Bitcoin Cash (BCH) is a cryptocurrency that originated as a fork on the Bitcoin blockchain. This means that Bitcoin Cash transactions are processed on the Bitcoin blockchain, but that there are partly other rules under which the cryptocurrency functions. The fork from which BCH emerged was completed in 2017. Since then, BCH has been a fixture in the top 25 largest cryptocurrencies by market capital. At the time, it was the only branch of the Bitcoin network – not much later Bitcoin SV was created under the leadership of the controversial Craig Wright as a fork of Bitcoin Cash. In this article we will leave that sub-branch of Bitcoin Cash for what it is.
Bitcoin Cash arose out of a difference of opinion among Bitcoin developers about the scalability issue. As early as 2017, it turned out that the transaction volumes of the Bitcoin network in its then form would become a problem. For a long time, it was limited to about seven transactions per second, with an average processing time of over 30 minutes. Bitcoin Cash continued as a separate branch on the blockchain, with one major change to the block validation process. We’ll discuss how much that makes a difference later in this article, along with everything else you need to know about Bitcoin Cash.
To understand the technology behind Bitcoin Cash, you really only need to know Bitcoin ‘s consensus model . Let’s refresh your memory.
Transactions on the Bitcoin network are processed by adding them to the latest block being created on the blockchain. The right to create that block is determined by the mining process, in which decentralized computers perform calculations to provide the network with computing power. The person who solves the calculation may validate the new block (check for validity), and will receive Bitcoins as a reward. Several new transactions on the network are bundled in the new block. These are approved during the validation and finally processed.
So all this happens with the computing power that individual computers invest in the mining process. The reward for creating a new block encourages miners to keep mining and thus provide the blockchain with computing power.
So much for the Bitcoin blockchain. The same way BCH transactions are processed: every ten minutes a new block is added to the BCH end of the Bitcoin chain. Miners on that sub-chain are of course paid in BCH. Everything else is pretty much the same: the total supply of 21 million coins, the block time of 10 minutes, and the Proof-of-Work model for validation. But what is the difference between Bitcoin and Bitcoin Cash transaction processes? That’s because of the block size, the so-called block size of the original Bitcoin network.
Here’s the thing: Bitcoin Cash’s block size has increased significantly compared to Bitcoin’s mainchain. Bitcoin’s blocks are still no larger than 1MB, which, according to some of the developers, was the reason for the low transaction volume. They chose to branch off with Bitcoin Cash, on which the block size was 8MB. Simply put, this allowed more transactions to be processed per block. In the meantime, the block size of Bitcoin Cash has even been increased to 32MB, with which it can handle considerably more transactions than the original Bitcoin network. It should be noted that the transaction time is not necessarily much better than with Bitcoin – logical, because the block time remained unchanged.
Who is the creator of BCH?
Again, we have to start at the beginning: the crude concept of BCH is exactly the same as that of Bitcoin, which is why we must first mention Satoshi Nakamoto as the creator. In fact, the Bitcoin Cash fork, according to its creators, was formed to best pursue Satoshi’s original vision with the network. Nevertheless, it is important to say that BCH is indeed a fundamentally different cryptocurrency than Bitcoin.
A conscious choice was made by a group of developers to take a different path. Specifically, it was about the block size, but actually it was mainly a difference in vision. One camp did not want to deviate from Satoshi’s set-up, while another group wanted an adaptation to give the concept more perspective. This is actually still the ratio of BTC vs BCH ‘followers’.
There is one more name we should mention when it comes to promoting Bitcoin Cash in the crypto world: Roger Ver. He was an early pioneer for Bitcoin, and decided to commit to BCH after the fork in 2017. That is why his name has often been mentioned in the same breath as the Bitcoin Cash project.
The USP of Bitcoin Cash
It is best to be brief about this: Bitcoin Cash aims to be what Satoshi envisioned with Bitcoin, but functionally scalable at large volumes. The name the developers chose for their fork also betrays that mindset. They wanted to show that BCH is meant to enable the philosophy behind Bitcoin. What was that vision again? As Satoshi describes in the introduction to his illustrious white paper, “… a fully decentralized peer-to-peer network for transactions (that) would enable instant online payments”.
Where can you buy BCH?
We dropped it for a while: BCH is one of the cryptocurrencies that still runs on a good old proof-of-work system. However, that doesn’t mean you have to start dusting off your old ASIC miner: as with big brother BTC, the mining power is very centralized. There are a few large pools that account for huge portions of the mining power. Most mining rigs for those pools are located in giga sheds in China, for example, or in other places where energy can be obtained cheaply and efficiently. You can of course join a mining pool, but the question is how profitable that is (still).
A faster way to collect some BCH is to buy it on an exchange. Most reliable parties sell Bitcoin Cash, and you can also store your BCH stock on most cold storage devices. Striking is of course not possible with proof-of-work coins: you can’t have everything.