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What is Bitcoin Cash (BCH)?
Bitcoin Cash - the product of first hard fork of Bitcoin
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- Bitcoin Cash is the product of Bitcoin's first hard fork, 47,8558 blocks later, the fork was born on August 1, 2017. Bitcoin Cash (BCH) is a peer-to-peer electronic cash system, which aims to enable “new economies with low fee micro-transactions, large business transactions, and permissionless spending”.
- Bitcoin Cash emerged to solve the problem of insufficient Bitcoin throughput. With an upper limit of 1MB blocks no longer able to support Bitcoin's transaction volume, proponents of on-chain scaling chose to develop a protocol to increase the block size to 8MB, later upgraded to 32M.
- With on-chain expansion, Bitcoin Cash solves the problems of high fees, slow confirmations, and poor usability of the old Bitcoin system.
- The maximum volume of Bitcoin Cash is 21 million, the same as Bitcoin.
- On November 16th 2018, the Bitcoin Cash blockchain withstood another hard-fork, which resulted in a chain split into Bitcoin Cash SV and Bitcoin Cash ABC. Since then, Bitcoin Cash ABC has commonly used the BCH ticker and referred to as Bitcoin Cash.
- The Bitcoin Cash network has protocol upgrades twice a year, on November 15th and May 15th. These upgrades are required for all node operators. For instance, on May 15th 2018, Bitcoin Cash upgraded to increase its block size to 32 megabytes.
Bitcoin Cash Key Metrics
| Market Ranking | #6 |
|---|---|
Market Cap | $5,993,776,872 USD |
Circulating Supply | 18,600,863 BCH |
Max Supply | 21,000,000 BCH |
What is Bitcoin Cash?
The BCH coin is a new chain based on a fork of the BTC blockchain network and is not fundamentally different from BTC. Therefore, most people see BCH as a fork of Bitcoin (BTC). It was once known as BCC, also known as Bitcoin Cash. Issued on July 24, 2017, with a total supply of 21,000,000 BCH.
Bitcoin was introduced in 2008 after Satoshi Nakamoto published his white paper "Bitcoin: A Peer-to-Peer Electronic Cash System". Initially, there was no limit to the block size, which could reach up to 32M under the control of its own data structure. In the process, the block limit was too high, leading to wasted computing resources and susceptibility to DDOS attacks.
As the user community expanded, the congestion problem caused by the vulnerabilities in Bitcoin intensified, and the community began to hear the sound of block expansion, but the small blockers, represented by core developer Core, wanted to use the isolated witness + lightning network to alleviate Bitcoin's congestion problem, rather than directly expanding to large blocks. Over time, community conflicts gradually became irreconcilable, while the sound of a hard fork intensified, and eventually a hard fork was completed under the leadership of miners, and the Bitcoin community has since split in two.
On July 17, 2017, ViaBTC, a comprehensive digital currency platform, issued a statement on the response to the Bitcoin UAHF, suggesting that in order to better serve customers and protect users' assets, would continue to support the New York Consensus SegWit2x solution while providing users with an alternative; would plan ahead for the UAHF event and name the new coin that may be created as a result of the UAHF implementation as "Bitcoin Cash" (BCC for short).
On August 1, 2017, Bitcoin Cash executed a hard fork at block height 478558, distributed 1:1 in accordance with Bitcoin, totaling 21 million, removing the isolated witness, upgrading the block limit to 8M, and later to 32M, to solve the problems of high fees, slow confirmation, and poor utility in the old Bitcoin system with on-chain expansion.
History of Bitcoin Cash
Of course, the obvious starting point for understanding Bitcoin Cash is Bitcoin. After all, until the hard fork in August 2017, both currencies shared the same blockchain data. Click to learn about Bitcoin.
Intense debate
The Bitcoin Cash story began with a debate, that is, a debate about how best to improve Bitcoin's ability to process transactions cheaply and quickly.
At the heart of the debate is the blockchain block size. The size of each block on the Bitcoin blockchain is capped at 1MB, a limit set by Satoshi Nakamoto in 2010, which allows for an average transaction throughput of less than seven transactions per second.
Block size limits have some important benefits.
- Preventing DOS (Denial of Service) attacks
- Ensure sufficient block propagation speed through the distributed network
- Limit the entire blockchain size
On the other hand, 1MB blocks also have a very obvious drawback; when more transactions occur than the network can handle, miner fees increase and the number of unconfirmed transactions increase, causing bitcoin transfers to arrive late.
The above negative scenario became a reality during the 2017 bull market, and as a result, the average transaction fees and confirmation times for Bitcoin are longer than typical bank wire transfers, making it essentially useless for most users and merchants alike.
Two solutions
There is no doubt that the lack of transaction throughput is a problem that must be addressed in order for Bitcoin to maintain its status as a top cryptocurrency. However, the best way to address the problem is less obvious, and Bitcoin can be scaled in two ways.
- On-chain: Increase block size to increase transaction throughput.
- Off-chain: Use a second layer solution (e.g., Lightning Network) to process transactions and reduce the burden on the blockchain chain.
Hard Fork
As it became increasingly clear that 1MB blocks could no longer support the volume of Bitcoin transactions, proponents of on-chain scaling chose to develop a protocol to increase the block size to 8MB.
These on-chain extension proponents decided to implement Bitcoin's first hard fork after voting on a campaign to lock down Segregated Witness (SegWit). (Note: SegWit is a change to the Bitcoin protocol that results in transactions that are 41% smaller than previous transactions, effectively allowing more transactions to be processed per byte of data on the blockchain.)
478,558 blocks later, Bitcoin Cash was created after forking Bitcoin on August 1, 2017. With blocks eight times larger, Bitcoin Cash has eight times the transaction throughput of Bitcoin. As a result, the fees and transaction times for Bitcoin Cash are very similar to those of early Bitcoin.
Importantly, Bitcoin Cash maintains the same proof-of-work algorithm as Bitcoin, which means miners can easily switch between either blockchain, and after a hard fork, many miners will choose to mine the more profitable chain at a given time, resulting in very inconsistent hash rates for the two currencies.
A few months later, in November 2017, Bitcoin Cash started using a new difficulty adjustment algorithm (DAA) to better manage mining difficulty and the unstable hash count situation was stabilized.
The Difference Between Bitcoin and Bitcoin Cash
As suggested by Satoshi Nakamoto, the architect of Bitcoin, Bitcoin is a peer-to-peer cryptocurrency used for everyday transactions. Over the years, as it gained mainstream attention and its price rose, Bitcoin became an investment vehicle rather than a currency. The Bitcoin blockchain developed scalability issues as it was unable to handle the increasing number of transactions.
Difference between Bitcoin and Bitcoin Cash：
- Bitcoin has a block size limit of 1MB and an average number of transactions per block between 1,000 and 1,500.
- Bitcoin Cash, by increasing the block cap to between 8 MB and 32 MB, saw the number of transactions on its blockchain spike to 25,000 per block during a stress test in September 2018.
- BCH does not have Segregated Witnesses (SegWit), another solution to boost the number of transactions a block holds, and SegWit retains only the information or data associated with the transaction.
Similarities between Bitcoin and Bitcoin Cash:
- Both use a proof-of-work (PoW) consensus mechanism to mine new coins.
- Bitcoin Cash has a maximum number of 21 million, the same as Bitcoin.
Bitcoin Cash Project team
The Bitcoin Cash fork from Bitcoin was supported by some of the critical members of the crypto community, including Jihan Wu (Bitmain) and Roger Ver (Bitcoin.com).
Later in 2018, a faction within the Bitcoin Cash community, supported by Craig Wright and Calvin Ayre, led to another contentious hard-fork, with a permanent chain-split. It ultimately led to the creation of Bitcoin Satoshi Vision (“Bitcoin SV”). This event was referred to as the “hash-war”.
Since its creation, the Bitcoin Cash project has been maintained by core developers and contributors from the community.
Bitcoin Cash Development
Block size expansion to 32MB
The Bitcoin Cash chain achieved a 32MB block expansion in May 2018.
Graphene Technology
On July 25, 2018, the Bitcoin Unlimited development team announced the addition of graphene technology to the BCH chain. Graphene is a block propagation concept that aims to be 10 times more efficient than dense and very thin blocks.
Transaction specification sorting
Prior to the implementation of transaction canonical ordering or CTOR, consensus rules processed transactions as a list and topologically sorted the list. after the November 15, 2018 upgrade, the BCH chain does not need to be sorted by list, but instead operates as a set of blocks and is done in a canonical manner.
Schnorr Signature
As the block height reached 582680, the BCH chain received its fourth upgrade by adding Schnorr signatures, which serve as the basis for various technologies that improve scaling and enhance privacy.
Speaking of the development of BCH platforms and protocols, there are also, for example, Cash-ID, an open protocol that allows secure authentication; Neutrino, a lightweight SPV wallet that uses BCHD and allows client-side filtering; Hash-ID, a database set up by Flowee Hash-DB, a database set up specifically for Bitcoin Cash UTXO; and Cashshuffle, a hybrid application that helps protect the privacy of individual transactions when using the BCH network.
Bitcoin Cash Community and Social Channel
