Bitcoin Cash (BCH) is a cryptocurrency that shares many of the same characteristics as Bitcoin (BTC) but also incorporates several changes and features that set it apart. It is considered a Bitcoin “fork,” although proponents argue that Bitcoin Cash sticks more to the original vision of creating a peer-to-peer electronic money system, as stated in a 2008 white paper written by the protocol’s founder, the person or group that goes by the name the guise of Satoshi Nakamoto.
If you are planning to buy bitcoin cash, move further in this article to learn about this cryptocurrency in detail.
Features Of Bitcoin Cash
Bitcoin cash is a peer-to-peer electronic cash system that is not dependent on any central authority, government, or financial institution. Its core features are as follows:
Open To Anyone- Bitcoin cash can be owned by anybody and they do not need permission to use it.
Transparent- All the crypto transactions are recorded on a global public ledger known as a blockchain. It is regularly updated in blocks that are connected to form a chain. It allows anyone to effortlessly see the entire ownership and helps to eliminate the potential for fraud.
Rules-Based- Nodes follow a set of rules (protocols) to reach a consensus on the status of the ledger. This consensus represents the “truth” about who owns what. However, the protocol is free to evolve according to the needs of the participants – although a high level of consensus is needed to make changes. This makes Bitcoin Cash a quasi-political system in which participants conclude a kind of social contract.
Secure- Through a process known as Proof-of-Work (PoW), “miners” compete to add new blocks to the chain that represent the ledger (in turn, the blockchain). The hardware and energy costs associated with PoW mining contribute to network security according to game theory principles, so attacking the network is very expensive and ensures that the attacker can’t win right away.
Low Fees- Bitcoin Cash enables reliable, fast, and low-cost transactions of any value, regardless of location (including cross-border transactions), making it an effective alternative to payment networks like Visa and Mastercard.
Pseudonymous- In Bitcoin cash, identities are not tied in transactions. It ensures that anyone can use it without censorship.
Distributed- The public ledger or blockchain is stored voluntarily by a network of participants called nodes, thereby ensuring the longevity of information.
Immutable- The technology used means that once transactions are recorded on the blockchain, they cannot be effectively changed.
Fixed Supply- Only 21 million coins are created, making Bitcoin Cash a hard asset, such as land or gold, that allows people to store value in the digital realm for long periods.
How Does Bitcoin Cash Work?
On a technical level, Bitcoin Cash works closely with Bitcoin. Both Bitcoin Cash and Bitcoin have a fixed limit of 21 million assets, use nodes to validate transactions, and use the PoW consensus algorithm. PoW means that miners use the power of computers to validate transactions and are rewarded for their contributions to BCH.
However, BCH runs faster and has lower transaction fees than its predecessor thanks to its larger block size. It is much more suitable for smaller transactions, such as buying a cup of coffee with cryptocurrency. Moreover, it supports smart contracts or prevalent applications within its ecosystem.
Difference Between Bitcoin and Bitcoin Cash
When Satoshi Nakamoto first created Bitcoin, it was intended to be a peer-to-peer cryptocurrency that would be used for everyday transactions. As bitcoin gained mass popularity and its price skyrocketed, it became an investment vehicle instead of a currency. It is because the Bitcoin blockchain has scalability issues.
The scalability issues that Bitcoin faces are mainly due to the block size limitations for Bitcoin. As more and more users submit transactions, they compete for a limited block size of 1MB every 10 minutes. This is not even enough as Bitcoin transactions are growing in popularity, let alone becoming a global currency with no boundaries. When compared, Bitcoin can only process seven transactions per second. In contrast, Visa’s credit card system is capable of processing up to 65,000 transactions per second!
To solve this problem, Bitcoin Cash offers a solution by increasing the block size from 8MB to 32MB, which allows more transactions to be processed per block. This gives the effect that Bitcoin Cash can process up to 10 times more transactions than Bitcoin.