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What is Bitcoin Cash (BCH) and how does it work?
What is Bitcoin Cash?
Bitcoin Cash (BCH) is a cryptocurrency created and launched to bring decentralization back to cryptocurrency. It is the result of a 2017 Bitcoin”hard fork,” which occurs when an existing blockchain splits in two. Bitcoin Cash allows for more transactions in a single block than Bitcoin and reduces fees and transaction times.
Bitcoin Cash is designed to be used as a cheap payment system, just as Bitcoin was originally designed. Transaction fees are generally lower and confirmation times are significantly shorter than Bitcoin, generally within a few seconds.
Find out more about Bitcoin Cash and how it differs from Bitcoin.
Key points
- Bitcoin Cash is the result of a Bitcoin hard fork it happened in August 2017.
- Bitcoin Cash was created to allow multiple transactions in a single block, theoretically decreasing fees and transaction times.
- Despite their philosophical differences, Bitcoin Cash and Bitcoin share many technical similarities: they use the same consensus mechanism and have limited their supply to 21 million coins.
- Bitcoin Cash continues to trade, at a fraction of the price of Bitcoin, but has yet to achieve widespread consumer acceptance as a form of payment.
History of Bitcoin Cash
The Bitcoin blockchain had scalability issues because it could not handle the increased number of transactions. Confirmation times and fees for a transaction on the Bitcoin blockchain have increased. This is mainly due to the 1 MB block size limitation for Bitcoin blocks. Transactions queued, waiting for confirmation, because the blocks couldn’t handle the increase in the number of transactions the network was experiencing.
Bitcoin Cash was created in 2017 when developers disagreed on the path Bitcoin should take to address emerging issues with the blockchain. Transaction fees continued to increase between 2009 and 2016. In June 2017, fees reached more than $5 before fluctuating and skyrocketing to more than $54 in December.
Bitcoin Cash was created and is maintained by an active community of developers. These developers saw Bitcoin Cash as a necessary alternative to Bitcoin because, in their opinion, Bitcoin had become more of an investment tool than a payment system. It had been conceived as a peer-to-peer payment system that excluded regulators and other third parties from financial transactions, but it had become something else entirely.
The Bitcoin Cash blockchain is Bitcoin Cash Node.
Bitcoin Cash vs. Bitcoin
Bitcoin Cash has increased the block size to a limit of 32MB, allowing for more transactions to be processed per block.
Also Bitcoin Cash differs from Bitcoin in another respect, as it does not incorporate Segregated witness (SegWit), another proposed solution to accommodate multiple transactions per block. SegWit removes witness signatures from certain areas to increase the number of transactions a block can store.
The average number of transactions per block on Bitcoin at the time of Bitcoin Cash’s proposal was between 1,000 and 1,500.
Yes, Bitcoin is available for trading.
How to get Bitcoin cash
Bitcoin Cash is available on cryptocurrency exchanges such as Binance, Coinbase, Kraken, KuCoin and many more. Because it’s a fork of Bitcoin, it is extracted in the same way. It can be mined on personal computers with dedicated GPUs, but this approach comes with some caveats.
Similar to Bitcoin and other mineable cryptocurrencies, Bitcoin Cash mining is dominated by large companies and mining pools. Pools increase your chances of receiving a block reward, although the rewards are shared with the pool. Depending on the size of the pool and the work contributions of other members, your shares could be quite small.
You can also buy a machine called an application-specific integrated circuit (ASIC) miner who can mine BCH. These machines are much faster at mining than personal computers, but cost several thousand dollars new. You can find used ones for much less, but their speeds are generally lower and it’s hard to tell what condition they are in.
Concerns about Bitcoin Cash
The Bitcoin Cash community believes that it must remain decentralized and convenient so that it can be used as the “best money in the world”. In the short term, the project focused on providing a fast, reliable and low-cost network, as well as “creating a professional mining node that listens to feedback and delivers measurable improvements.”
Contrary to its developer’s goals, BCH appears to have gained popularity among investors, ranking 25th by 24-hour trading volume and 16th by market capitalization. Its price on May 15, 2024 was $445, more than 270% higher than the price of $188 a year earlier. While this may be good news for BCH investors, it may not be such a positive development for a community that wanted a cryptocurrency to remain a payment method.
Is Bitcoin Cash Worth Having?
It depends on the market outlook, risk appetite and investment preferences. Bitcoin Cash has seen a significant increase in price until mid-2024, but that doesn’t mean it will continue.
Is it right to invest in Bitcoin Cash?
It is important to remember that all cryptocurrencies are subject to volatility, so you must accept the risk of large losses along with the possibility of large gains. It’s best to talk to a financial advisor about your financial situation to see if BCH is right for your portfolio.
What is the disadvantage of Bitcoin Cash?
Like many other cryptocurrency forks or projects, Bitcoin Cash has a small network (compared to Bitcoin and some others), which makes it more susceptible to attacks. However, this vulnerability is one that all blockchains suffer from until they become economically unviable to be targeted by attackers.
The bottom line
Bitcoin Cash is an altcoin forked from Bitcoin in 2017. It was created to speed up transaction times and maintain a position as a payment method. Although it is not the most popular cryptocurrency, it has survived many market ups and downs.
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