Bitcoin Cash is a cryptocurrency that was developed as a fork from Bitcoin, the world’s largest cryptocurrency, in 2017. It was developed as a cryptocurrency that is better suited for cheap, everyday payments than Bitcoin.
As Bitcoin grew in popularity, it ran into scalability problems. The Bitcoin network processes 4.43 transactions per second as of January 2022, making the wait time for the verification longer and transaction fees higher. To address this problem, mining pools and companies that power 80-90% of Bitcoin voted to incorporate a technology called the segregated witness (SegWit). This fix removes the signature data from the block of data that needs to be processed in each transaction and attaches it in an extended block, reducing the amount of data that needs to be verified in each block. Bitcoin also increased the size of its blocks from 1 MB to 2 MB to further improve Bitcoin’s scalability.
However, some Bitcoin miners and developers were skeptical of SegWit. In August 2017, some miners and developers initiated a radical change to the Bitcoin protocol—a hard fork. This hard fork created a new currency, the Bitcoin Cash. Also abbreviated BCH, it has its own blockchain and specifications, implementing an increased block size of 8 MB to accelerate the verification process. As of March 2022, the maximum block size for Bitcoin Cash increased to 32 MB.
Bitcoin Cash is able to process more transactions than Bitcoin, lowering the transaction fees and shortening the waiting time. However, this speed potentially compromises the security of the blockchain network compared to Bitcoin.
BTC Vs Bitcoin Cash
Though Bitcoin and Bitcoin Cash have different ideologies and block sizes, there are several similarities between them. One similarity is that Bitcoin Cash also uses the Proof of Work (PoW) consensus mechanism to mine new coins. Secondly, it also uses the services of Bitmain, the world’s largest cryptocurrency miner. Thirdly, BCH also used the same mining algorithm as Bitcoin called the Emergency Difficulty Adjustment (EDA). However, BCH revised its EDA algorithm to make it easier to mine the cryptocurrency. And lastly, BCH also has a supply cap of 21 million tokens.
In 2018, Bitcoin Cash also had its own hard fork, splitting into Bitcoin Cash and Bitcoin Cash SV (Satoshi Version). The disagreement was due to proposed protocol updates that incorporated the use of smart contracts into the blockchain.
As of March 22, 2022, the circulating supply of Bitcoin Cash was 19,015,775 BCH—91% of the total supply.