Bitcoin (BTC) first came into the public eye almost nine years ago and is now the most established cryptocurrency, going strong as ever. It is not only the world’s first cryptocurrency, but also the most expensive and the most stable one.
However, it is not perfect, far from it. One of the most compelling issues in all the cryptocurrencies around the world is of the dreaded scalability. For newbies, scalability can be defined as the size of a block that contains all the transactions and records. In Bitcoin’s case, this size was limited to one megabyte. This limit is the biggest headache crypto developers up till now face, due to which there come about substantial delays in transaction processing times. These delays ultimately limit the number of transactions that the network can process.
Bitcoin Cash (BCH) was created just to cater to the scalability issue in BTC. It differed from it’s predecessor in a way that enabled the increase of block size from one MB to eight MBs. The overall goal was to increase the number of transactions that can be processed by the network and it was hoped that BCH could be able to compete with the volume of transactions which the industry giants like PayPal and Visa can currently process.
The Bitcoin Cash (61 tps) was certainly an improvement towards that goal, which competed against Visa (24,000 tps) somewhat better compared to the BTC at a meager rate of 7 tps.
Let’s look at the idea that went into Bitcoin Cash’s creation.
How BCH Started?
Bitcoin enthusiasts understood how the scalability issue was going to completely shut down the very concept of cryptocurrencies, so they came up with two solutions along with developers.
The first solution was to change the format of the block instead of altering it’s size. In broad terms, the block would be broken into separations in which some part would contain the addresses and credentials of the senders and receivers, while the other part in separate file outside the blockchain would contain the signatures from each transaction. This was called the ”Segregated Witness” solution and his way, there would be more space on the block and hence more transactions could proceed.
The other idea was to simply increase block size which was known as “Bitcoin Unlimited”, as some believed that changing the format would only present a temporary solution.
As a result of deadlock, a compromise called SegWit2x was developed. Launching this protocol meant storing some of the information outside of the blockchain as well as increasing the block size limit to 2 MBs. This came as taking out the best from both ideas but it didn’t gather the results it was supposed to. It seemed to cater for those who treated BTC as an investment opportunity rather than a payment system, which was the original functionality goal.
Then, the SegWit2x protocol was abandoned and finally the block size was increased to eight MB and hence, a split from the original bitcoin network took place in the form of a hard fork on August 1, 2017. This came to be known as Bitcoin Cash.
The new cryptocurrency was quickly adopted by investors, as by the end of the first day of its existence Bitcoin Cash became the third cryptocurrency behind Bitcoin and Ethereum in terms of market capitalization.
Note: When we talk about a fork, it means that changes are made to the design of a blockchain. When a soft fork happens, it means certain rules are changed, but the new blocks are still recognized by the original software. However, in a hard fork, the new blocks operate on a separate blockchain – just like Bitcoin Cash!
What Does BCH do?
Bitcoin cash was released in a technology very similar to the BTC, and in the same amount – 21 million coins. The day it was launched, everyone that held BTC received BCH at a 1:1 ratio.
The main purpose of Bitcoin Cash was to be used as a payment system. This means just like the original Bitcoin client, people could send and receive funds. This, however, happened at much rapid transaction times and hence, lower transaction fees.
The general notion at release time was that most people would end up selling Bitcoin Cash very quickly, but since then, it has performed wonderfully and is ranked 4th among the largest cryptocurrencies around the world, as well as being listed on Coinbase.
In the crypto world, nothing that you do can ever please all the entities involved. Especially, a hard fork is often thought of as a troublesome concept. Many people believe that the practice goes against the very principle of immutability of blockchain.
With this particular hard fork, many critics are worried that the computer power required to process larger blocks will price out smaller miners, which might lead to the decision-making power being concentrated in the hands of large corporations that can afford more and better equipment.
As everyone who held BTC was given a BCH for it, it created a situation similar to the double-spending problem, as it made conducting two transactions from a single wallet using the same set of keys possible.
One of the most prominent advocates that the BCH has gathered in it’s small time of existence is the earliest crypto investor and adopter; Roger Ver. He has invested over a million dollars into various emerging Bitcoin startups, including Ripple, ZCash, blockchain.com, Bitpay, purse.io and Kraken. He is also a CEO of bitcoin.com and one of the five creators of the Bitcoin Foundation, to which he has also donated more than $1 million worth of Bitcoin.
”Bitcoin Jesus”, by which he is also known as, has spent time supporting Bitcoin Cash recently. He described Bitcoin Cash as ‘the real Bitcoin’ claiming it will have the bigger market capitalization, trade volume and user base in the near future. He had also claimed to be holding majority of his cryptocurrency funds in BCH, which serve as the biggest indicator to the fame and repertoire gathered by Bitcoin Cash in such a small time.
The Bitcoin Cash Converter on bitcoin.com is the easiest way to look at the current value of BCH. This will indicate the current value of BCH in USD, EUR, GBP, etc.
In December 2017, Coinbase integrated support for Bitcoin Cash. Immediately following Coinbase’s integration, the price of Bitcoin Cash spiked dramatically.
On December 20th, the price of BCH soared from about $2,000 to almost $10,000 on Coinbase’s exchange, GDAX, which is now called Coinbase Pro. On other exchanges, the price went up to almost $4,000.
Coinbase had only opened BCH trading for less than 3 minutes before closing it because the requests exceeded their supply. Most of the requests for BCH were denied because Coinbase did not have enough supply.
Coinbase claims that the dramatic increase in price was due to the fact that the excessive demand for BCH exceeded the exchange’s supply. However, many users believe that there could have been insider trading on Coinbase before its official integration , which depleted the exchange’s supply.
Ticker Symbol: BCH
Market Cap of BCH: $21.0 Billion (at the time of writing)
It is hard to envisage BCH’s stability without a stable BTC. However, it may also be due to the fact that the largest cryptocurrency takes everything up and below with it, when it does.
It still remains to be seen if BCH proves to be less volatile than BTC.
How to Buy or Mine Bitcoin Cash?
Now that you know of both sides of the story, the critics and the proponents, along with the market reputation, you might as well try and buy or mine BCH for yourself.
The easiest way to buy BCH is with a broker exchange. The most popular of these is Coinbase and you can buy it using your fiat currency via credit/debit card with your bank account. Other well known exchanges include Bittrex, Kraken, Cex.io, and Poloniex. It is also possible to buy Bitcoin Cash from a crypto-for-crypto exchange. This is where you deposit using a different cryptocurrency (such as Bitcoin) and exchange it for Bitcoin Cash.
However, if you like to do things yourself, you can mine Bitcoin Cash for yourself. For definitions, mining is the usage of computing power to solve mathematical equations on the blockchain. Once a node on the decentralized network solves the mathematical equation, it verifies a transaction block and then receives a reward for verifying the transaction. This reward, in the case of Bitcoin Cash mining, is a Bitcoin Cash coin.
Although mining was relatively preferred at the start of the crypto world, it has, with time, become a hard suit to follow. There is so much competition that only those who can generate huge amounts of computing power are rewarded. To generate enough computing power to become a successful miner, you must invest a lot of money.
An alternative to individual mining is the “mining pool” – a place where you can join a network of other miners which combine computing power to solve mathematical equations to earn BCH reward, which is split between the members of the mining pool once a transaction is successfully verified.
Bitcoin Cash – Conclusion
The legacy of Bitcoin Cash against BTC is due to the increase in block size; 8MB. However, this increase gives way to greater security risks.
For now, it is clear that the discord between hardline BTC users and staunch BCH supporters will keep up. It also serves as good news for the market because these different sets of supporters will keep the market intact. BCH is now available in 276 exchanges around the world – compared to Bitcoin’s 400.
There are developments lined up for BCH in order to make it a viable alternative to BTC. A software upgrade also took place in May, which is first of the scheduled upgrades.
Recapitulating, Bitcoin Cash (BCH) could be headed to greater heights in the market as the project continues to evolve and adoption continues to increase.