own currency on the 1st of August in 2017. This is how Bitcoin Cash was born.

The video below goes through Bitcoin’s history and the blocksize war.

The block size of Bitcoin Cash was instantly increased from 1 MB to 8 MB. Nowadays it’s increased further to 32 MB.

If the Bitcoin Cash solution is technically working, what’s the debate all about? The problem is that most of the Bitcoin developers want to solve the scaling with a Layer 2 (off-chain) solution. This technology is called Lightning Network.

Lightning Network enables real-time transactions at almost no cost. This technology has taken big steps forward in the past years. The network has expanded rapidly, and Bitcoin maximalists claim that it’ll eventually make other cryptocurrencies useless.

The Bitcoin Cash solution has also been seen as a hasty one, which could also cause problems to the network. Bigger blocks demand more from the nodes running the network, which can eventually compromise the decentralization.

However, there are also issues with Lightning Network. No solution is absolutely perfect. The opposing argument is that there is no need to create an additional layer because the scaling can be done on-chain.

The Bitcoin vs Bitcoin Cash “war” on social media has calmed down a lot since 2017. Investors don’t care about Bitcoin’s transaction limitations, because it’s seen as digital gold and an ultimate store-of-value.

Roger Ver gives a face to Bitcoin Cash

Roger Ver has been the spokesperson of Bitcoin Cash since the beginning. He is a controversial character, who is well known for his social media comments and marketing stunts.

Ver is one of the best-known persons in the crypto industry. Back in the days, he was even called “Bitcoin Jesus”. Roger Ver has been an advocate for cryptocurrencies since the early 2010s. Everyone recognizes the pioneering work Ver did for Bitcoin.

He created the first popular online store accepting Bitcoin. Ver was also an early investor in many crypto projects. He still owns Bitcoin.com too, which is by far the most valuable crypto domain.

roger ver

Two famous guys in the crypto industry: John McAfee (left) and Roger Ver (right).

Bitcoin.com is one of the marketing weapons at Ver’s disposal. The site is used to promote Bitcoin Cash as the true Bitcoin. At one point the default currency of Bitcoin.com wallet was even changed to Bitcoin Cash, which was then reversed.

Roger Ver also created the term “Bitcoin Core” in 2017. He used this in debates between Bitcoin and Bitcoin Cash to bring Bitcoin Cash to the same level. When you compare “Bitcoin Core vs Bitcoin Cash”, it sounds better and more equal than “Bitcoin vs Bitcoin Cash”.

The Bitcoin Cash campaigning has raised the eyebrows of many analysts. The problem people have is that it sometimes mixes FUD with facts. Litecoin founder Charlie Lee commented on Bitcoin Cash marketing tactics like this in December 2017:

AboutBitcoin.io tries to always remain neutral with all cryptocurrency analyses. It is just a fact, that there has been quite a lot of controversy surrounding Bitcoin Cash in the past years. Surely there have been new fans and hodlers, but Ver has certainly his vocal opponents too.

One message that Ver has been shouting is that Bitcoin Cash is the real Bitcoin. According to Ver, it’s closer to Satoshi Nakamoto’s original vision of digital P2P cash.

It’s also important to mention Roger Ver’s relationship with Jihan Wu. The Chinese businessman is the founder of Bitmain, the leading manufacturer of ASIC mining devices. Bitmain has been a key supporter of Bitcoin Cash and once held more than a million BCH coins.

Roger Ver has disappeared from the news in the past two years. Investors are now interested in Ethereum, DeFi tokens, NFTs, etc. There is no Bitcoin Cash vs Bitcoin debate going on either.

Investors, who have arrived in the crypto world since 2019, haven’t probably even heard of Roger Ver.

Bitcoin Cash vs Bitcoin SV

At first, the Bitcoin Cash project was united against Bitcoin. But gradually, debates inside the group started to get heated. This happened even before the first birthday. Arguments over the project development split the team into two groups: Bitcoin ABC and Bitcoin SV.

The name Bitcoin ABC comes from the Bitcoin Cash software run by the nodes. This group was led by Roger Ver. It had also support from previously mentioned Bitmain founder, Jihan Wu.

Bitcoin SV group was led by Craig S. Wright, who is probably an even more controversial figure than Roger Ver. For example, Wright has publicly stated that he is Satoshi Nakamoto. This is where the Bitcoin SV name comes from as well (Satoshi’s Vision).

BSV received strong support from billionaire Calvin Ayre, who owns the CoinGeek website.

Check the video below, which explains the Bitcoin Cash war. It’s done in November 2018, one week before the blockchain-splitting hard fork.

The Bitcoin Cash war was, ironically, an argument over the block size. This time it was Roger Ver, who wanted to keep the block size as it was. Bitcoin SV people wanted to increase it further, even up to one gigabyte. You can read more details about the debate from this article.

Since the two groups didn’t reach an agreement, a chain-splitting hard fork took place in November 2018. This battle had serious consequences on the entire cryptocurrency market. Bitcoin price crashed from 6000 dollars to almost 3000 dollars. The entire market lost 50% of its value in a space of two weeks.

We’ll never know for sure, what caused this crash. The common wisdom is that the crash was partly due to scared investors and partly because Bitcoin Cash groups were selling bitcoins in order to pump their own currency in value.

The market has widely accepted the Bitcoin ABC as the “original Bitcoin Cash” chain and therefore it’s still called Bitcoin Cash. Bitcoin SV has always been the smaller of the two, but it’s in no way a dead coin.

Bitcoin Cash vs Bitcoin technology comparison

We won’t dive too deeply into Bitcoin Cash technology in this article. The reason is that it was the same currency as Bitcoin until August of 2017. Technically, it works just like it’s “big brother” in almost every way.

If you want to learn about Bitcoin Cash mining, network nodes, and the blockchain, check out this article: What is Bitcoin? The information can be applied to Bitcoin Cash as well.

Let’s compare Bitcoin Cash to Bitcoin and see what are the key differences.

Bitcoin Cash is a cryptocurrency using the Proof of Work consensus algorithm. Many argue that PoW is a “pre-historic” method to secure the blockchain because it requires physical mining devices. Whether this is true or not, there are still many cryptocurrencies using Proof of Work: All Bitcoin forks, Litecoin, Ethereum, Dash, Digibyte, Dogecoin, etc.

Bitcoin Cash is using the same SHA-256 hashing algorithm as Bitcoin. This means you can switch a Bitcoin miner to mine Bitcoin Cash instead.

Here lies one security threat for Bitcoin Cash. It would be relatively easy to perform a 51% attack on this chain since the hash power needed already exists in massive quantities. The same goes for Bitcoin SV, where the hash rate is even lower.

This is a threat for any PoW based coin, which uses the same hashing algorithm as one clearly stronger (in terms of hash power) currency. It’s the reason why the Ethereum Classic blockchain was attacked in 2020.

bitmain antminers

Antminers from Bitmain. These can be used to mine Bitcoin or Bitcoin Cash.

The biggest difference between Bitcoin and Bitcoin Cash is the block size. As mentioned earlier, the debate over the block size led directly to the creation of Bitcoin Cash. Nowadays Bitcoin Cash has a block size of 32 MB giving it a capacity of 100-200 TPS (depending on a source).

In theory, the Bitcoin Cash TPS capacity is 32x bigger compared to Bitcoin. In practice, the difference is not so big. This is due to the SegWit soft fork, which doubled Bitcoin’s capacity by moving some of the transaction data outside the block. SegWit is not activated in Bitcoin Cash.

How about the Lightning Network? Roger Ver has plenty of anti-LN arguments, which he is not shy to tell either. He has also demonstrated the speed of Bitcoin Cash many times and shown how it can match the Lightning Network. Here’s one example:

Bitcoin Cash blockchain can perform this transaction because the service requires no confirmations. Bitcoin Cash blockchain has the same limitations as Bitcoin, which means new blocks are mined every 10 minutes. This means, that if there is no significant traffic on the Bitcoin network, a BTC transaction moves as fast as a BCH transaction.

The advantage of Bitcoin Cash is shown if the network gets clogged like it did in late 2017. This is when Bitcoin Cash could process your transaction much faster. It is also clearly cheaper than Bitcoin when we look at the transaction costs. Bitcoin Cash has so small fees that it’s almost free to send.

It is possible to use Bitcoin Cash at online merchants (like Roger Ver demonstrates) because there is an underlying difference in the protocol compared to Bitcoin. That makes a double-spend attack almost impossible to make even if no blockchain confirmations are needed.

However, Bitcoin Cash cannot escape the 10-minute block time when coins are moved “in a normal way”. If you try to send Bitcoin Cash from an exchange to your wallet or vice versa, you’ll notice it’s usually slower than using Bitcoin. The block time is the same, but operators demand more confirmations due to smaller network security.

Bitcoin Cash is meant to be a digital currency, which can be used easily and cheaply for purchase. This is the role that fits as well.

The future of Bitcoin Cash

Bitcoin Cash has kept its high market rank despite the war against Bitcoin SV and the Lightning Network expansion. Litecoin has also activated its Lightning Network, which will increase the pressure on Bitcoin Cash.

Roger Ver has clearly taken a stand against the Lightning Network. He has often demonstrated how Bitcoin Cash can match that transaction speed, as seen in the video above.

Even if Bitcoin Cash doesn’t have Lightning Network, the project is going forward in other sectors.

The advantage of Bitcoin Cash is the marketing wizard Roger Ver. The Bitcoin.com domain plays surely an important role as well. Ver is very well networked in Japan, where he has managed to raise the awareness of Bitcoin Cash a lot. He has been able to make Bitcoin Cash a well-known cryptocurrency despite its young age.

There is also Bitmain, which is one of the biggest players in the entire crypto industry. Bitmain’s support has been crucial for Bitcoin Cash since the beginning and it is also an essential part of the hash wars (mining battle between Bitcoin Cash and Bitcoin SV).

It also looks like Bitcoin Cash has won the war against Bitcoin SV. The market has clearly decided which of them is the “original Bitcoin Cash”, while Bitcoin SV has even been banned from some exchanges. This battle between Roger Ver and Craig Wright is far from over, though.

Check the video below for a good update from the Coin Bureau channel.

If you want to learn about Bitcoin Cash technical updates, check this post.

There are some big questions still left unanswered. Are any of the digital currencies (Bitcoin Cash, Litecoin, Dash, etc.) ever going to hit the mainstream?

The first major obstacle is taxation. Every crypto-to-fiat transaction is taxed in most countries. This makes it unwise to use any cryptocurrency for payments, whether it’s Bitcoin or Bitcoin Cash.

Only cryptocurrencies that work in such an environment are stablecoins. Even if they are taxed as well, you won’t make any taxable gains because the value of each coin is tied to one dollar all the time.

The second threat is CBDC – Central Bank Digital Currency. It looks very likely CBDCs will be launched by many central banks in the near future. They will be also pushed as the main payment method.

How are coins like Bitcoin Cash going to survive in an environment like this? The same goes for Litecoin, Digibyte, and other coins designed to be just currencies. Bitcoin is doing fine with its digital gold narrative. But, there is just one gold, not all cryptocurrencies can reach this status.

Bitcoin Cash price and how to buy Bitcoin Cash

 

If you want to invest in Bitcoin Cash, we recommend using Coinbase. That’s a newbie-friendly option to buy Bitcoin Cash with fiat currencies. Wire transfers are fast and there are also credit card deposits available.

Buy Bitcoin Cash now

Other popular options for buying BCH with fiat are eToro and Binance.

Almost all popular crypto wallets support Bitcoin Cash. Exodus is a very good option for free – they have both a desktop and a mobile version of the wallet. You can also use the official Bitcoin.com walletLedger Nano SLedger Nano X, and Trezor Model T offer ultimate safety.

Keep up with Bitcoin Cash by following the official Bitcoin.com Youtube channel and Roger Ver on Twitter. You’d also follow the Reddit pages  /r/btc/ and /r/bitcoincash/.

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