Bitcoin Cash (BCH), introduced in 2017 following a split from Bitcoin (BTC), is designed to offer lower transaction fees and increased transaction capacity. By expanding block size to 32 MB, Bitcoin Cash can accommodate more data per block, thereby reducing user fees during periods of high demand. Despite its consumer payment focus through rapid updates and new features, this strategy also heightens the risk of network splits and software errors. The future trajectory of Bitcoin Cash hinges on its ability to maintain low transaction fees and user preference for BCH over BTC for payments or as a store of value.
What is Bitcoin Cash (BCH)?
Bitcoin Cash (BCH) is a cryptocurrency that emerged as an alternative to Bitcoin (BTC), the oldest and most widely traded cryptocurrency. Launched in 2017, Bitcoin Cash was created by a faction of Bitcoin users who disagreed with the technical direction proposed by Bitcoin’s primary developers, Bitcoin Core. They aimed to make Bitcoin more globally accessible and competitive.
Advocates of Bitcoin Cash sought to make the cryptocurrency more competitive with traditional payment systems like Visa and PayPal by lowering transaction fees and redistributing costs within the network. This led to changes in Bitcoin’s code and the release of an incompatible software version, resulting in two blockchains: BTC and BCH. Consequently, any BTC holder at the time of the split could claim an equal amount of BCH.
What Sets Bitcoin Cash Apart?
A significant feature of Bitcoin Cash is its ability to store more data per block by increasing the block size to 32 MB, allowing the processing of more transactions per block and lowering user fees during high demand periods. In contrast, Bitcoin uses a different system for counting transaction data.
Bitcoin Cash has also integrated features from other cryptocurrencies, such as the ability to launch new coin types on its blockchain. However, the larger block size means maintaining a blockchain copy could be costlier for users, potentially requiring more frequent software upgrades.
User-Usable Inferences
Key Takeaways
- Bitcoin Cash can process more transactions per block due to its increased block size.
- Lower transaction fees make BCH appealing for everyday payments.
- Frequent updates and new features could introduce both innovation and risks.
- Maintaining the blockchain might become more expensive for users.
Conclusion
Bitcoin Cash’s future is influenced by several factors, including its ability to continue offering low-cost transactions and whether frequent upgrades will improve its features or cause more network splits. Additionally, it is uncertain if users will prefer holding BTC as a store of value or using BCH for payments, challenging traditional systems like Venmo or PayPal.