What is Bitcoin Cash?
The cryptocurrency known as Bitcoin Cash (BCH) is similar to Bitcoin (BTC) in many ways, but it also incorporates several unique features and adjustments. Despite the fact that it is regarded as a “fork” of Bitcoin, supporters contend that Bitcoin Cash adheres more closely to the original vision of developing a peer-to-peer electronic cash system as outlined in a 2008 white paper written by the protocol’s creator, a person or group going by the pseudonym Satoshi Nakamoto.
Bitcoin Cash’s core features
A decentralized peer-to-peer electronic cash system, such as Bitcoin Cash, runs independently of any centralized entities like a government or banking institution. As a result, it signifies a fundamental rethink of money itself. Bitcoin Cash’s main characteristics are:
- everyone is welcome. Bitcoin Cash has no owners or owners. There is no CEO, and using it is not subject to approval.
- Pseudonymous. Transactions are not linked to identities. This makes it possible to maintain the unrestricted usage of Bitcoin Cash by everyone.
- Transparent. Every transaction is documented on the blockchain, a decentralized global public ledger. At regular intervals, blocks that are linked together to form a chain update the ledger. This reduces the possibility of fraud by making it simple for anybody to view the complete history of ownership.
- Distributed. A network of people called as “nodes” willingly stores the public ledger (blockchain). This ensures the durability of the information.
- Rules-based. To reach consensus on the ledger’s current state, nodes adhere to a set of guidelines (a protocol). The ‘truth’ about who owns what is this general agreement. The protocol, however, can alter in response to participant demand, however significant consensus is needed to implement modifications. As a result, participants in Bitcoin Cash create a sort of social contract, making it a quasi-political system.
- Immutable. Transactions practically cannot be changed once they are recorded in the blockchain because to the technology used.
- Secure. Proof of Work (PoW) is a procedure where “miners” compete to add new blocks to the chain that makes up the ledger (again, the blockchain). By using game-theory based security measures, the hardware and energy requirements of PoW mining ensure that an attack on the network is both prohibitively expensive and assures that the attacker will not immediately profit.
- constant supply There will only ever be 21 million coins produced. This turns Bitcoin Cash into a physical asset, similar to real estate or gold, giving users the chance to long-term hold value in the digital world.
What is Bitcoin Cash used for?
The fundamental characteristics of Bitcoin Cash stated above make it an excellent means of exchange and a long-term store of wealth. From a more philosophical standpoint, these two use cases along with the protocol’s decentralized and open structure make Bitcoin Cash (the network) a means of promoting and supporting international economic freedom.
Long-term store of value
There will never be more than 21 million coins in circulation for Bitcoin Cash. This is stated in the Bitcoin Cash protocol’s definitional code. Since Bitcoin Cash is a decentralized network, users ultimately control how the protocol develops. Since it is not in participants’ best interests to dilute their holdings by modifying the protocol, the 21-million-coin cap will probably always exist.
Along a predetermined timetable that is also included in the code, the pace at which new coins are added to the quantity that is in circulation steadily diminishes. Every four years, the issuance rate is roughly halved in half. As a result, Bitcoin Cash is an asset that “disinflates.”
The third “halving” took place in April 2020, bringing the issuance rate per block down from 12.5 to 6.25 BCH. 87.5% of the 21 million coins had been distributed at that moment, or 18,375,000. Up until about the year 2136, when the last halving will cut the block reward to to 0.00000168 BCH, the fourth halving in 2024 will reduce the issuance to 3.125 BCH.
The’set-in-stone’ supply schedule of Bitcoin Cash distinguishes it from other hard assets. In contrast, despite its restricted supply, gold is nevertheless susceptible to the dynamics of supply and demand. More gold miners are motivated to look for gold when the price of gold rises. the causes a rise in the amount of gold available, which drives down the price.
Highly effective medium of exchange
Peer-to-peer payments may be made with Bitcoin Cash, exactly like with traditional money. Importantly, regardless of the participants’ physical locations, costs for transmitting Bitcoin Cash often amount to less than a cent per transaction, and settlement happens very quickly. This makes Bitcoin Cash ideal for everyday transactions like grocery shopping in addition to remittances and international trading. Bitcoin Cash works well for micro-transaction use cases like tipping content creators and rewarding app users since the costs and transaction times are so minimal.
Economic freedom
Economic freedom is the capacity for people to independently and collaboratively acquire and use their own resources as they see fit. It is a fundamental human right and an essential part of human dignity. Money is a key instrument for facilitating economic freedom since it can be used for both storing and exchanging value.
On an opt-in basis, Bitcoin Cash offers a different currency that promotes economic independence. In contrast to national currencies, Bitcoin Cash has robust defenses against (1) money laundering, (2) government censorship, and (3) depreciation through unchecked inflation.
Is Bitcoin Cash different from Bitcoin?
A “fork” of Bitcoin is what Bitcoin Cash is known as. After members of the Bitcoin ecosystem couldn’t come to terms on how to scale the cryptocurrency, it was founded on August 1st, 2017.
Block size, which is important for the number of transactions that can be completed per second (also known as “throughput”), was the major topic of disagreement. Since transactions are made up of data, a bigger block size allows for the inclusion of more transactions per block, increasing throughput.
Since its inception, the Bitcoin protocol has restricted each block to 1MB in size. The rivalry for the finite block size as Bitcoin’s user base developed progressively resulted in higher transaction fees and extended settlement times. In these circumstances, Bitcoin still has some use for high-value transactions or transactions where speed is not as critical, but it has lost a lot of its use as a means of exchange for smaller transactions when fees and settlement time are crucial. In other words, it lost some of its value as “currency.”
A static protocol is not what Bitcoin is. The process of integrating changes, or the “government” of Bitcoin, is based on consideration, persuasion, and volition. To put it another way, individuals decide what Bitcoin is.
One side thought the necessity to preserve 1MB block sizes while scaling Bitcoin was a problem. They argued that scaling Bitcoin “off chain,” or on a second-layer solution, was preferable, reserving the “on-chain” base settlement layer for only bigger transactions. The opposing party favored expanding the block size to accommodate more transactions per block. This immediate update was viewed as a straightforward way to maintain rapid, dependable transactions and cheap costs.
As a result of the Bitcoin community’s inability to agree on the adjustment, there occurred a “hard fork,” or a moment when two different Bitcoin versions split apart. The block size increase version was given the moniker Bitcoin Cash (BCH), whilst the unaltered version kept the name Bitcoin (BTC).
What’s the difference between Bitcoin and Bitcoin Cash?
Since Bitcoin Payment’s fork in 2017, the several separate development teams working on the protocol have introduced a number of developments targeted at enhancing Bitcoin Cash’s usefulness as a peer-to-peer electronic cash system that promotes economic freedom. The following is a summary of the advancements that differentiate Bitcoin Cash from Bitcoin:
Maximum block size
Compared to Bitcoin, Bitcoin Cash has a 32MB maximum block size (1MB). The Bitcoin Cash network can handle more transactions on chain due to the higher block size. In contrast to Bitcoin, which normally processes 3–7 transactions per second, Bitcoin Cash can handle up to 200 transactions per second. This contributes to lower transaction costs and faster, more dependable transactions. Transactions using Bitcoin Cash often cost less than one cent. In contrast, since 2020, the average on-chain Bitcoin (BTC) transaction cost has ranged between $1 and $15.
Smart contract support
To allow more advanced tasks than the simple transactions available on Bitcoin, Bitcoin Cash developers can employ smart contract languages like Cashscript. This opens the door for “decentralized finance” applications like trading in synthetic derivatives. Private payments using programs like CashShuffle and CashFusion are another example of use cases. Additionally, it permits “token issuance” (see below).
Token issuance
Developers may create new tokens using the Simple Ledger Protocol that exist on the Bitcoin Cash blockchain in a similar way to how ERC-20 tokens exist on the Ethereum network. For instance, the leading provider of USD stablecoins, Tether, has released USDT tokens that are decentralized on the Bitcoin Cash network. This makes it possible for users to transfer and receive USDT for just a few cents each time they use a non-custodial digital wallet like the Bitcoin.com Wallet.
Non-Fungible Tokens
In addition, Non-Fungible Tokens (NFTs), which perform similarly to Ethereum’s ERC-721 standard, are supported by the Simple Ledger Protocol. The primary characteristic of NFTs is that they are distinct from one another digital tokens. This opens up a wide range of possible use cases, from online markets for digital art to tradable in-game goods.
No ‘replace-by-fee’
With Bitcoin (BTC), transactions can be canceled or double-spent while they are still pending confirmation. Since unconfirmed transactions are effectively* irreversible, the Bitcoin Cash (BCH) protocol is more secure because replace-by-fee is not supported. Additionally, it permits almost instantaneous small-dollar transactions. The unconfirmed chained transaction limit (formerly set at 50) was abolished and double-spend tests were added with the May 2021 Bitcoin Cash protocol upgrade. This increased the usefulness of Bitcoin Cash as a payment method in situations where a large number of quick, low-value transactions are required.
*Take note that theoretically, a Bitcoin Cash transaction can still be double spent. However, doing so would need collaborating with miners and/or paying miners a very large transaction fee to accept a second transaction over the first. For this reason, it’s best to hold off on accepting a sizable sum of BCH until the transaction has been verified on the blockchain. Check out more information about the Bitcoin Cash network’s double spends.
Schnorr signatures
This digital signature system enables more sophisticated signing abilities. Schnorr signature-based transactions use less storage, which lowers their cost. Schnorr signatures are now supported by the Bitcoin Cash protocol, however they are not yet extensively used by wallet providers. When Schnorr signatures are widely used, the network’s privacy might be improved by increasing the fungibility of tokens (effectively making all transactions appear to third-party observers to be more similar to each other).
Difficulty adjustment algorithm
The aserti3-2d exponential moving target difficulty adjustment algorithm is used by Bitcoin Cash. The difficulty decreases by half for every two days that blocks are behind schedule, whereas it increases by two days for every two days that blocks are ahead of plan. Although there is substantial price volatility and hash power elasticity, this difficulty adjustment method helps to ensure that new blocks are created at a consistent rate (every 10 minutes). For instance, Bitcoin Cash’s difficulty adjustment algorithm guarantees blocks continue to be generated at the appropriate constant rate even if SHA256 miners switch their hashing power from BTC to BCH and back.
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What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?
What is Bitcoin Cash?