Inspired by frustration with Bitcoin’s scalability challenges, Bitcoin Cash (BCH) is designed to be a more practical cryptocurrency for everyday transactions on the blockchain. In this article, we explore the founding purpose of BCH and what sets it apart.
Bitcoin (BTC) is a relatively new technological development. Despite having only launched in 2009, it has already spawned numerous alternative coins (“altcoins”). Somewhat controversially, one of the first altcoins incorporates Bitcoin in its name — but what is Bitcoin Cash (BCH)? Based on the original Bitcoin code, Bitcoin Cash implements several technical changes that have far-reaching implications. Inspired by frustration with Bitcoin’s scalability challenges, Bitcoin Cash is designed to be a more practical cryptocurrency for everyday transactions on the blockchain. Its increased block size encourages use as a payment system rather than as a store of value.
Bitcoin Hard Fork: What is Bitcoin Cash?
The Bitcoin protocol was designed in 2008, and the network itself went online in January 2009 with the mining of what is known as the ‘genesis block’ — the first block on the Bitcoin blockchain. Over the years, the Bitcoin community grew from a small community of computer scientists and cryptographers to become increasingly mainstream. As Bitcoin adoption grew, different opinions and strategies about how to accommodate this growth emerged within its core group of developers.
In Bitcoin’s early stages, the network was more than capable of managing the transaction load of a niche community of developers. But as its popularity grew, the network got bogged down with an increasingly large amount of transactions, ultimately slowing down their processing time.
The concern was that eventually, Bitcoin transactions might take days or weeks to clear if nothing was done, which could also require users to pay higher fees to accelerate the process. Neither scenario was ideal, and this became known as Bitcoin’s scalability problem.
Several solutions were proposed that can be grouped into two camps: those who sought to increase the block size, and those who sought to keep block size small. Bitcoin’s maximum block size is 1MB. That’s how much data can be contained in each block of the blockchain. By most technological standards, that’s not a lot of data. There were, of course, pros and cons on both sides of the debate, but none convincing enough to unite the community of developers.
With the core developers unable to achieve a consensus regarding the appropriate path forward, a hard fork took place. In both soft and hard forks, an update to the original blockchain is made, but not all of the nodes accept the update. In the case of a hard fork, the nodes that do accept the update are migrated to a new blockchain and the coins on the new blockchain are separate and unique from the original ones. Bitcoin Cash (BCH) was created in a hard fork of the original Bitcoin protocol in August of 2017, complete with a unique Bitcoin Cash blockchain and BCH cryptocurrency.
Why Create a Second Bitcoin?
The desire to increase the number of transactions that could take place every second was the primary impetus for the Bitcoin Cash fork. This concern is reflected in the structure of BCH, with its increased block size. More data in each block means that transactions can be processed more quickly. Measures were also taken to reduce the total amount of data that needed to be verified in each transaction, which further sped up the process.
These technical differences are significant. Transaction speed is crucial to the scalability, functionality, widespread adoption, and ultimate success of a cryptocurrency. For comparison, Bitcoin is capable of processing seven transactions per second, whereas Bitcoin Cash processes 116 transactions per second on average. It’s also worth noting that Visa processes 24,000 transactions per second. In the eyes of Bitcoin Cash supporters, seven transactions per second wasn’t going to cut it in the long run.
The Controversy: Bitcoin vs. Bitcoin Cash
The Bitcoin Cash fork was a hotbed of controversy. The core group of developers initially working on Bitcoin were early-adopters of cryptocurrency and blockchain technology — meaning, they were passionate about the project and believed in its long-term potential. Supporters of both Bitcoin and Bitcoin Cash felt that their way forward was the right one, so the hard fork was the only way both equally passionate groups could proceed.
Supporters of BTC argued that BCH’s increased block size meant that it would be more energy-intensive and costly to run a node. More processing power requirements could theoretically become a barrier for individuals to operate nodes and preserve the decentralized nature of the network. This could in turn open the door for centralized institutions to take control of the network.
Aside from the deep ideological differences between the two camps, the controversy between Bitcoin and Bitcoin Cash also stems from the latter’s appropriation of the Bitcoin name. Although BCH is technically very similar to BTC, many believe that its adoption of the Bitcoin name is to some degree disrespectful.
Furthermore, after Bitcoin creator Satoshi Nakamoto’s disappearance from the Bitcoin community, many speculated about what Satoshi’s original vision for Bitcoin truly was. Different accounts of “Satoshi’s vision” suggest that his original intent was either more aligned with BTC or BCH. The controversy gets especially heated when significant figures in the cryptocurrency community voice assertions on the matter.
For example, Craig Wright (who has claimed to be Satoshi himself) has expressed that “Bitcoin Cash is Bitcoin.” As a controversial figure (with a history of alleged fraud), his support of BCH has fanned the flames on both sides of the BTC versus BCH debate with many BCH supporters still distancing themselves from Wright.
Despite all the controversy that exists between the two cryptocurrencies, they fulfill largely distinct roles and share only a name. They have different use cases. BTC functions like “digital gold” and operates as a store of value, whereas BCH serves as “digital cash” and aims to be a payment method. Many users understand this and support the further development of both BTC and BCH.
This article originally appeared on Gemini and is republished here with permission.
The post Bitcoin Cash (BCH): There’s More Than One Bitcoin? appeared first on Vulcan Post.