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Bitcoin Cash (BCH) is a fork of the original bitcoin, created in August 2017. It is very similar to bitcoin, but some innovations make it a faster and cheaper network to use. It is the fifth largest cryptocurrency in the world, with a capitalization of 4 billion dollars.
BCH was created in a process called Hard Fork, which involves dividing one cryptocurrency into two. The reason for the division was the disagreement of the community regarding the size of the blocks that would be good for bitcoin. Namely, the processing capacity of bitcoin transactions is low, about 7 transactions per second. In 2017, it was even lower.
One current block can hold up to ≈3,000 transactions, and a new block is mined every ≈10 minutes.
During the period when bitcoin is used a lot, the network becomes clogged, because there are more transactions waiting to be processed than places in the next block.
In the time of bitcoin mania, it happens that 200,000 transactions are waiting to be processed at the same time. This situation slows down the network a lot. It also makes it more expensive, because senders compete to get their transaction processed as quickly as possible, so they offer more money to miners for processing. The community has long debated increasing blocks as a potential solution to increase network capacity.
∆∆∆ How does Bitcoin cache work?
Each BCH transaction must be added to the blockchain in order to be considered successful. The job of validating transactions and adding to blockchain is done by miners and nodes, their powerful computers connected to a network. Miners spend a lot of processing power and electricity to get financial rewards. If they manage to "dig up" or connect one block of valid transactions on time, they receive a reward of 6.25 BCH. In addition, they receive fees from the senders of all transactions that they have included in that block. Thus, like BTC, BCH is issued on the basis of a process called “proof of work” (PoW), in the form of rewards given to miners.
The issuance of new units of bitcoin cache is limited. It is considered inflation and is 1.72% annually. Inflation is halved every 4 years, which means a reduction in rewards for miners. After the next halving, inflation will be only 0.86% per year.
∆∆∆ How much BCH already exists in the world?
New units of this cryptocurrency will be issued until the final number of 21,000,000 is reached. So, that mean that
88% of its BCH that will ever exist has already been mined
The lastBCH should not be mined until around 2140.
After that, transaction fees will be the only source of income for the miners.
∆∆∆ Potential risk and BCH
Risks related to Bitcoin cash Miners are currently providing a Bitcoin cash network with 2,495 ehash / s. Although this processing power is 50x less compared to Bitcoin, it is higher compared to other cryptocurrencies that are mined. BCH has dedicated miners, as well as the support of large farms like bitmain, so the amount of process power is quite stable.
However, it is not enough to prevent a potential short-term 51% attack. A more serious 51% attack would, in combination with the so-called double-spending, harmed the stock exchanges trading BCH the most.
In addition to double spending, an attacker could prevent certain transactions from being confirmed. The damage that would be done to the cryptocurrency's reputation would also be significant.
BCH was attacked by reorganizing the blocks on May 15, 2019, during a regular update. Then there was a poorly executed implementation that was supposed to recover the mistakenly sent BCH from Segwit, and in fact opened up space for theft. The "war of miners" followed, who reorganized the blocs by trying to steal someone else's BCH. One part of the stolen BCH was returned to its rightful owners, thanks to the efforts of large pools to dig up a longer chain.
There is still controversy over whether there was a 51% attack or reorganization of the blocs. BCH is regularly updated (hard forked) twice a year.
This attack showed how risky it can be. The developers said they do not intend to carry out two invasive updates a year forever. It is only a current measure at this stage of development.
∆∆∆ The potential of Bitcoin cash
Bitcoin cache can process a much larger number of transactions per second than the Bitcoin network, which means that it is faster and cheaper to send BCH than BTC. It is great for transactions, because no matter how much money is sent, a fee less than a cent is usually paid. In addition to sending transactions, Bitcoin cash developers are working to build new functionality on smart contracts.
Their goal is to build as many types of tokens and decentralized applications on it as possible.
Additional solutions are being developed to increase the scalability of Bitcoin cache.
The goal is to create a network that can process as many transactions as possible in the future.
To achieve this, in addition to the implemented Schnorr signatures, developers are also developing solutions for faster block propagation and blockchain cropping. Using mass parallelization, they will try to raise thenumber of possible transactions per second to over 5 million. They want to reach a level at which stores will be able to consider the transaction safe enough after only 3 seconds, that they can treat it as if it "passed". More and more online and physical stores, as well as other providers of services and goods, are accepting Bitcoin cash as a means of payment.
∆∆∆ The price of BCH
The value of cryptocurrencies is very volatile and depends on many factors. Some factors are related to individual cryptocurrencies, and some to the global market.
Highest price of $ 4,355 in December 2017, at the same time as BTC was worth $ 20,089.
This was followed by a big drop in the prices of all cryptocurrencies on the market.
BCH hit rock bottom at $ 75.
It currently sells for $ 244. The return of confidence in the potential of this cryptocurrency can be noticed through the record volume of BCH trading this year compared to all previous ones.
What are your predictions?
What value will BCH reach in 2021?
Will you invest and hold?
Thank you, feel free to write your opinion in comment section.