Bitcoin first appeared almost exactly nine years ago and it’s now as strong as ever. These days, it’s not only the world’s first but also the most expensive, stable and popular cryptocurrency.
That being said, it isn’t perfect. One of the most pressing issues for the cryptocurrency has always been its scalability. More specifically, it’s been the size of a block of transactions, which upon the creation of Bitcoin was limited to one MB. This limit causes substantial delays in transaction processing times and limits the number of transactions the network can process.
Bitcoin Cash was a different story. It differs from the other versions in that in enabled the increase of the block size from one MB to eight MB. It’s overall goal is to increase the number of transactions that can be processed by the network, hoping that Bitcoin Cash will be able to compete with the volume of transactions that industry giants like PayPal and Visa can currently process.
Bitcoin Cash was launched in August 2017 and has since become Bitcoin’s most successful offshoot.
Story of the hard fork
The one MB limit for the size of every block was originally implemented to lower the possibility of potential spam and DDoS-attacks. While there were not that many transactions happening in the network, the limit wasn’t affecting anything at all.
As Bitcoin grew more and more popular, the limit started causing blocks to pile up, which unnecessarily extended the transition times. The situation got out of hand around May 2017, when some users reported having to wait for confirmation for up to four days.
Users had a chance to pay higher transaction fees to speed up the confirmation, but this approach basically rendered Bitcoin useless as a payment method, especially when it came to smaller transactions. For instance, paying for a sandwich or a cup of coffee with BTC just simply wasn’t viable, as a $3 cup of coffee will incur a transaction fee of more than $15. Otherwise, the seller will receive an unspendable dust amount.
The Bitcoin community came up with two possible solutions to this situation: Bitcoin Unlimited and Segregated Witness (SegWit).
Bitcoin Unlimited would scrap the block size limit altogether. Many miners were in favor of this solution, as the lack of block size limit would not only prevent blocks from piling up but also raise the overall miner’s fee for every block.
However, a lot of developers were against this proposal, thinking that its implementation will lead to small miners going out of business, which, in turn, could lead to a centralization of the entire network by massive mining corporations.
A Segregated Witness solution implied storing some of the information in separate files outside of the Blockchain. Developers claimed that it would free up a lot of storage space, the blocks will fit in more transactions and the confirmation time will significantly decrease. But, many people believed it was just a more complicated temporary stopgap when compared to the Bitcoin Unlimited approach.
As a result, a compromise protocol called SegWit2x was developed. Launching this protocol meant storing some of the information outside of the Blockchain as well as increasing the block size limit to two MB. The protocol was implemented on Aug. 1, 2017, after 95 percent of miners voted for the proposal. However, the network didn’t see the immediate increase in the block size limit. To a lot of people, this meant postponing a problem instead of solving it.
Moreover, this decision seemed to cater for those who treat Bitcoin as an investment opportunity and not a payment system it was created to be.
Then, during the Future of Bitcoin conference in Arnhem, Netherlands, the first implementation of the Bitcoin Cash protocol called Bitcoin ABC was announced by Amaury Séchet, a former engineer at Facebook.
Séchet and his team of developers decided to abandon the SegWit2x protocol and increase the block size limit to eight MB. As such drastic changes required their creation to split from the original Bitcoin network, it was announced that a hard fork will take place on Aug. 1, 2017.
For those that don’t know, a hard fork is the only currently known method for developers to update Bitcoin software. Developers split the network and essentially create a new Blockchain with altered rules. The original and the forked version of the cryptocurrency have identical Blockchains all the way up to the block when the split occurred. From there on, the two networks exist independently.
After the split happened, everyone who held Bitcoins before the hard fork received the same amount of Bitcoin Cash tokens.
The new cryptocurrency was quickly adopted by investors, as by the end of the first day of its existence Bitcoin Cash became the third cryptocurrency behind Bitcoin and Ethereum in terms of market capitalization.
Bitcoin Cash cheaper to use than Bitcoin Core?
In short: yes. The ever-rising fees associated with Bitcoin transactions were one of the main reasons for the inception of Bitcoin Cash. A very hands-on test, conducted in December 2017, showed that a Bitcoin Cash transaction was 99.56 percent cheaper than the equivalent transaction on the original Bitcoin network.
At the very end of 2017, people were paying $28 on average in transaction fees to move their Bitcoin tokens. Someone has even claimed that they had to pay a $16 fee to send $25 worth of Bitcoin, which is a 40 percent commission.
Hard fork critics
In a cryptocurrency world, a hard fork is always quite a troubling event. Many people believe that it goes against the very principle of the immutability of Blockchain and contradicts the ‘code is law’ principle.
When it comes to this particular hard fork, many critics are worried that the computer power required to process larger blocks will price out smaller miners, which might lead to the decision-making power being concentrated in the hands of large corporations that can afford more and better equipment.
Finally, as everyone who held Bitcoins before the split received an equal amount of Bitcoin Cash tokens, some people voiced their concerns that the split was nothing but a money-making scheme. In fact, the hard fork did create a situation similar to a double-spending problem, as it made conducting two transactions from a single wallet using the same set of keys possible.
Who is Roger Ver?
Roger Ver is a prominent investor and an early Bitcoin adopter. He invested over a million dollars into various emerging Bitcoin startups, including Ripple, Z.Cash, Blockchain.com, Bitpay, Purse.io and Kraken. He is also a CEO of Bitcoin.com and one of the five creators of the Bitcoin Foundation, to which he has also donated more than $1 mln worth of Bitcoin. Ver sees Bitcoin as a mean of achieving economic freedom. In the cryptocurrency community, he is also known as Bitcoin Jesus.
These days, however, Roger Ver is advocating for Bitcoin Cash. In a recent interview with Cointelegraph, Ver described Bitcoin Cash as ‘the real Bitcoin,’ claiming it will have the bigger market capitalization, trade volume and user base in the near future. He has also been quoted saying that he holds the majority of his cryptocurrency funds in Bitcoin Cash, which is, perhaps, the biggest indicator of his faith in the asset.
Should I invest in Bitcoin Cash?
Bitcoin Cash hasn’t been around for very long, but it has already established itself as an extremely strong cryptocurrency. At the time of writing, it’s the world’s fourth cryptocurrency in terms of market capitalization, behind the industry stalwarts Bitcoin, Ethereum and Ripple. It’s also a world’s second most valued cryptocurrency at $1,623 for one BCH as of Jan. 22, 2018.
To many people, Bitcoin Cash became an answer to everything that was wrong with the original Bitcoin, and it keeps getting new followers day by day.
Generally, every investment and trading move involves risk, you should conduct your own research when making a decision.
Does Bitcoin Cash price depend on Bitcoin price?
Bitcoin Cash is a completely independent cryptocurrency, so its price is not dependant on that of the original Bitcoin. However, it is important to note that Bitcoin is still the world’s dominant cryptocurrency, so if it goes up or down, the absolute majority of other cryptocurrencies are very likely to follow its trend.
Where can I buy Bitcoin Cash?
As Bitcoin Cash is a relatively new cryptocurrency, not every major exchange supports it as of yet. Below is a table of exchanges that operate worldwide where you can trade BCH for a fiat currency or another cryptocurrency. A complete list of every exchange supporting Bitcoin Cash can be found here.
Difference Between Bitcoin and Bitcoin Cash
A not so long time ago, in a galaxy not so far away, some smart people invented Bitcoin. In the beginning, there were only a few enthusiasts excited about the new currency, but very soon people started to realize the potential. So, the number of miners and people who hold bitcoins and pay with it became to grow exponentially.
It is a great thing, overall, except for one glaring issue: Bitcoin’s transaction speeds are very slow at around 7 transactions per second. As a comparison, Visa performs around 24,000 transactions per second. In 2017 it was clear that there are already too many transactions to handle and some reform is required in order to allow Bitcoin to scale further.
So, why can’t the volume of transactions just be increased?
That’s a great question. Initially, Bitcoin’s Blocksize limit was 1MB (today it’s 2MB). So, why they can’t make it a larger number, for example 820,100MB?
The answer to this can be explained using a heavy traffic metaphor. For example, say we have a heavy traffic issue, so we decide to change the speed limit to 200 miles per hour. What will happen? First of all, there will be a safety issue because at this speed the chances of crashing and injuries increase. However a potentially bigger problem is that now old and small vehicles will not be eligible for highways, because they can’t move fast enough. So the highway will be full of big people with big strong cars and a regular driver will stay at home or take slower roads to get to where they want to be.
This is exactly what will happen with increasing the limit. More blocks = more data to process for each transaction. So small nodes will not be able to process this increased data and decentralization becomes inevitable.
But there is still a need for more transactions - what is the solution?
The transaction issue has divided the Bitcoin community into two groups. One group claims that Bitcoin was never designed to be a “cup of coffee” payment solution, the other says that it has to scale. As neither group was ready to give up, in August 2017 Bitcoin was basically split using a process called “Hard Fork”, which created a new version of Bitcoin called Bitcoin Cash. Bitcoin Cash uses the same codebase, but with a Blocksize limit of 8Mb. This increased limit makes possible a performance of around two million transactions processed per day.
Bitcoin and Bitcoin Cash in your wallet
Ok, the couple is divorced, but who keeps the children?
What happened to people who had Bitcoins before the fork? The easiest way to solve the issue was to clone the wallets. The last mined block, before the fork, was 478558. So, if you had any Bitcoins before that block, after the fork you’ve will end up having the same amount in Bitcoin Cash. Easy, isn’t it? I wish we could do the same with children. (just kidding, it’s creepy!). Just imagine that you suddenly have 4 kids instead of 2. You are not really sure who is your original son. What about the school, friends, family? Sounds like a nightmare. In the Bitcoin world this nightmare came true in what is known as a “Replay Attack”.
You see, each person after the split has the same bitcoin with the same Private key in two wallets. This means that once you make a transaction, people can use the private key for a transaction in another currency. Instead of paying only from one wallet, the same amount will be deducted from the second too.
Like if you have two apartments and somebody enters and takes a laptop in one of them, he also is able to take the same laptop from another apartment. This doesn’t sound so great, right?
So, all the people now have twice more? Sounds great!
Not really, once the amount has increases, it automatically decreases the overall value of the currency, so nobody has actually become richer from the fork itself.
Another popular question: are the two interchangeable? The answer is: no. They are completely separate now and are able to operate independently of each other - I definitely wish the best of luck to both.
Differences
So, you can say it wasn’t confusing enough before, when we needed to choose from Bitcoin, Ripple, Ethereum and others – now we need to choose from two Bitcoins. Which one is better, you ask? In fact, they are just different, with each currency having its pros and cons. Let’s explore some of these below.
1. New Name
Of course the name itself. The word cash in it is not accidental - the creators are intending that the future of the currency is to become a new form of cash.
2. Advantage/Disadvantage
+ Larger Blocksize limit (8MB). As a result - more transactions are able to be processed for a cheaper fee.
- Bitcoin has lots of mining pools, so no one is strong enough and a situation where a single miner has a majority of 51% to rule them all is quite impossible.
Bitcoin Cash, on contrary, is highly centralised. Right now we already have 3 mining pools that make more than 51% together. This can be a dangerous situation because the future of the currency becomes too reliant on these three.
3. Technical difference
Bitcoin Cash is aware of its weaknesses and added protection adjustments to close these gaps and make the new currency safer for all to use.
Feature
Description
Replay and Wipeout Protection
Bitcoin Cash uses a different hash algorithm to the one Bitcoin uses. So, the replay between the two chains is no longer possible.
On-chain scalability
Bitcoin Cash’s technology allows for an increase in the number of blocks. Right now it is 8MB and further increases are possible.
New transaction signatures
Bitcoin Cash has a different transaction signature to verify its distinction from Bitcoin.
Emergency Difficulty Adjustment (EDA)
A new algorithm which ensures normal chain work in case of dramatic changes of the number of miners This provides additional stability to the currency as a whole.
What factors affect BCH price and why did it spike in November?
Bitcoin Cash was announced on August, 2017. But the rocketjump happened on November of the same year. On November 12, the price rose twice in one day and Bitcoin Cash officially took second place, behind Bitcoin.
So, what factors caused this spike?
Bitcoin had a really bad weekend. Due to lowered hashing power there was about 10000 pending transactions in the network. As a result, buyers moved to buy Bitcoin Cash.
Bitcoin Cash came as a solution to the well known speed issues that Bitcoin was suffering from and offered a better solution than Bitcoin’s SegWit2X. Today it is the only technology that offers a scaling solution - which is a killer feature.
Another feature that original Bitcoin doesn’t have is the EDA algorithm - which makes the network more stable during high price periods.
What do smart people say about Bitcoin Cash?
Optimistic opinion
Dan Nathan, the founder of Risk Reversal Advisors, said: "I’ve been buying Bitcoin Cash and Ethereum. Those two seem like ones that have some room to go here, while bitcoin seems to have some technical issues.”
Roger Ver, one of the most known Bitcoin angel investors and evangelists, believes “Bitcoin Cash is the real Bitcoin and will have the larger market cap, trade volume and user base in the future.”
Dr Garrick Hileman, economics historian at the University of Cambridge, says “beyond the financial gains Bitcoin holders may realise from the advent of Bitcoin Cash, there are also potential technical benefits, such as observing how BCH performs with 8MB blocks and what kind of use it attracts.”
Ken Shishido, a Bitcoin Cash evangelist, is sure: “When BCH will get more adopted and people will see that you can actually use it to buy goods and services, the price will go up.”
Pessimistic opinion
Adam Back is a British cryptographer says: “Bitcoin has the edge over Bitcoin Сash regarding long-term scaling because Bitcoin cash lacks the infrastructure to support second layer scaling.”
