Bitcoin Cash (BCH) is a cryptocurrency payment network created to implement Bitcoin's core idea of facilitating peer-to-peer payments for everyday transactions rather than becoming a preferred store of value like Bitcoin.
Despite being the gold standard of the crypto world, Bitcoin has some inherent problems that are widely debated in the public domain. The most well-known of these is its limited 1 MB block size which makes it unscalable. This shortcoming has caused a notable rise in Bitcoin's transaction fees.
A section of the Bitcoin network's participants had been pushing for larger blocks as early as 2010. However, seeing no result from their efforts, this group hard-forked Bitcoin Cash (BCH) from the Bitcoin blockchain on August 1, 2017.
Bitcoin Cash was launched with an 8 MB block size limit, which was later expanded to 32 MB in 2018. According to the Bitcoin Cash charts, the Bitcoin Cash price often follows the same trajectory as its parent network, Bitcoin.
The main aim of Bitcoin Cash is to fulfill the original purpose of Bitcoin. Its team constantly strives to make BCH a cheaper, faster, scalable, and easy-to-use peer-to-peer electronic cash system. It also doesn't hold back when it comes to increasing block sizes or making other updates to keep the project well-aligned with its core objective.
Bitcoin Cash works like Bitcoin, as it can be easily transferred from one individual to another without any financial intermediary or censorship.
BCH token holders can send and receive BCH through their digital wallets using the unique public keys associated with the latter. As a result, BCH transactions are settled almost instantly and involve an average transfer fee of less than $0.01 at the time of writing.
Some well-known businesses that accept Bitcoin Cash for their goods and services are Twitch, Newegg, CyberGhost VPN, SlingTV, Namecheap, airBaltic, ALFAtop, Menufy, SatoshiDice, CoinRemitter, and eGifter.
How does BCH work?
Bitcoin Cash's workings are quite similar to that of Bitcoin. The primary difference is the bigger block size, which allows for higher transaction speeds and lower fees.
That said, larger block sizes make audit and storage expensive and lead to difficulties downloading a copy of the blockchain.
Like Bitcoin, Bitcoin Cash also uses a Proof-of-Work (PoW) consensus model for securing its network. Entities called miners compete against each other to process transactions and add new blocks to the Bitcoin Cash blockchain. They employ complex computing devices for this purpose. The hashing algorithm of Bitcoin Cash is SHA-256, the same as that of Bitcoin.
One of the biggest differentiators between Bitcoin and Bitcoin Cash is the "difficulty adjustment" for mining new blocks. While the Bitcoin software adjusts this difficulty factor every 2,016 blocks, it's done every 10 minutes in Bitcoin Cash.
The high frequency of this update is to provide a better idea about the computing power needed for BCH mining. In addition, Bitcoin Cash miners are rewarded with new BCH coins for their hard work.
This mining reward stands at 6.25 BCH per block at the time of writing. Moreover, miners also get to keep the fees paid for transactions contained in the added block.
Bitcoin Cash supports smart contracts as well. Several decentralized applications (DApps) are created atop the Bitcoin Cash blockchain. Some popular ones are CashFusion, CashScript, eatBCH, Flipstarter, AnyHedge, Libauth, Spedn, and Fountainhead.
Bitcoin Cash is a decentralized, low-cost, high-throughput, and easy-to-use network for BCH transactions. Any changes required on its mainnet involve many nodes and a high level of consensus. This restricts trial-and-error processes, which are a must for innovation.
Launched in July 2021, Smart Bitcoin Cash or SmartBCH is a side chain of Bitcoin Cash created to explore new ideas and unlock new possibilities. It's compatible with Web3 API and Ethereum's EVM, offering high throughput for DApps, in a secure, decentralized, and fast environment.
The side chain doesn't have any new tokens. Its native token is BCH, and all gas fees on the network are paid in BCH.
BCH price and tokenomics
Like Bitcoin, the maximum supply of Bitcoin Cash has a hard cap of 21 million coins. Out of these, 19.17 million were in circulation at the time of writing.
There are 17.12 million BCH holding addresses at press time, with the top 10 addresses holding nearly 2.3 million BCH. When Bitcoin Cash hard forked from Bitcoin, almost 16.5 million BCH coins were distributed amongst existing BTC holders at 1:1.
Every time a BCH miner successfully adds a new block to the Bitcoin Cash blockchain, s/he is awarded BCH coins as a reward. This process brings new BCH coins into the circulating supply.
Bitcoin Cash has a deflationary mechanism called "halving," like Bitcoin. As per this mechanism, the block mining rewards are halved every 210,000 blocks or approximately four years. It shares Bitcoin's transaction history in this regard up to August 1, 2017, the day of its launch.
The last Bitcoin Cash halving happened in April 2020, which reduced the mining rewards from 12.5 BCH per block to 6.25 BCH. The next halving event is expected to occur in 2024, reducing the BCH mining reward to 3.125 BCH per block.
BCH developments
The most noteworthy event in Bitcoin Cash's journey since its launch was the 2018 hard fork, which led to the creation of Bitcoin SV (BSV).
This split occurred on November 15, 2018, due to two rival factions. It was one of the most significant factors in the BCH price drop from $444 on November 15, 2018, to an all-time low of $76 on December 16, 2018.
It originated from what is often described as a "civil war" between two competing camps in the Bitcoin Cash ecosystem. The first one was supported and led by Roger Ver and Bitmain's Jihan Wu.
It promoted a software called Bitcoin ABC (adjustable blocksize cap) that maintained the Bitcoin Cash block size at 32 MB. However, the second camp, led by Craig Steven Wright and millionaire Calvin Ayre wanted another software called Bitcoin SV (Satoshi Vision). This new software would have increased the Bitcoin Cash block size to 128 MB.
In another critical Bitcoin Cash development, Tether (USDT) stablecoin was launched on Bitcoin Cash in March 2020. It was implemented on the Bitcoin Cash blockchain via SLP (Simple Ledger Protocol) token standard.
As a result, people could now transact USDT on the Bitcoin Cash blockchain, besides other networks like EOS, Ethereum, Tron, Algorand, Liquid Network, and Omni.
About the founders
Network participants and miners collectively founded Bitcoin Cash in the Bitcoin ecosystem. These included prominent names like Roger Ver, Amaury Sechet, Bitmain (a crypto mining company), ViaBTC (a mining pool), and Craig Wright.
All these participants were against the proposed Segwit2x upgrade on Bitcoin, which meant increasing its capacity. They preferred increasing Bitcoin's block size to 8 MB instead.
However, unable to fulfill their demand, this group launched a hard fork of Bitcoin on August 1, 2017, and named it Bitcoin Cash.