What is Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is a cryptocurrency created in August 2017. Bitcoin Cash is among the top cryptocurrencies worldwide by market cap.
Scalability Problem is a Challenge for Wider Adoption
The ethos of Bitcoin is a decentralized peer-to-peer electronic cash payment system that does not rely on a central authority. Since its near 10 years run, Bitcoin has become a global brand for alternative finance and the predominant cryptocurrency by market cap. However, since the beginning, there’s been a growing concern about network scalability.
Each block of data within the blockchain is limited to 1MB (Megabyte), originally intended to prevent the risk of spam and DoS-attacks (note: denial-of-service-attacks here refer to a network’s inability to perform core functions). For instance, a malicious actor can load a large number of spam transactions with little legitimate purpose, overwhelming the ability of miners to verify, which leads to network congestion. In early Bitcoin days, this was a trivial concern since transaction levels were relatively low.
As the Bitcoin network grew more popular, the block size limit imposes a constraint on the network’s ability to do high transactions per second during busy market periods. When the network is clogged up during these episodes, it lengthens transaction processing times and increases transaction fees, both of which are a blow to user adoption. Around mid-2017, confirmation times got particularly bad for users. While users were able to pay higher transaction fees to speed up processing, it potentially prevents Bitcoin from being an accessible payment method.
Bitcoin Cash is Born
Bitcoin, like many cryptocurrencies, is open source code so anyone can review and submit changes. A number of proposed changes to the Bitcoin code have been submitted, which requires support from developers and miners. Due to the decentralized governance process, adopting proposals can be lengthy and result in the creation of a separate blockchain that uses new standards known as a fork.
To increase transaction capacity, several viewpoints have emerged. On one spectrum, there are those advocating for maintaining the 1MB block size while relying on off-chain settlement layers. By providing relief to the Bitcoin network, it would cut down processing times, creating a better user experience for those with legitimate purposes. By contrast, Bitcoin Cash addresses the network scalability issue by increasing the block size from 1 MB to 8 MB, aiming to support higher transactions per second in each block mined. In other words, Bitcoin Cash aims to bolster on-chain scaling by increasing the supply per block. That hopes to support wider adoption of the cryptocurrency as a medium of exchange and achieve scalability comparable to traditional payment networks like Visa and Mastercard.
A hard fork is a way open-source developers update Bitcoin software, splitting a network to create a new chain with new rules. On August 1, 2017, developers completed a hard fork of the Bitcoin blockchain resulting in the Bitcoin Cash blockchain. Bitcoin Cash uses the same codebase but has a blockchain size limit of 8MB.
How Can Bitcoin Cash Be Used?
Bitcoin Cash is among the top cryptocurrencies worldwide by market cap. Therefore, many cryptocurrency exchanges allow people to send, receive, buy and sell the cryptocurrency.
To read more about Bitcoin Cash and its roadmap, check out: https://www.bitcoincash.org
Originally published at https://overblock.io on August 1, 2019.
