Coin Insights: What Is Bitcoin Cash

What-Is-Bitcoin-Cash

You might have noticed Bitcoin Cash is included among the list of tokens we offer on our trading platform. It shares a similar logo and name to Bitcoin, but what the heck is it?

We get it. If you’re relatively new to the cryptocurrency space you’ll notice that there are many different types of ‘Bitcoin’ in the market, and things can get, well, confusing.

But let’s unravel that confusion and talk about Bitcoin Cash (BCH), the most notable of all the Bitcoin named alternatives.

What is Bitcoin Cash?

Bitcoin Cash was created by various miners and developers within the Bitcoin community, and was backed by one of Bitcoin’s most significant early advocates, Roger Ver. The miners and developers who created Bitcoin Cash were original contributors to Bitcoin, but for a number of reasons (we’ll get into them all) they wanted to part ways from the original Bitcoin team.

Bitcoin Cash was designed to replace the Bitcoin network – offering users faster transactions and lower transaction fees. It is thus a version of Bitcoin, but has been updated and changed in ways that make it unrecognizable and unusable with Bitcoin.

That is correct – you cannot use Bitcoin Cash on the Bitcoin network. You cannot send Bitcoin to a Bitcoin Cash address, or send Bitcoin Cash to a Bitcoin address. Doing so will result in lost funds, and no ability for you to recover your cryptocurrency.

How Was Bitcoin Cash Created?

To understand this we’ve got to go back a little bit. We’ve got to understand some of the inherent challenges with Bitcoin back during 2015-2017.

For every Bitcoin transaction to happen, a block of information/data has to be mined. Each block on the Bitcoin network can handle approximately 1-4mb of data, which roughly equates to about 2700 transactions per block. Each block of Bitcoin (BTC) takes 10 minutes to be mined.

If we do a bit of quick math, this equals approximately 4.5 transactions per second (with a maximum of about 7 TPS). This transactions per second speed (TPS) has become one of the key differentiators between BTC and BCH, and was one of the primary reasons Bitcoin Cash was created.

Why Do Transactions Per Second (TPS) matter?

We’ve got to remember that the original vision Satoshi Nakamoto, Bitcoin’s anonymous founder, had planned for Bitcoin was to have:  “A Peer to Peer Electronic Cash System”. This was stated in his 2008 whitepaper, and will be an important aspect in understanding why the Bitcoin Cash was launched.

While Satoshi Nakamoto had a fantastic vision “A peer-to-peer electronic cash system”, in reality, the speed and costs of Bitcoin transactions prevent it from actually being an effective system of exchange. While a maximum of 7 transactions per second may seem high, in comparison to Visa’s 1700 transactions per second, Bitcoin isn’t even close to being in the range of something usable for electronic cash.

Thus, instead of being the “peer-to-peer electronic cash system” Satoshi envisioned, Bitcoin turned into a store of value, as gold or a traditional security (stock) might be.

But even this new adoption of Bitcoin as a storehold of value caused the Bitcoin network to become heavily congested and slow. With new waves of people adopting Bitcoin there was a very noticeable uptick in transaction activity. This led to many transactions being held in queue, and slow processing times that could take hours to complete.

Many in the Bitcoin community weren’t happy with this particular direction. Instead, they wanted to stay true to the words in the title of the whitepaper Satoshi had published: “Peer-to-Peer Electronic Cash”.

As a result of this issue, two different camps emerged in the Bitcoin community. One camp wanted to keep the current system in place (maintaining the 4.5 TPS speed), and the other wanted to update the Bitcoin code completely.

Essentially, we can look at it like this: Bitcoiners wanted to keep the existing structure of ‘big blocks’ of data, processing a maximum of 7-TPS (Transactions Per Second), and a growing number of users wanted to change the code to ‘smaller blocks’ of data, increasing the processing speed to 100-TPS (Transactions Per Second).

The growing number of users who wanted ‘smaller blocks’ of data formed what is now called Bitcoin Cash.

Bitcoin Splits – Two Groups, Different Visions

The small blocks camp was backed by one of the original investors and biggest proponents of Bitcoin in the early days, a man named Roger Ver. Interesting side note: he actually was the world’s first Bitcoin billionaire.

When Bitcoin was heating up in the spring of 2017 before it’s most explosive bull run to date, the price of Bitcoin was $1200. It was at this point that the friction between the two Bitcoin camps, big blocks (Bitcoin) and small blocks (Bitcoin Cash), reached its height.

Roger Ver and others thought that updating the network might be an option to make Satoshi’s vision a reality, and suggested that creating smaller block sizes was the path forward to achieve this.

The update was not met with full support however. The Bitcoin community, divided into two camps (Bitcoin with ‘big blocks’ of data) and (updated Bitcoin with ‘small blocks’), were at a standstill.

In the end, the team who wanted to update Bitcoin decided to push forward with their plan, splitting the Bitcoin network in a technological update called a hard fork. As an aside, a hard fork is analogous to taking a document, copying it, and then changing it. In the beginning you’ve got two copies of the same document. But as you progress with edits, you’ll change the new document to something that is, eventually unrecognizable. In the case of Bitcoin’s blockchain, the underlying ‘document’ comes from the same code, but the internal workings vary so much that the blockchains cannot interact with each other.

This is what happened with Bitcoin and Bitcoin Cash.

Bitcoin Cash Today – An Overview

Bitcoin Cash is one of the many hard forks of Bitcoin, and is arguably one of the most flourishing hard forks of the Bitcoin splits to date.

With a focus on transaction-per-second (TPS) increases, Bitcoin Cash aims to be one of the cryptocurrencies leading the charge in peer-to-peer cash systems.

It fluctuates in the Top 20 cryptocurrencies on Coin Market Cap And at the time of this writing has a market cap valuation of approximately $11.6B USD or $14.6B CAD. It’s ticker symbol is BCH.

Coinberry users have the option to buy and sell Bitcoin Cash on the Coinberry platform if they so choose.

Will Bitcoin Cash fulfill Satoshi Nakamoto’s original plan to create a peer-to-peer electronic cash system? Only time will tell.

Bitcoin Cash Resources

If you’re interested in learning more about Bitcoin Cash you can continue to read our educational series. We’ll be releasing more articles on this cryptocurrency, and covering various aspects of it.

You can also take a look at some of the following links:

Coinberry.com

Bitcoin Cash Price (BCH to CAD)

Cointelegraph.com

What is Bitcoin Cash and how does BCH work? A beginner’s guide

Coin Bureau

Bitcoin Cash 2020: This You NEED To Know

Bitcoin Cash References

The websites, articles, and content that was used to make this article:

99Bitcoins

What is Bitcoin Cash? – A Beginner’s Guide

Investopedia.com

What Is Bitcoin Cash?

Paypal.com

What do I need to know about Bitcoin Cash?