Cryptocurrencies

What is Bitcoin Cash? The Beginner’s Guide

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, we refer to the fact that the word cryptocurrency is used for almost any token there is in the market. Bitcoin Cash, however, is true P2P currency.

The currency category has many different options, which Bitcoin Cash is competing with. You have probably heard about Litecoin, Dash, and Digibyte as well. One could also place XRP into this category, not to forget Bitcoin.

bitcoin.com

The front page of Bitcoin.com, which is an information website of both Bitcoin and Bitcoin Cash. The site is owned by Bitcoin Cash leader Roger Ver.

Bitcoin Cash is a hard fork of Bitcoin and it was born on the 1st of August in 2017.  There have been many cryptocurrencies forked out of Bitcoin, but Bitcoin Cash is the only one with 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 top cryptos since its birth.

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 about increasing the 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 and block time in the Bitcoin blockchain. Currently, the block size is limited to 1MB, and blocks are mined only every 10 minutes.

Each block is simply a list of Bitcoin transactions. Smaller the block, fewer transactions it can contain. You could bypass this bottleneck by having blocks every minute or even ever 10 seconds. But, Bitcoin has a 10-minute block time, which makes the problem even bigger.

The debate was all about increasing the block size. The alternative solution is called “off-chain” or “sidechain”, which in practice means the lightning network. This technology exists and is used today, but it was too much of beta in early 2017.

Things got really heated in 2017 when the SegWit upgrade was finalized. A group of Bitcoin supporters and developers left and hard-forked their own currency on the 1st of August at block #478559. This is how Bitcoin Cash was born. The block size of Bitcoin Cash was instantly increased from 1 MB to 8 MB. Just a few weeks later, SegWit was launched on the Bitcoin blockchain.

The drama continued even after the Bitcoin Cash hard fork and SegWit. There was another proposal splitting the Bitcoin community called SegWit2X. This was a proposed hard fork, where the Bitcoin block size would have been doubled. It was a big threat and divided opinions, but SegWit2X was eventually canceled just a few days before the proposed time.

segwit2x

A cryptocurrency called SegWit2X was created in the boom of December 2017, which quickly died, though.

If the Bitcoin Cash solution is technically working, what’s the problem? The problem 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 in the past two years. The network has expanded rapidly, and some Bitcoin maximalists claim that it’ll eventually make other cryptocurrencies useless. The argument is this: if Litecoin, Bitcoin Cash, and other similar currencies can only bring fast & cheap transactions on the table, what advantage is left after the lightning network?

The Bitcoin Cash solution has been also 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 a face to Bitcoin Cash

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

Ver is one of the best-known persons in the whole crypto universe. Back in the days, he was also titled Bitcoin Jesus. Roger Ver has been an advocate for cryptocurrencies since the early 2010s. Everyone recognizes this pioneering work Ver has done for 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 too, which is by far the most valuable crypto domain. Ver has also funded many early-stage crypto startups, which have then grown to big operators in the crypto market.

roger ver

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

One of the marketing weapons in Ver’s disposal is the Bitcoin.com website. It was originally all about Bitcoin and the site is a landing page for many newbies wanting to learn about cryptocurrencies. Nowadays Bitcoin.com 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 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:

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 the 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. The “What is Bitcoin” page of Bitcoin.com shows the Bitcoin branch as a grey one and Bitcoin Cash branch the proper, continuation of Satoshi Nakamoto’s vision.

It’s also important to mention Roger Ver’s good relationship with Jihan Wu. The Chinese businessman is the founder of Bitmain, which is the leading manufacturer of ASIC mining devices. Bitmain has been a key supporter of Bitcoin Cash and held over one million BCH coins. Bitmain plays also an important part in Bitcoin Cash mining.

Bitcoin Cash war (Bitcoin Cash ABC vs SV)

At first, the Bitcoin Cash project was united against Bitcoin. But gradually, debates inside the group started to get heated before the first birthday. Arguments over the project development split the team eventually 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 and 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, the creator of Bitcoin. This is where the Bitcoin SV name comes from as well. SV stands for 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 early November, one week before the blockchain-splitting hard fork.

The Bitcoin Cash war was, ironically, an argument over the block size. Exactly the same reason that had split the Bitcoin camp one year earlier. This time it was Roger Ver, who wanted to keep the block size as it was. Bitcoin SV people wanted to increase it eventually to 1 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 also 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 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.

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. This means that Roger Ver must lead his troops into a battle on two fronts: against Bitcoin SV and against Bitcoin (with other currencies).

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 too 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 that you can switch an SHA-256 compatible miner from Bitcoin to Bitcoin Cash and even to Bitcoin SV. Here lies also one security threat for Bitcoin Cash. It’s 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.

bitmain antminers

Antminers from Bitmain. These can be used to mine Bitcoin, Bitcoin Cash, and Bitcoin SV.

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 (and Bitcoin SV). 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. Bitcoin Cash cannot escape the 10-minute block time when coins are moved “in a normal way” in the blockchain.

You can make a test transaction from your Ledger Nano to Binance or Coinbase and see how long it takes. In fact, these exchanges require twice as many confirmations from Bitcoin Cash compared to Bitcoin. If the Bitcoin network has no extra traffic, your transaction is available twice as fast.

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

The future of Bitcoin Cash looks pretty good at the moment. The currency has kept its market position despite the Bitcoin Cash war 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 on other sectors. You can check the roadmap at bitcoincash.org/roadmap.html.

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. BCH has also kept its status as one of the biggest cryptocurrencies.

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 that 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. Bitcoin SV is still very much in the game.

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

An investor must evaluate the position of Bitcoin Cash compared to Bitcoin & Lightning Network and the Bitcoin SV project. The competition is tough in the currency niche in general. For example, Dash and Digibyte have many technical features Bitcoin Cash doesn’t have. One cannot rule out XRP and Stellar Lumens either, which offer extremely fast and practically free transactions.

There are many cryptocurrencies nowadays, which can offer very fast and very cheap transactions. Even with blockchain confirmations included.

Bitcoin Cash price

 

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.

Other popular options for buying BCH with fiat are eToro and Kraken. Bitcoin Cash can be found from every popular exchange these days. You can also buy it with Bitcoin from crypto-crypto exchanges, like 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/.

2229   btrz ancient egyptbtc 728x90 en

What is your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Comments are closed.