Bitcoin Cash (BCH)
Since 2009, Bitcoin has inspired the creation of new cryptocurrencies, each designed to address specific limitations or introduce new features to the blockchain ecosystem. Although Bitcoin remains the most popular crypto, it had scalability issues that limited the volume of transactions per second. It is in this context that Bitcoin Cash (BCH) emerged as an alternative by prioritizing transaction speed and cost efficiency. This article delves into BCH's origins, key features, and the challenges it faces.
Origins
Bitcoin Cash emerged on August 1, 2017, as a result of a hard fork from Bitcoin (BTC). The fork was driven by a debate within the Bitcoin community regarding how to scale the network to accommodate an increasing number of transactions. Bitcoin's blockchain was originally designed to handle a limited number of transactions, leading to significant delays and high fees during periods of high demand. By June 2017, transaction fees had hit $ 5. By the end of that year, fees skyrocketed to over $ 54. The Bitcoin community was divided on how to address these issues.
One faction proposed a solution called the Lightning Network, which involved processing transactions off-chain to reduce the load on the main blockchain. However, another faction supported increasing the block size limit, which would allow more transactions to be processed in each block. This solution would reduce congestion and lower fees.
Unable to reach a consensus, a group of developers and miners who supported the block size increase initiated a hard fork, resulting in the emergence of Bitcoin Cash. It was created to facilitate faster and cheaper transactions while preserving the core principles of decentralized digital currency. The forked chain retained the original Bitcoin transaction history up to that point, but from the moment of the split, Bitcoin Cash operated on its own network with an increased block size limit of 8 MB, which has since been increased to 32 MB.
Key features
Bitcoin Cash works very similarly to Bitcoin. It is a decentralized cryptocurrency that operates on blockchain technology and utilizes proof-of-work as consensus mechanism. However, it has some characteristics that set it apart from Bitcoin.
1. Larger block size: The most significant feature of Bitcoin Cash is its larger block size, currently set at 32 MB. This allows the network to process more transactions per block, reducing congestion and making transactions faster and cheaper.
2. Lower transaction fees: Bitcoin Cash typically has lower transaction fees compared to Bitcoin because it can process more transactions per block. This makes it more attractive for microtransactions, where high fees could be a barrier.
3. Decentralized development: Bitcoin Cash adopts a decentralized development model, with various independent teams contributing to its progress.
4. Flexibility: Compared to Bitcoin, the protocol of Bitcoin Cash is designed to be more flexible and easier to upgrade. This allows that future changes, such as further increases to the block size or the introduction of new features, can be implemented more smoothly.
Challenges
Despite its advantages, Bitcoin Cash faces some challenges that it needs to overcome in order to have a long-term success.
1. Competition: Bitcoin Cash not only competes with Bitcoin, but also with other cryptocurrencies, such as Litecoin and Dash, that focus on scalability and transaction efficiency.
2. Market perception: Bitcoin is still the most popular and widely recognized cryptocurrency, while Bitcoin Cash is perceived as a lesser version of it. This perception impacts the credibility of the project.
3. Block size: While a larger block can process more transactions per block, it also compromises the decentralization of the network by making it more difficult for smaller nodes to participate.
4. Internal disputes: The BCH community experienced an internal debate around further increases to the block size. This dispute led to another hard fork and the emergence of Bitcoin SV (BSV), which originally had a block size of 128 MB.
5. Volatility: The market price of BCH has been volatile, with significant fluctuations since its origin. This could impact the adoption of BCH as a mean of payment for everyday transactions.