What is Bitcoin Cash?
One of the most controversial events in crypto history was the “hard fork” that created Bitcoin Cash (BCH) from the base Bitcoin blockchain in August of 2017. Scalability has been one of Bitcoin’s biggest challenges, with transaction fees and times skyrocketing as the network is put under more and more strain. Bitcoin Cash is one of the proposed solutions, though not the only one: “Segwit” has already been partially implemented and the Lightning Network upgrade is coming up.
In technical terms, it increased the block size from 1 megabyte to 8 megabytes, which means that transactions can be processed much more quickly. A sizeable part of the Bitcoin community was vehemently opposed to this solution, arguing mainly that larger blocks would make it harder for individual users to download the blockchain and join the network. As of yet, there is no clear winner between the two versions, and one may not necessarily emerge.
How does Bitcoin Cash Work?
When a cryptocurrency makes a “hard fork” it is essentially making an identical copy of the original, then changing the code so that every transaction after that point will run on the altered system. This means that technically, Bitcoin Cash is as old as Bitcoin itself, as every transaction made since 2009 is also in the Bitcoin Cash ledger. When the hard fork occurred, anyone with a BTC balance automatically had a BCH balance as well.
In every other respect, the two blockchains are almost identical. The most significant change is the block size, which went from 1 MB to 8 MB and seems to have worked. Transactions are faster and cheaper, and the size increase doesn’t seem to have pushed smaller participants out of the network.
The basic crypto technology has gone almost untouched: miners still use processing power (Proof of Work) to validate transactions contained in blocks and receive coin rewards. Users still have addresses with private keys that only they can use to access their accounts, and every transaction they make is published on every copy of the ledger stored on computers worldwide. It is still mainly a store of value and medium of exchange, not a smart contracts platform or anything else. As crypto history continues to be written, the two coins may continue to diverge more dramatically, but for now, they remain fairly similar.
In January 2018, Bitcoin Cash trading became available on Coinbase—and was frozen almost as soon as it began. The price of BCH on the popular exchange ballooned to many times its going rate on other exchanges, with insider trading being identified as the likely culprit. Coinbase’s prices later normalized.
The Bitcoin and Bitcoin Cash communities (largely in the r/bitcoin and r/bitcoincash subreddits) are still highly segregated even months after the fork. Despite both technologies remaining fairly successful, the supporters of each continue to be vocally biased towards their coin of choice and against the opposition.
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