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Concerns About Bitcoin Cash

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Avatar for Amsad17
Written by   58
1 year ago

Key Takeaways

  • Bitcoin Cash is an offshoot of Bitcoin and is the result of a hard fork to the original cryptocurrency's blockchain in August 2017. Bitcoin Cash itself underwent a fork in Nov 2018 and split into Bitcoin Cash ABC and Bitcoin Cash SV (Satoshi Vision). Bitcoin Cash ABC is referred to as Bitcoin Cash now.

  • Bitcoin Cash plans to have a bigger block size as compared to Bitcoin to fit more transactions into a single block and function as a medium of daily transactions.

  • Despite their philosophical differences, Bitcoin Cash and Bitcoin share several technical similarities. They use the same consensus mechanism and have capped their supply at 21 million.

Concerns About Bitcoin Cash

Bitcoin Cash promised several improvements over its predecessor. But it has yet to deliver on those promises.

The most important one is regarding block size. The average size of blocks mined on Bitcoin Cash’s blockchain is much smaller than those on Bitcoin’s blockchain. The smaller block size means that its main thesis of enabling more transactions through larger blocks is yet to be tested technically. Transaction fees for bitcoin have also dropped significantly, making it a viable competitor to bitcoin cash for daily use.  

Other cryptocurrencies aspiring to similar ambitions of becoming a medium for daily transactions have added another wrinkle to Bitcoin Cash’s original ambitions. They have staked out projects and partnerships with organizations and governments, at home and abroad. For example, Litecoin announced partnerships with event organizers and professional associations and others, such as Dash, claim to have already gained traction in troubled economies like Venezuela.   

While its split from Bitcoin was fairly high-profile, Bitcoin Cash is mostly unknown outside the crypto community and is yet to make major announcements about adoption. Based on transaction levels on blockchain, Bitcoin still has a sizeable lead on its competition.

The second fork on Bitcoin Cash’s blockchain also highlights problems with managing its developer pool. That a sizeable section of the pool thought that Bitcoin cash was diluting its original vision is troubling because it opens the door to further splits in the future. Smart contracts are an essential feature of all cryptocurrencies. However, it remains to be seen whether Bitcoin Cash pivots to become a platform for incorporating smart contract for transactions or simply for payment systems. 

Bitcoin Cash also does not have a clearly-defined governance protocol. While other cryptocurrencies, such as Dash and Vechain, have innovated and outlined detailed governance protocols that assign voting rights, the development and design of Bitcoin Cash seems to be centralized with its development teams. As such, it is unclear with investors without substantial holdings of the cryptocurrency have voting rights or say in the cryptocurrency's future direction.

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Comments

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