What is Bitcoin Cash?
Bitcoin Cash (BCH) is a hard fork of Bitcoin which aims to improve multiple inherent drawbacks of bitcoin by providing faster transactions and bigger block sizes. The main differences between BTC and BCH are that BCH has 8 MB blocks (as compared to BTC’s 1 MB blocks) and a modification of the bitcoin difficulty adjustment algorithm which allows mining difficulty to adjust more quickly in BCH than BTC.
History of Bitcoin Cash
Bitcoin Cash was launched on August 1, 2017 as a fork of bitcoin. After the community accepted, Bitcoin Improvement Proposal (BIP) 91 and activated Segregated Witness (SegWit) in July 2017, a faction of developers not content with this modification decided to launch their own hard fork of bitcoin at block # 478558: the final common block between the two coins. The first Bitcoin Cash block was subsequently #478559. In the first month, 1500 more blocks were mined on the Bitcoin Cash network, and the number of blocks between the two coins varies by a little over 1%.
How Bitcoin Cash Works
Like bitcoin, Bitcoin Cash is a cryptocurrency which is completely decentralized, which means there is no administrating authority or central repository of the currency. Thus, nobody oversees or monitors the transactions and it relies upon a network of nodes and miners to keep the blockchain up-to-date.
During a transaction, the sender needs to initiate the ‘send’ command which contains the receiver’s Bitcoin Cash wallet and amount to be transferred. Public record keepers, called ‘miners’, will approve the transaction and add it to the Bitcoin Cash public ledger (or “blockchain”).
Bitcoin Cash was launched to improve a few drawbacks of Bitcoin. The prominent changes and subsequent advantages are:
- Increased Block Size: Small block sizes cause delay and congestion on the Bitcoin network, and thus transactions can sometimes take hours to complete. With a much bigger block size of 8 MB, Bitcoin Cash gets the transaction done in seconds and confirmation is received within minutes. The network has been designed with lots of redundancy to ensure clogging-free transaction.
- Lower Transaction Charges: Bitcoin transaction charges have gone rather high but Bitcoin Cash keeps the transaction charges down to a few cents. This is even lower than popular credit cards and obviously lower than the original bitcoin.
- Increased Transaction Security: Bitcoin Cash utilizes “replay protection technology,” a new and safer way of signing the transactions. It also improves the hardware wallet security and eliminates the perennial problem of quadratic hashing.
- Replay and Wipe-out Protection: In case of multiple block chains (a fork within BCH), the replay and wipe-out protection works to ensure peaceful co-existence of both chains. In simpler words, users of Bitcoin Cash have a decreased risk of service disruption.
- Improved Hardware Wallet Security: If you are a fan of hardware wallets (like Trezor), Bitcoin Cash offers higher and improved security for your wallet with input value signing via the new SigHash type.