Bitcoin Cash (BCH) is a hard-fork of the cryptocurrency bitcoin, aimed at increasing the number of transactions its ledger could process by raising the block size limit to eight megabytes.
The legacy Bitcoin code only has a maximum limit of one megabyte of data per block, or about three transactions per second. But even after years of debate, the community could not reach a consensus to raise this limit.
In 2017, capacity hit the ‘invisible wall’. This meant fees skyrocketed, Bitcoin became unreliable, and many users could not get their transactions confirmed, prompting the hard-fork.
Upon launch on 1st August 2017, Bitcoin Cash inherited the transaction history of the Bitcoin cryptocurrency on that date, but all later transactions were separate.
Bitcoin Cash strengths and attributes
Since the hard-fork, there’s been over 36,000 blocks mined, and the Bitcoin Cash chain is 8406 blocks ahead of the core chain.
- Fast and reliable – Transactions take seconds and get confirmed in minutes. The network also runs without congestions.
- Easy and accessible – Is very easy to use, enabling you to send money around the global for next to nothing.
- Secure and stable – Featuring the world’s most robust blockchain technology, Bitcoin Cash’s payment system is a proven store of value.
Despite the fact there isn’t a centralised development team for Bitcoin Cash, multiple teams are constantly introducing new features such as:
- Transaction signatures – A new SigHash type provides greater protection, improved hardware wallet security, and elimination of the quadratic hashing problem.
- On-chain scalability – Along with the increased blocksize limit of 8MB, research is underway to allow for massive future increases too.
- Difficulty Adjustment Algorithm (DAA) – Responsive Proof-of-Work difficulty adjustment enables miners to move away from the legacy Bitcoin chain as desired and provide protection against hashrate fluctuations.
- Decentralised development – isn’t in danger of political and social attacks on protocol development, as no single group or project controls it.
Price and volatility
Little over a week after the hard-fork, Bitcoin Cash was 30 per cent more profitable to mine on the original chain. As of 30th August 2017, around 1,500 more blocks were mined on the Bitcoin Cash chain than on the original, as high profitability periods attracted a significant proportion of total processing power.
But in light of the new Emergency Difficulty Adjustment (EDA) algorithm used by Bitcoin Cash, mining difficulty has fluctuated rapidly. Therefore, the most profitable chain to mine has kept switching between Bitcoin Cash and mainline bitcoin.
According to internet entrepreneur Vinny Langham, who has been dubbed the ‘Bitcoin Oracle’ for his previously correct predictions, Bitcoin Cash will be in greater demand than the original this year.
“Bitcoin and Bitcoin Cash are focusing on two totally different markets right now,” Lingham told CNBC’s Fast Money. “When I look at it from the product standpoint, I think the greater demand is for peer-to-peer cash than for digital gold.”
Lingham also recommended that investors hold onto Bitcoin and Ethereum, but to buy Bitcoin Cash.