A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
Background
Bitcoin Cash was forged in the climactic finale of Bitcoin political drama that unfolded from 2010 to 2017. An economic minority, led by Haipo Yang of ViaBTC created the Bitcoin Cash fork at block height 478559. This created a new chain with a permanent incompatible rule change against the original Bitcoin network. With the creation of the new chain, we have the founding of a new cryptoasset.
A common view among Bitcoin maximalists is that Bitcoin Cash is a cheap ripoff of Bitcoin. This is based on select observations they find offensive. Bitcoin Cash began by “just” changing the block size parameter. Bitcoin Cash declined to include the SegWit softfork. Worst of all, some have been arguing that Bitcoin Cash actually “is Bitcoin.” That Bitcoin Cash perhaps inspired dozens of knockoffs including Bitcoin Gold and Litecoin Cash does not help its reputation.
What makes a cryptocurrency valuable?
Cryptocurrencies are difficult to value. They are not imbued with value through technology alone. Rather, it’s the market of buyers and sellers that determine the value. Today the market contains an abundance of speculators whom create wild oscillations in the values of cryptoassets. In theory, the market will mature and converge on appropriate valuations over time. To get there, the market will need a larger userbase that is not concerned with speculation, but real use.
Many variables factor into which cryptos people value and purchase. Brand, scarcity, and network effect are elements that keep Bitcoin in the lead for the moment. However, it’s possible that more expressive technology from Ethereum or other upstarts will eventually reign supreme. Other differentiators such as scaling could crown the ultimate winners.
What about cost?
A coin or token isn’t a physical good, but a virtual claim. These assets ultimately boil down to the right to use the network. To use the network is to create transactions that are processed by the network. The natural maturation of the market will force us to exit the speculation phase where the primary use case is to purchase crypto and hodl for years. Soon we should expect to enter the utility phase where people are primarily utilizing crypto to complete a transaction.
Different crypto networks may not be perfect substitutes, but the market may settle for adequate substitutes when cost is a factor. In the adoption phase, we must consider cryptocurrencies as products competing in a market. Bitcoin may remain the most immutable and censorship resistant cryptoasset, but we can expect that many users will be judging alternatives based on the cost to complete their transaction and not these ideals.
Bitcoin Cash pitches a parallel universe
Pursuing Bitcoin’s original goal of a transactional currency, Bitcoin Cash is the rejection of the Bitcoin Core philosophy that Bitcoin should be a settlement layer. Bitcoin Core demands that full nodes be within reach of inexpensive hardware and ordinary internet connections. Its stance based on the rationale that as it becomes harder to run a node, the fewer people will run them. This may force mining to further consolidate potentially jeopardizing Bitcoin’s censorship resistance. Ultimately, the current prevailing view is that the Bitcoin blockchain must remain compact and efficiently used for sake of conserving the public good.
The Bitcoin Core developers claim that Satoshi was operating under assumptions that no longer hold true given the consolidation of mining due to ASICs and mining pools. The Bitcoin Cash community believes that a network with more transactional throughput and technological improvements — both hardware and software — will contribute to decentralization by attracting new participants willing to overcome the hurdles of participation.
Bitcoin Cash takes seriously the ambition of Satoshi to create a system that can scale to Visa level transactions without the need for secondary layers. Bitcoin Cash dismisses the notion that average users will want to run a node and believe that it is much more important to have affordable transactions than the ability to easily validate the entire ledger for oneself. Bitcoin Cash is designed to be Simple Payment Verification (SPV) friendly. SPV means that payments can be verified as included in the main chain without validating the entire blockchain on the client’s device.
Just another s***coin?
The above disagreement to Bitcoin’s evolution resolved by splintering the Bitcoin network and community. Interestingly, during the fracture, enough economic value and social energy went towards Bitcoin Cash that it obtained significant market value and actually carbon copied or literally duplicated much of Bitcoin’s infrastructure and ecosystem. Most prominent Bitcoin exchanges also list Bitcoin Cash or BCH. The most tenured Bitcoin wallets have been adapted for Bitcoin Cash. All major hardware wallets support BCH. Bitpay, the largest active crypto merchant processor accepts Bitcoin and Bitcoin Cash.
Many projects originally built for Bitcoin and abandoned as Bitcoin’s transaction fees rose too high have been rebooted for Bitcoin Cash. Several early Bitcoin contributors have since turned their attention and interest towards Bitcoin Cash.
