What is Bitcoin Cash? Bitcoin Cash is one of the best-known cryptocurrencies in the world. It 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. By that, I refer to the fact that the word cryptocurrency is used of almost any token there is in the market.
Bitcoin Cash has its roots in Bitcoin. In fact, there was no Bitcoin Cash until August 2017. This means Bitcoin Cash is competing with Bitcoin and other currencies such as Litecoin in the digital cash & payment network market.
There have been many cryptocurrencies forked out of Bitcoin, but Bitcoin Cash is the only one with significant success. It’s been one of the top cryptos since its birth and seems to have established itself as one of the most popular coins in the market.
Next, let’s go through Bitcoin Cash features and history. What is this cryptocurrency all about?
Bitcoin Cash is a solution to Bitcoin’s scalability issues
The scaling debate of Bitcoin has been an on-going process for several years. This is a discussion over Bitcoin’s transaction capacity TPS ( Transactions Per Second), which is still very low. Third generation platforms can reach 1000 TPS levels, while Bitcoin is still stuck to less than 10 TPS.
Bitcoin’s poor capacity comes from its technical limitations, which were decided over 10 years ago. It is all about the block size in Bitcoin’s blockchain. Currently, the block size is limited to 1MB. It’s easy to understand, that smaller the block, fewer transactions it can contain.
A soft ward called SegWit was implemented in 2017. This helped to double the capacity of Bitcoin.
Bitcoin Cash hard forked from Bitcoin, because a group of people wanted to increase the block size significantly, not just double it. Eventually, Bitcoin Cash was launched with 8MB sized blocks. In 2018 the block size was increased further to 32MB.
This “divorce” from Bitcoin was a long-time coming. Differences boiled in the summer of 2017 and led to Bitcoin Cash being born in August. A blockchain splitting event like this is called a hard fork.
If Bitcoin Cash solution is technically working, what’s the problem? The difference is that the remaining Bitcoin developers want to solve the scaling issues with an off-chain solution. This is called the Lightning Network and it moves small transactions out of the Bitcoin to another network.
The Lightning Network enables close to real-time transactions with almost no cost. This technology has taken big steps forward during 2018 and 2019. The network has expanded rapidly, and some analysts claim that it’ll eventually make other cryptocurrencies useless.
The Bitcoin Cash solution is 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 of the network.
However, there are also issues with Lightning Network. No solution is absolutely perfect and it’s a question of two different solutions to one problem. The Bitcoin Cash argument is that there is no need to create an additional layer and reduce decentralization, because the scaling can be done on-chain.
Roger Ver gives Bitcoin Cash a face
Roger Ver has been the spokesperson of Bitcoin Cash from the beginning. He is a very controversial character, who’s also used quite a few questionable tricks in his marketing efforts.
Ver is one of the best-known persons in the crypto universe. Back in the days, he was even titled as Bitcoin Jesus. Roger Ver has been an advocate for cryptocurrencies since the early 2010s. Everyone recognizes this pioneering work Ver has done with Bitcoin.
He created one of the first popular online shops accepting Bitcoin, and Ver was also an early investor to many crypto projects. He still owns Bitcoin.com, which is by far the most valuable crypto domain.
One of the weapons in Ver’s disposal is Bitcoin.com website. It was originally about Bitcoin, and the site is a landing page for many newbies wanting to learn about cryptos. Nowadays Bitcoin.com (and the Bitcoin handle in Twitter) are also 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.
Roger Ver has also created the term Bitcoin Core in early 2018. 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 more equal than “Bitcoin vs Bitcoin Cash”.
The Bitcoin Cash campaigning has raised the eyebrows of many analysts. The problem people have with such campaigning is that it sometimes mixes FUD with facts. Litecoin founder Charlie Lee commented Bitcoin Cash marketing tactics like this in December 2017:
Sad to see Roger Ver FUD'ing Bitcoin on CNBC. And he keeps calling it Bitcoin Core coin. Talk about being a hypocrite. SMH https://t.co/mDWc8WnmZL
— Charlie Lee [LTC⚡] (@SatoshiLite) December 11, 2017
Roger Ver talks often about Bitcoin problems, but he isn’t always telling the whole truth of possible solutions. He also rarely mentions any issues Bitcoin Cash has encountered and market manipulations we’ve seen. Bitcoin Cash is also not the best solution to fast transactions, as we’ll see later on.
The message Ver has been shouting is that Bitcoin Cash is the only real Bitcoin because it’s closer to Satoshi Nakamoto’s original vision of P2P cash. The Bitcoin.com website reminds also its visitors of Bitcoin’s problems, which annoys some Bitcoin enthusiasts.
Disclaimer: AboutBitcoin.io doesn’t want to take a stand against Roger Ver (or anyone else) and wants to remain neutral with all cryptocurrencies. It is just a fact that there has been quite a lot of controversy surrounding Bitoin Cash in the past year. BCH has lots gained a lot of fans, but Ver has certainly strong opponents too.
Bitcoin Cash (ABC) vs Bitcoin SV
At first, Bitcoin Cash was a united front against Bitcoin. But debates started to get heated up in 2018, which split the Bitcoin Cash team in two camps: Bitcoin ABC and Bitcoin SV.
The name Bitcoin ABC comes from the Bitcoin software. This group is led by Roger Ver and it has also support from Bitmain founder Jihan Wu. Bitmain is the biggest manufacturer of ASIC miners in the market and also holds about one million coins of Bitcoin Cash.
Bitcoin SV group is led by Craig S. Wright, who is probably even more controversial character than Roger Ver. For example, Wright has publicly stated that he is, in fact, Satoshi Nakamoto, the creator of Bitcoin. This is where the Bitcoin SV name comes from as well. SV stands for Satoshi’s Vision.
BSV receives 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 early November, one week before the blockchain-splitting hard fork.
Ironically, the Bitcoin Cash civil war was ignited by the same factor as Bitcoin Cash vs Bitcoin debate. This time it was Roger Ver though, who wanted to keep the block size as it is. Bitcoin SV people wanted to increase it eventually to 1GB. You can read more about the debate from this article.
The two groups couldn’t reach an agreement, so a hard fork took place in November 2018. Bitcoin Cash blockchain was split in two, just like Bitcoin blockchain, only about 15 months earlier.
The Bitcoin Cash hard fork had serious consequences to the whole crypto market. Bitcoin price crashed from 6000 dollars to almost 3000 dollars. The entire market lost 50% of its value in a space of one week.
We’ll never know for sure, who exactly 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.
After the hard fork took place, the crypto market has widely accepted the Bitcoin ABC as the “original Bitcoin Cash” chain. Hence, nowadays you see Roger Ver’s Bitcoin Cash as Bitcoin Cash everywhere. But, there was a short time when it was referred as Bitcoin Cash ABC in some exchanges.
Craig Wright’s project is still known as Bitcoin SV, as it’s been from the beginning.
Bitcoin Cash technology
We won’t go through Bitcoin Cash technology too deeply 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 “ancestor”. 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 to Bitcoin Cash as well.
Bitcoin Cash is a cryptocurrency using Proof of Work consensus algorithm. This means, that new blocks are created by mining machines, which consumes quite a lot of electricity. This is the reason some people consider PoW consensus as a pre-historic method to maintain a blockchain.
Bitcoin Cash is using the same hashing algorithm (SHA-256) as Bitcoin. That means you can put your ASIC miner to work on Bitcoin or Bitcoin Cash blockchain. But you’d need a different machine to mine Litecoin for example, which is using a different hashing algorithm (scrypt).
The biggest difference between Bitcoin and Bitcoin Cash is the block size. As mentioned earlier, the debate of increasing the block size led directly to the creation of Bitcoin Cash in the first place. Nowadays Bitcoin Cash has the block size of 32MB giving it a capacity of 100-200 TPS.
In theory, the Bitcoin Cash 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’s also demonstrated the speed of Bitcoin Cash many times and shown how it can match the Lightning Network. Here’s one example:
If you look at the video comments, you’ll notice there might be a small problem with this demo.
Bitcoin Cash blockchain works just like Bitcoin’s, meaning there are new blocks every 10 minutes in the Bitcoin Cash blockchain as well. If there’re no traffic jams in either network, transactions get confirmed as fast. Typically, services like exchanges and wallets require 2-3 confirmations, meaning you have to wait 2-3 new blocks to be created until your funds are available. This means 20-30 minutes.
Then, how can Roger Ver send some coins in two seconds? This is because his demo transactions are not actually confirmed in the blockchain. This means they are not fully secure, and a hostile actor could reverse them. You can try to send Bitcoin Cash in practice from your wallet to an exchange and you’ll notice that there’s no escaping the 2-3 block rule.
Bitcoin Cash capacity kicks in if the network has a high load and there are lots of transactions needed to be handled.
The future of Bitcoin Cash
The future of Bitcoin Cash looks relatively good at the moment. The currency has kept its market position strongly despite the November hard fork and Lightning Network expansion. Litecoin has also activated its Lightning Network recently, which will increase the pressure on Bitcoin Cash.
Roger Ver has clearly taken a stand against the Lightning Network. He’s been trying to prove how Bitcoin Cash can match that transaction speed, as seen in the video above.
The advantage of Bitcoin Cash is the marketing machine of Roger Ver. Bitcoin.com domain is surely an important part of this puzzle. Ver is very well networked in Japan, where he has managed to raise the awareness of Bitcoin Cash a lot.
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. This might change in the future, because Jihan Wu is not in charge anymore and the company has had a terrible year (2018). The mining syndicates are still there, though.
It also looks like that Bitcoin Cash has won the civil war against Bitcoin SV. The market has given the status of original Bitcoin Cash, while Bitcoin SV has been even banned from some exchanges. This battle between Roger Ver and Craig Wright is far from over, though.
An investor must analyze the Bitcoin Cash position compared to Bitcoin and its competitors (like Litecoin) and its rival, Bitcoin SV. Real-time price of Bitcoin Cash:
If you want to invest in Bitcoin Cash, we recommend Coinbase. That’s the most popular exchange to buy Bitcoin Cash with fiat currencies. Wire transfers are fast and there are also credit card deposits available.
Other popular options for buying BCH with fiat are Bittrex, Kraken and CEX. Bitcoin Cash can be found from every popular exchange these days. You can also buy it with Bitcoin from crypto-crypto exchanges, like Binance.
Here’s a recommended video, where Roger Ver talks about Bitcoin Cash with Crypto Lark.