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Bitcoin Cash (BCH): Is there more than one Bitcoin?



Inspired by the desire to improve Bitcoin's scalability, Bitcoin Cash was developed as a practical cryptocurrency for everyday transactions.



SUMMARY


Bitcoin (BTC) is a relatively new development. Although it only entered the market in 2009, BTC has already spawned numerous alternative coins (altcoins). One of the first altcoins to have Bitcoin in its name is somewhat controversial - but what is Bitcoin Cash (BCH)? Bitcoin Cash is based on the original Bitcoin code and introduces several technical changes that have far-reaching implications. Inspired by frustration with Bitcoin's scalability, BCH was designed to be a more practical cryptocurrency for everyday transactions on the blockchain. The larger block size - and therefore faster processing speed - favours its use as a payment system rather than a store of value.



CONTENT

  • Bitcoin Hard Fork: What is Bitcoin Cash?

  • Why create a second Bitcoin?

  • The controversy: Bitcoin vs. Bitcoin Cash


BITCOIN HARD FORK: WHAT IS BITCOIN CASH?


The Bitcoin (BTC) protocol was developed in 2008, and the network itself went online in January 2009 with the mining of the so-called Genesis block - the first block of the Bitcoin blockchain. Over the years, the Bitcoin community grew from a small community of computer scientists and cryptographers to becoming more mainstream. As Bitcoin became more widespread, different opinions and strategies emerged within the core group of developers on how to manage this growth.


In the early stages of Bitcoin, the network was more than capable of handling the transaction load of a niche community of developers. But as it grew in popularity, the network became overloaded with an ever-increasing number of transactions, which eventually slowed down processing time. The fear was that it could take days or weeks for Bitcoin transactions to settle if nothing was done. Neither scenario was ideal, and this became known as Bitcoin's scalability problem.


Solutions were proposed by two camps: those who wanted to increase the block size and those who wanted to keep the block size small. The block size indicates how much data each block can contain in a given blockchain. Bitcoin's maximum block size is 1 MB, which is not a large amount of data by most technical standards. Of course, there were pros and cons on both sides of the debate, but none was convincing enough to unite the community of developers.


Since the core developers could not reach a consensus on the right way forward, a hard fork of the original Bitcoin protocol occurred in August 2017. In both soft forks and hard forks, the developers make an update to the original blockchain that is not accepted by all nodes. In a hard fork, the nodes that accept the update are migrated to a new blockchain and the coins on the new blockchain are separate and unique from the original ones. This is how Bitcoin Cash (BCH) was created, with its own Bitcoin Cash blockchain and cryptocurrency.



WHY CREATE A SECOND BITCOIN?


Transaction speed is critical to a cryptocurrency's scalability, functionality, wide acceptance and ultimate success. The original Bitcoin can process seven transactions per second, while Bitcoin Cash can process an average of 116 transactions per second. And for comparison, Visa processes 24,000 transactions per second. In the eyes of BCH proponents, a speed of seven transactions per second was not enough in the long run.


The main reason for the fork of Bitcoin Cash was to increase the number of transactions per second, which is reflected in the larger block size of BCH. In addition, the developers have taken steps to reduce the total amount of data that needs to be verified for each transaction, which has further sped up the process.



THE CONTROVERSY: BITCOIN VS. BITCOIN CASH


The Bitcoin Cash fork was a hotbed of controversy. Early Bitcoin proponents were enthusiastic about the project and believed in its long-term potential. Both Bitcoin and Bitcoin Cash proponents believed that their way was the right way, and so the fork was the only way both groups could go.


The proponents of BTC argued that the larger block size of BCH meant that running a node was more energy and cost-intensive. Higher demand for computing power could theoretically be a barrier for individuals to run nodes and maintain the decentralised nature of the network. This in turn could open the door for centralised institutions to take control of the network.


Apart from the profound ideological differences between the two camps, the controversy between Bitcoin and Bitcoin Cash also stems from the fact that Bitcoin Cash has appropriated the name Bitcoin. Although BCH is technically very similar to BTC, many feel that using the name Bitcoin is in some ways disrespectful.


After the disappearance of Bitcoin creator Satoshi Nakamoto from the Bitcoin community, many have speculated on what Satoshi's original vision for Bitcoin was. Different accounts of Satoshi's vision suggest that his original intent was either more towards BTC or BCH. The controversy becomes particularly heated when key figures in the cryptocurrency community speak out on the issue.


For example, a person named Craig Wright (who has claimed to be Satoshi himself) has voiced that "Bitcoin Cash is Bitcoin." A controversial figure with a history of alleged fraud, Wright's support of BCH has fanned the flames on both sides of the debate between BTC and BCH, with many BCH supporters still distancing themselves from Wright.


Despite all the controversy that exists between the two cryptocurrencies, they serve largely different purposes and share only one name. They have different use cases. BTC functions like "digital gold" and serves as a store of value, while BCH serves as "digital cash" and is meant to be a means of payment. Many users understand this and support the further development of BTC and BCH.

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