Bitcoin Cash is the best-known hard fork of the Bitcoin blockchain.
In 2017, a team of developers, miners, and other major shareholders met to discuss the problem of Bitcoin’s scalability. The biggest issues were transaction speeds—at one point, it took almost 30 minutes for transactions to get verified, while transaction costs reached an all-time high of over $50.
At this conference, two camps emerged rooting for different ways to solve the issue. The so-called big blockers advocated for Bitcoin’s block size to be increased so that it could fit more transactions. The small blockers or decentralists opted for the SegWit and Lightning network upgrades.
With the backing of titans like Roger Ver and the mining giant BitName, the blog group broke off and initiated a hard fork of the Bitcoin blockchain, creating Bitcoin Cash.
Block Size Limit: How BCH Came to Be
It is important to understand that the whole point of contention that led to the creation of Bitcoin Cash (with the BCH ticker) was the block size limit. Satoshi Nakamoto had set this limit to 1 MB, but the big blockers thought that the only way to improve scalability was to change it to 8 MB.
The other camp argued that increasing block size would endanger Bitcoin’s decentralisation. In short, increasing Bitcoin’s block size would increase the size of the entire blockchain, require more modern equipment to maintain the network, and reduce mining rewards.
The result would be that only large mining operations would afford to maintain Bitcoin Cash mining nodes, thus centralising it. This is why the majority stuck with the original Bitcoin blockchain.
Bitcoin Cash Vs. Bitcoin
The whole point of creating Bitcoin Cash was to help create the cryptocurrency of the future, one that could be used for day-to-day transactions. To aid this, BHC was designed to have some distinct and mostly beneficial differences.
- Bitcoin Cash has an increased block size, first set to 8 MB and then to 32 MB in 2018; BTC remains limited to 1 MB
- Bitcoin Cash’s average transaction speed is 116 transactions per second, compared to Bitcoin’s 10 minutes.
- Similarly, BCH’s median transaction fee is 0.000014 BCH ($0.0088) compared to BTC’s 0.000049 BTC ($2.4)
- In terms of security, Bitcoin Cash has significantly lower hash power supporting it, theoretically making it more vulnerable to a 51% attack.
- In terms of adoption and market usage, Bitcoin remains the most popular cryptocurrency, with over 300,000 daily transactions. In comparison, Bitcoin Cash manages just under 100,000
From this comparison, you can quickly gather some of the advantages and disadvantages of Bitcoin Cash compared to Bitcoin. Bitcoin Cash has noble goals and has taken big steps to accomplish them, but it is not yet there.
Summary: What’s the Future of Bitcoin Cash Like?
Unfortunately, Bitcoin Cash simply didn’t take off as well as expected. BCH still has a very low transaction volume and often does not even fill its assigned 8 MB block size after many hours.
In order to win, Bitcoin Cash would need to draw away more miners, more users (thus more transactions), and create a longer and more robust blockchain.
In fact, Bitcoin Cash went through its own hard fork in November 2018, resulting in Bitcoin ABC (original Bitcoin Cash, with an increased block size of 32 MB) and Bitcoin SV (short for Satoshi’s Vision, with a block size of 128 MB). Bitcoin ABC’s code was also upgraded to support smart contracts, while Bitcoin SV doesn’t.
As of today, Bitcoin remains the cryptocurrency of choice for investors, being the gold standard for holding value. Bitcoin Cash might become the cryptocurrency of choice for daily transactions if it can manage to get better adoption globally. Until then, Bitcoin will continue to dominate the market, as it always has.