Introduction to Bitcoin Cash (BCH)

By iTrustCapitalMay 03, 20222 minutes read
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Understanding Bitcoin Cash (BCH)

Bitcoin Cash (BCH) is a blockchain and decentralized cryptocurrency that emerged from a fork of Bitcoin (BTC) in August 2017. BCH was created to address scalability issues that were plaguing BTC at the time. BCH has since become one of the most established cryptocurrencies. 

Let’s explore exactly what Bitcoin Cash is, how it works, and its brief history.

What is Bitcoin Cash (BCH)?

Bitcoin Cash was created as a solution to scalability issues that have historically impacted Bitcoin. Bitcoin Cash is designed to process a higher number of transactions per block, making the network faster and more scalable.

Since its launch, Bitcoin Cash has seen support from groups and individuals from several developed countries. Bitcoin Cash is traded on many major cryptocurrency exchanges and can be used to purchase goods and services from merchants that accept the digital currency. 

How does Bitcoin Cash (BCH) work?

Bitcoin Cash uses the proof-of-work consensus mechanism to operate the blockchain. Here's how the Bitcoin Cash blockchain works: 

  1. If someone wants to send BCH to another person, they initiate a transaction and broadcast it to the network. 

  2. Bitcoin Cash miners collect the individual transactions and group them into blocks. 

  3. Miners compete to solve a complex mathematical puzzle to earn the right to add the newest block to the blockchain. 

  4. The miner who solves the puzzle the fastest adds the new block to the blockchain. That miner is rewarded with newly minted BCH. 

  5. The transactions in the block are considered finalized. 

Bitcoin Cash vs. Bitcoin

Bitcoin and Bitcoin Cash are similar in a few ways:

  • Consensus mechanism: Both use the proof-of-work consensus mechanism.

  • Maximum coin supply: Bitcoin Cash and Bitcoin both have a supply limit of 21 million coins.

  • Block processing time: Both blockchains process a new block every 10 minutes.

Bitcoin Cash and Bitcoin also have some key differences: 

  • Block size: Bitcoin has a block size limit of 1 MB, while Bitcoin Cash has a block size limit of 32 MB. This allows Bitcoin Cash to process more transactions per block, making the blockchain faster and more scalable. 

  • Transaction fees: As of April 2022, the average transaction fee for Bitcoin is $3.15, while the average transaction fee for Bitcoin Cash is only $0.005. With Bitcoin more frequently facing congestion issues, its fees for processing transactions are generally higher.

Bitcoin Cash vs. Bitcoin in a nutshell:


A brief history of Bitcoin Cash

Let’s take a glance at the history of Bitcoin Cash. After Bitcoin launched in 2009, the network became increasingly unreliable due to its limited scalability. On August 1, 2017, Bitcoin Cash was formed by a hard fork—split—from the original Bitcoin blockchain. The forked version of the Bitcoin blockchain was modified to increase the maximum block size from 1 MB to 8 MB, creating the functionality that differentiates Bitcoin Cash from its predecessor.

On May 15, 2018, another hard fork was conducted to raise the block size from 8 MB to 32 MB. This move was to further increase the scalability of Bitcoin Cash. Later in 2018, on November 15, yet another hard fork was conducted to create an autonomous cryptocurrency called Bitcoin SV, which aims to closely follow the original vision for Bitcoin.


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