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Bitcoin cash: What is it?

By Guardian Nigeria
10 May 2022   |   3:48 pm
Bitcoin cash is a cryptocurrency created in 2017. Here's all you should know about Bitcoin cash.

Bitcoin Cash PHOTO: Shutterstock

Bitcoin cash is a cryptocurrency created in 2017. Here’s all you should know about Bitcoin cash.

Bitcoin has inspired robust innovations since its inception in 2009, and Bitcoin cash is one of its most notable protégés. Bitcoin cash is crypto developed in 2017 from a Bitcoin fork. Its introduction mitigated Bitcoin’s scalability issue, increasing the size of blocks on the blockchain. That has enabled the network to process more transactions quickly, meeting the growing market demand. 

Bitcoin cash also underwent another fork in 2018, splitting into Bitcoin Cash ABC and Bitcoin Cash SV. The fork is known as Bitcoin cash because it relies on the original Bitcoin cash client. Nevertheless, you need to know certain things to understand Bitcoin cash and how it works. 

Understanding Bitcoin Cash 

The distinction between Bitcoin and Bitcoin cash is mainly philosophical. Bitcoin Satoshi envisioned Bitcoin as a peer-to-peer cryptocurrency for daily transactions. However, Bitcoin’s increasing mainstream adoption and stellar growth over the recent years have earned it the status of an investment asset.

 

Bitcoin’s blockchain experiences scalability issues mainly because it could not handle the increased number of transactions. Its bloc size was limited to 1MB only. And this impacted longer payment processing times and higher transaction fees for Bitcoin users. 

Bitcoin cash offers a way to resolve the situation by increasing the size of blocks to between 8M and 32 MB. That enables the network to process more transactions per block, reducing the wait times and costs. At the time of Bitcoin cash’s debut, Bitcoin processed an average of 1,000 to 1,500 transactions per block. A stress test of Bitcoin cash’s blockchain in 2018 proved it could handle up to 25,000 transactions per block. 

Many proponents of Bitcoin cash have applauded it, saying the change in Bitcoin’s block size would promote its use as a medium for daily transactions. Also, they argue that it would help compete against established multi-national credit card processors that usually charge higher fees to complete cross-border payments. The BitIQ is one of the most reputable platforms for processing international money transfers with Bitcoin. 

Bitcoin cash differs from Bitcoin because it does not integrate SegWit (Segregated Witness). SegWit is another proposed solution for increasing the number of transactions per block. It retains small pieces of information related to transactions in blocks. 

Similarities Between Bitcoin and Bitcoin Cash 

Bitcoin and Bitcoin cash also share several characteristics. For instance, both use the PoW (Proof of Work) consensus mechanism to mint new tokens. They also rely on Bitmain services, the world’s largest crypto mining platform. 

Like Bitcoin, Bitcoin cash’s supply can’t exceed 21 million only. The two cryptocurrencies also started with the same mining difficulty algorithm, known as Emergency Difficulty Adjustment. The algorithm adjusts the difficulty levels of mining the crypto every 2016 block or an average of two weeks. 

Miners leveraged the similarities between Bitcoin and Bitcoin cash to alternate their operations. That was profitable, but it also became detrimental to the growing Bitcoin cash market supply. That prompted Bitcoin cash to revise its EDA algorithm to give miners an easier time minting new coins. 

Bitcoin Cash ABC and Bitcoin Cash SV

Bitcoin cash split into Bitcoin Cash ABC and Bitcoin Cash SV (Satoshi Vision) in 2018. Bitcoin cash ABC uses the original Bitcoin cash client, but its blockchain has integrated numerous changes, such as the CTOR that rearranges transactions in a block to a particular order. Bitcoin cash SV rejected the integration of smart contracts into its ecosystem. Nevertheless, both have attracted significant valuations at major crypto exchanges worldwide since their inception. 

Overall, Bitcoin cash promises several improvements over its predecessor. It has achieved most of those promises so far, but some are still concerned by its relatively smaller block size than that of Bitcoin’s blockchain. 

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