What is Bitcoin Cash (BCH)?

What is Bitcoin Cash? 

An ongoing debate about the stability of Bitcoin led to a split of the coin on August 1st, 2017, resulting in Bitcoin Cash, a new crypto project based on the Bitcoin blockchain. The cryptocurrency issued by this blockchain is also called Bitcoin Cash (BCH). 

Bitcoin Cash allows a block size of eight megabytes (compared to Bitcoin’s 1 megabyte) to increase the number of transactions that its ledger can process. Supporters of Bitcoin Cash have opted for on-chain scaling solutions such as the mentioned increase in block size, while supporters of Bitcoin (BTC) opt for off-chain scaling and second-layer solutions like the Lightning Network. 

Based on market cap, Bitcoin Cash is among the top 30 largest cryptocurrencies and one of the most important altcoins to date. Still, Bitcoin Cash is not as easy to spend as Bitcoin because it does not have the same level of adoption amongst merchants.

How does Bitcoin Cash work? 

Much like Bitcoin, Bitcoin Cash is a decentralised open-source network that uses a Proof of Work consensus mechanism to mine new currency and approve transactions. Miners earn Bitcoin Cash tokens as a reward for their work.

Bitcoin Cash (BCH) vs. Bitcoin (BTC)

Though Bitcoin Cash is based on the Bitcoin blockchain, there are key differences between the two cryptos. With a 1 MB block size, Bitcoin is only able to process around seven transactions per second. One of the main reasons for the hard fork was that Bitcoin Cash supporters wanted a larger block size to scale up the transaction volume and speed. Bitcoin Cash, therefore, started with a block size of 8MB and has since increased that to 32MB, meaning it is now able to process over 100 transactions per second.

Another difference between the two is the transaction fees. The Bitcoin Cash network fees are lower than those of Bitcoin, averaging between $0.20 and $0.25 per transaction. Bitcoin meanwhile charges an average of $0.4 and $2 per transaction. This figure excludes the period between 2017-2018 during which Bitcoin Cash was created and Bitcoin’s transaction fees briefly rose to $55 at their height.

What further sets Bitcoin and Bitcoin Cash apart is the fact that Bitcoin Cash does not rely on the Segregated Witness Consensus Layer (SegWit) scaling solution that both Bitcoin and Litecoin, another forked Bitcoin altcoin, use to optimise transactions.