Bitcoin Cash comes from Bitcoin based on the same technology and it’s used the same way, but like Litecoin it’s a unique variation that is separate from the king crypto. Here’s what you should know about Bitcoin cash.
What is Bitcoin Cash?
Bitcoin Cash is the result of a Bitcoin hard fork that occurred in 2017. It was created to accommodate a larger block size, compared to Bitcoin, that allows more transactions into a single block. Bitcoin cash, like Bitcoin, is decentralized, processed, validated and logged on a blockchain, finite (just like Bitcoin, only 21 million will ever be made), and anonymous.
How it Works
Back in 2010, the average size of a block on Bitcoin’s blockchain was less than 100KB and the average fee for a transaction amounted to just a couple of cents. This caused the blockchain to be vulnerable to attacks, consisting of cheap transactions that could potentially impede the system. To prevent that from happening, the size of the blockchain had to be limited to 1MB. Each block is generated every 10 minutes, allowing for space and time between successive transactions. The limitation on size and time required to generate a block added another layer of security on bitcoin’s blockchain.
However, these safeguards proved to be an obstacle when Bitcoin started gaining popularity and adoption. The average size of a block increased to 600K by the beginning of 2015 and the number of Bitcoin transactions surged, causing a jam up of dubious transactions. The average time it takes to confirm a transactions also moved upwards. So did the fee for a transaction. This weakened the argument that Bitcoin is a competitor to expensive credit card processing systems.
Fees for transactions on bitcoin’s blockchain are specified by users. Miners typically push transactions with higher fees to the front of the queue in order to maximize profits.
What is it Used For?
BCH can be used as a long-term store of value or as a highly effective medium of exchange. These two use cases combine with the decentralized and open nature of the protocol to make Bitcoin Cash (the network) a method for supporting and enhancing global economic freedom.
What Problem Does it Solve?
Bitcoin’s blockchain had big problems; like signature data, block size, and segregated witness. Eventually, Bitcoin outgrew its blockchain, and as more people joined, the system became harder to scale, causing both transaction times and costs to grow so high that Bitcoin’s chief miners and producers worried about its viability.
Bitcoin Cash proposes to solve the situation by increasing the size of blocks to between 8 MB and 32 MB, thereby processing more transactions per block. The average number of transactions per block on Bitcoin at the time Bitcoin Cash was created was between 1,000 to 1,500.4 The number of transactions on Bitcoin Cash’s blockchain during a stress test in Sep. 2018 surged to 25,000 per block.