Bitcoin Cash (BCH) is a hard-forked version of the original Bitcoin. The fork occurred on August 1, 2017, with the main purpose to speed up transaction processing. As of July 2019, the currency closes up the Top 5 on CoinMarketCap.com.
It is a cryptocurrency and payment network, which is a hard fork of BTC. Here’s how it appeared.
The block size in the Bitcoin blockchain is limited to 1 megabyte. With the growing popularity of BTC, the number of transactions increased, but due to the limitation of the maximum block size, not all transactions were processed immediately, resulting in a queue. In May 2017, some users complained that they had to wait for confirmation for several days. To speed up the processing, the users could pay a higher commission. But this makes the use of bitcoins quite expensive, especially for small payments.
To solve the problem, two ways were suggested:
Bitcoin Unlimited – removal of the 1 MB limit. Many miners voted for this because an increase in the block size would not only eliminate the queue but also increase the miner’s profit due to the increase in the total commission in the block. The developers were mainly against this increase because they believed that it would increase the requirements for the power of equipment.
Segregated Witness (SegWit) – storing part of the information not in the blockchain, but in separate files outside it. The developers believed that as a result, a lot of space would be freed up, more transactions would be processed in the block, and the confirmation speed would be increased. Supporters of Bitcoin Unlimited believed that this was only a temporary and more complex decision.
As a result, a compromise SegWit2x protocol was developed — some of the information should be stored outside the blockchain and the block size should be increased to 2 MB. On July 20, 2017, 95% of miners voted in favor of the Bitcoin Improvement Proposal (BIP) 91. At the same time, the development team refused to use SegWit2x, maintaining the old blockchain structure (without storing information beyond its scope), but increasing the block size to 8 MB. They called their branch Bitcoin Cash (BCH).
The main advantages of BCH over BTC, besides anonymity in the network, are also the increased speed and security of transactions. More specifically, the benefits are as follows:
The size of BCH blocks as compared to BTC increased to 8 MB, which accelerated transactions and reduced commissions in the network.
New security standards: the system is protected from erasure and replay attacks.
When making transfers in BCH, the input value of the transaction is signed to increase wallet security.
However, a significant disadvantage of this fork is the automatic adjustment of the network complexity. Unfortunately, it directly depends on the new data extraction speed. That is, if for a certain amount of time, the miners mine an insufficient number of blocks, then the complexity decreases. This pattern works in both directions.
The miners began to exploit this vulnerability and mined BCH in of complexity recession. When the situation changed, they switched to BTC. Such actions led to the destabilization of the network and increased the coin’s volatility.
Cryptocurrency investors do not yet consider Bitcoin Cash as a long term investment asset. This coin is used rather as a speculative tool. For this reason, the future of BCH is quite uncertain. And this can be proven by the fact that in August 2018, the Chinese mining equipment company Bitmain, invested in BCH and lost $328 million.
However, there are also optimistic investment prognoses for BCH. For example, millionaire Roger Ver, who was one of the first investors in original BTC, says that BCH is a second chance for investors. He predicts that in several years, Bitcoin Cash will cost more than Bitcoin because the people will realize the advantages of BCH over BTC.
“Bitcoin Cash shows me the drive, passion, and evangelism that once was driving Bitcoin.”
- Marc De Mesel, early Bitcoin investor
“Bitcoin Cash is not trying to capitalize on the Bitcoin brand. It’s trying to save the brand which is being destroyed by people who no longer believe in it. Bitcoin is a peer-to-peer electronic cash offering fast, secure, and reliable global payment with low fees.”
- Jim Philipps, Founder/CEO of PTYcoin, Founder/CTO of Golden Frog Technology Services
BCH price has been fairly stable in the last 3 months, except for the abrupt decline on April 30, 2019, when it reached $242.02. Apart from that, the coin has been performing quite stable. On May 17, it took a leap and reached $413.97, going up to $436 in a few days. In June, BCH has been performing well until June 5th, when it fell below $400. Today, on July 13, 2019, the price of BCH is $343.65. As per price prediction today, Bitcoin Cash might go bullish very soon.