The bigger and more popular Bitcoin was getting, the transactions took more time to process and made the cost of each transaction become more expensive for the sender.
To improve the current system of Bitcoin, Bitcoin Cash (BCH) was created. It was released on August 2017 and has grown at a tremendous rate.
Why and how did Bitcoin Cash start?
It all started when the developers of the Bitcoin community could not come to an agreement regarding changes that were needed in Bitcoin's code, so therefore they created Bitcoin Cash (BCH). One side wanted to improve the technology of Bitcoin while the other side wanted to keep it the same way. But there was a problem; as more and more people use Bitcoin, the networks took longer than normal to process a transaction with higher fees.
Bitcoin (BTC) vs Bitcoin Cash (BCH)
|BITCOIN (BTC)||BITCOIN CASH (BCH)|
|Block Size: 1MB Maximum||Block Size: 8MB Maximum|
|Transactions signatures NOT NEEDED from transaction ID||Transaction signatures NEEDED on the Blockchain|
|Implementation: Bitcoin Core||Implementation: Bitcoin Unlimited|
|Scaling: Off-Chain payment||Scaling: On-Chain payments and block size increase|
Bitcoin enthusiasts knew as more and more people were using it, as time passes it would get slower and to fix that solution the developers came up with two different ideas:
Idea #1 - Change the format of each block
To think of it in a real-world situation, let's take this example: Think about writing each Bitcoin transaction on a blank sheet of paper. First, you would need to write the wallet addresses of both the sender and receiver. Then, you need to write the individual signatures for each transaction.
this would take up quite a lot of space on your sheet of paper, right?
So, one group of developers suggested separating the one sheet of paper into two. One sheet of paper would have the addresses of the sender and receiver, while the other sheet would contain the signatures. Essentially, as there would be more space on the paper, more transactions could be processed!
Idea #2 - Increase block sizes
Another group developers thought this was a horrible idea because it'll solve the speed of transactions only temporarily, so when Bitcoin becomes more popular it would become even slower and need an upgrade. Their solution was to increase the maximum block size.
Now, imagine the original sheet of paper was 10mm long. That is the size of the block. (In Bitcoin, this amounted to 1MB.) It was suggested that by increasing the block size, more transactions could be processed. So, they thought to increase the sheet of paper by 2 times, or to 20mm long! (2MB in the case of Bitcoin.) What this idea also allowed is the maximum block size to be increased by 8 times, if this was needed in the future. The whole idea behind it was for Bitcoin to become an everyday thing, it needed to be fast and easily accessible, otherwise, it would be more like gold rather than a currency that can be used daily.
Idea #1 was voted for the most with 97% of the votes which was a soft fork idea compared to the unhappy idea #2 developers who created Bitcoin Cash from a hard fork.
What does Bitcoin Cash do?
Released on August 2017, Bitcoin Cash is extremely similar to Bitcoin and has the same amount of coins - 21 million.
The day Bitcoin Cash was created, if you had Bitcoin you would receive free Bitcoin Cash on a 1:1 ratio, for every 1 Bitcoin you had, you would receive 1 Bitcoin Cash.
The main purpose behind Bitcoin Cash was to improve on the flaws of Bitcoin. People can send and receive funds, with faster transaction times and lower transaction fees so this gave Bitcoin Cash a lead in the race. Fater being listed on Coinbase, Bitcoin Cash took fire and has gained a significant amount of market cap. Not many merchants accept it now but since it's still in its early stage that's to be expected.
Pros and Cons of Bitcoin Cash
- Bitcoin Cash transactions are faster than Bitcoin transactions because of the increase in block size to 8MB compared to the 1MB of Bitcoin.
- Average Bitcoin transaction fees are currently around $1.8 which has gone down to $0.067 in the case of Bitcoin Cash.
- Bitcoin Cash, like Bitcoin, is expected to be completely decentralized.
- BCH mining is as expensive as Bitcoin mining but gives lesser returns, so it is not a favorite among cryptocurrency users.
- Bitcoin Cash is not as easily available on cryptocurrency exchanges as the other top 10 cryptocurrencies.
Bitcoin Cash may have been forked from Bitcoin but it doesn't take away the fact that Bitcoin Cash is still moving at a faster rate than Bitcoin because of the different techniques of Bitcoin Cash. Bitcoin Cash offers everything that Bitcoin cannot, which some people find attractive but Bitcoin will always be at the top of cryptocurrencies because of its history and the massive amount of people behind it. In due time, Bitcoin Cash might be able to catch up to Bitcoin but it's far from that.