What Is Bitcoin Cash? Introduction to BCH
What Is Bitcoin Cash?
Bitcoin Cash is a “hard fork” of Bitcoin. It was created on August 1st, 2017 when a disagreement between miners of the cryptocurrency over block sizes led to a schism. The fork has the same the shared distributed ledger records of the Bitcoin blockchain up until that point – but from block number 478558, their histories diverged.
Introduction To Bitcoin Cash
Bitcoin’s revolutionary crowd-based consensus model means it inevitably experienced several hard forks. The first Bitcoin hard fork created Bitcoin Cash on August 1, 2017. This fork is identical to Bitcoin (even its ledger) up until that point.
As Jaden Smith can attest, however, a celebrity lineage doesn’t necessarily guarantee success for the progeny. Work must still be put in, no matter how much of a headstart you get in life. Bitcoin Cash is notable for more than being Bitcoin’s first hard fork. The project forged important partnerships and became a cryptocurrency to be reckoned with in its own right.
The rift that created Bitcoin Cash related to how Bitcoin Improvement Proposal (BIP) 91 was being implemented. Many in the community, including Roger Ver, felt block size limits needed to be increased to maintain BTC’s usage as a currency instead of a speculative investment. SegWit became the straw that broke the camel’s back, and BCH was coined.
Of course, even BCH has its own infighting, and in November 2018, Bitcoin SV (short for Satoshi’s Vision) was hard forked from Bitcoin Cash. This started 2019 with a lot of noise when Coinbase delisted Bitcoin SV.
Before examining the success chances a literal Bitcoin clone can have (especially since it’s not the only one), let’s take a look at the crypto market performance of BCH, the proprietary crypto coin of Bitcoin Cash.
Bitcoin Cash BCH Crypto Market Performance
Bitcoin Cash (aka Bcash) has a total supply of 21,000,000 BCH just like Bitcoin. The peak price of BCH so far was $4091.70 on December 20, 2017.
BCH is mined using a partial hash inversion Proof-of-Work protocol using an SHA-256 hash function. Like Bitcoin, Bitcoin Cash is decentralized and issues a block reward every 10 minutes, although BCH blocks are eight times the size of BTC blocks, making them a little harder to process. The current block reward as of October 2018 is 12.5 BCH.
Because it used Bitcoin’s digital ledger up through block 478558, BCH was awarded at a one-to-one ratio to BTC holders. This makes it an airdrop, rather than a traditional ICO. It also shares BTC’s genesis block on January 9, 2009.
Forking from Bitcoin gave Bitcoin Cash a big boost in its initial pricing. Given today’s BCH price being well over $500, it’s still free money to BTC holders, which is why it’s still coveted as currency today.
BCH is tradeable on a variety of crypto exchanges, including EXX, BitForex, OKEx, Huobi, HitBTC, and Binance. Its trading pairs include BTC, USDT, and fiat currencies like the US Dollar and Chinese Yuan. Over $500 million worth of BCH is traded each day.
Since it’s very similar to Bitcoin, many Bitcoin wallets support Bitcoin Cash, including the official Bitcoin Wallet, Trezor, Ledger, and more.
Why Cryptocurrencies Fork
What makes cryptocurrency so revolutionary is its decentralized governance. When you get a bank account with Bank of America, for example, the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) are set up by the federal government to set rules.
In addition to the government, Bank of America makes its own rules (such as setting overdraft fees, deposit minimums, and other account requirements). If Bank of America wants to reduce its Keep the Change savings incentives, it’s welcome to do so. There’s not much you can do as an account holder except accept the change or switch banks.
Cryptocurrency has what many believe to be a better way.
Holders, miners, and other stakeholders of a crypto have a say in the governance of the currency. Using the above banking scenario, that would mean account holders, not Bank of America, determine overdraft charges and other account requirements.
As cryptocurrencies are upgrades, sometimes the community disagrees on what the new protocol should look like. With enough support for two separate protocols, a hard fork is created, and a new crypto splits off the old one. There’s now two blockchains, one that follows the old protocol and one that follows the new one.
This allows both cryptos to coexist, and the market determines the value of each based on the different changes. And, as we discussed above, Bitcoin Cash is only the first Bitcoin fork. The last bitcoin won’t be mined until approximately 2140, and by that time, there could possibly be as many Bitcoin forks as there are cryptocurrencies right now.
Also be on the lookout for blockchains that call themselves forks but aren’t. There are two types of forks in crypto – hard forks and soft forks.
- Soft Fork – Soft forks replace the old blockchain with a new, valid one. Often the original blockchain code is used to create an entirely new crypto. Luckycoin was created as a soft fork of Litecoin and it in turn soft forked into Dogecoin.
- Hard Fork – Hard forks create two blockchains, and both remain valid. Sometimes the new blockchain retains the original name (i.e. Ethereum), while the original blockchain gets a new name (i.e. Ethereum Classic).
As an investment, forks are great because you get an equal amount of each currency so long as you hold prior to the fork. Savvy investors should keep an eye on potential forks and learn the best time to maximize profits.
Of course, being born from Bitcoin isn’t the only ace up Bitcoin Cash’s sleeves.
Building a Better Bitcoin
Community support and corporate partnerships are key ingredients to any cryptocurrency’s success. Bitcoin Cash isn’t resting on its laurels – the community and team actively pursue partnerships.
BCH is accepted by satellite provider Dish Network, Roger Ver even met with the president of Cyprus to promote BCH as a currency. Its success as a currency has Charlie Lee and Litecoin declaring themselves rivals, but Litecoin isn’t yet on that level yet. Bitcoin Cash is more than just a currency.
Taking the lead from blockchain 2.0 projects, Bitcoin Cash also acts as a smart contract platform that hosts decentralized apps. It already has Wormhole enabling Initial Coin Offerings (ICO) to be launched on the Bitcoin Cash blockchain.
It may just be eating Bitcoin’s crumbs, but Bitcoin is a giant, and its crumbs fed Bitcoin Cash enough to become a legitimate competitor in blockchain.
Bitcoin Cash Introduction: Summary
Bitcoin Cash is the first Bitcoin fork, but it’s hardly the last. When the community couldn’t agree on SegWit and block sizes, Bitcoin Cash was created as an alternative to the original cryptocurrency. Its value is driven by several key factors.
- Because it shared a decentralized ledger with Bitcoin until August 2017, Bitcoin Cash benefited in its valuation, which is much less than Bitcoin, but more than most other cryptos.
- BCH has block sizes 8x larger than BTC. They’re still mined in the same 10-minute intervals and share many other similarities.
- The price of BCH is heavily reliant upon BTC, but that doesn’t mean its not successful in its own right. It already supports smart contracts and has an ICO platform.
With these pieces in place, Bitcoin Cash is a dark horse crypto candidate that could easily surprise anyone. One day it may even take over Bitcoin itself as the king of cryptocurrency.