Bitcoin Cash ($BCH) is a Bitcoin hard fork that was created in 2017. Different from Bitcoin community's censorship resistance and trust-minimization, Bitcoin Cash advocates for building towards a literal interpretation of Bitcoin as a “peer-to-peer electronic cash system”. It views cheap peer to peer as its core value proposition of the network and is dedicated to increasing block sizes and on-chain transaction throughput in pursuit of this goal.
In November 2018, Bitcoin Cash split further into two chains (or cryptocurrencies) : Bitcoin Cash & Bitcoin SV (SV stands for Satoshi's version. BSV had been delisted by Binance exchange later after launch). $BCH is the native coin of Bitcoin Cash network.
Because it is a fork of Bitcoin, Bitcoin Cash has many same features as Bitcoin. The following sheet is the comparison of BCH and BTC.
As Bitcoin Cash is a result of a chain split from Bitcoin, it shares much of Bitcoin’s fundamental workings. In fact, they even share the same history.
Due to it being a fork of bitcoin, all on-chain data prior to the split are inherited. If you owned 1 bitcoin before the creation of Bitcoin Cash, you now have 1 BTC and 1 BCH, which can both be signed using the same private keys.
However, Bitcoin and Bitcoin Cash are not non-interoperable. You cannot send your Bitcoin Cash to the Bitcoin network and somehow own 2 BTC. Your bitcoin cash and bitcoin now exists on two different sets of blockchains.
One of the main differences between Bitcoin and Bitcoin Cash is the block size limit and transaction fee. As Bitcoin Cash has bigger blocks and arguably lower usage, sending Bitcoin Cash on the network is relatively cheaper and faster than if done on Bitcoin. In that sense, Bitcoin Cash does serve as a faster and more efficient form of digital currency.
Bitcoin Cash uses Nakamoto Consensus whereby the valid chain is the longest chain with the most accumulated proof-of-work. Consensus in Bitcoin Cash, and other systems using Nakamoto Conensus, is probabilistic because there is always a chance that a new, longer competing chain could emerge with more accumulated proof-of-work, that would invalidate the current chain.
Miners solve computational puzzles to generate new blocks using a SHA-256 algorithm. In this process, miners compete to generate a hash less than the target number set by Bitcoin Cash's difficulty adjustment algorithm. Notably, the target difficulty level is adjusted every block as opposed to Bitcoin's every 2016 blocks.
Although open to anyone with a CPU, Bitcoin Cash mining is now dominated by ASICs usually situated in enterprise-scale data centers. Furthermore, in order to smooth individual miner revenue as mining has become more competitive, mining is now done in pools where participants contribute hash power to the pool and receive a proportional share of the profits if the pool finds a valid block.
There are several prominent leaders behind Bitcoin Cash, one of them being Roger Ver, CEO of Bitcoin.com. Other important contributors can seen as follow:
- Bitcoin Unlimited, a full node mplementation for the bitcoin and Bitcoin Cash networks.
- Jason Cox, Bitcoin Cash engineer at Bitcoin ABC.
- Wu Jihan, Co-founder of BITMAN.
- Rick Falkvinge, thought leader of Bitcoin Cash.
As early as 2010, shortly after Satoshi implemented a block limit into Bitcoin, discussions around block size began. However, discussions around the block limit largely stayed in the background until 2017 when tensions within the Bitcoin community rose over rising transaction fees and increasingly divergent opinions on scaling Bitcoin. Supporters of bigger blocks believed that for Bitcoin to fulfill the vision of a peer-to-peer electronic currency as outlined in the original whitepaper, it was crucial to raise the block limit in order to increase transaction capacity. Bitcoin Cash proponents pushed for a system that could scale to VISA level transaction throughput without second layers and while maintaining affordable transaction fees. It rejected the philosophy of Bitcoin Core that Bitcoin's central value proposition is censorship resistance and trust-minimization, and that Bitcoin full nodes needed to be maximally decentralized to achieve this. Instead of envisioning Bitcoin as a settlement layer or a Digital Gold, Bitcoin Cash envisions Bitcoin as a peer-to-peer electronic cash system, emphasizing Bitcoin's utility as a medium of exchange.
In 2017 at the Consensus conference amidst rising transaction fees on Bitcoin and increasingly tense debate around the Bitcoin block limit, a meeting with miners and Core Developers took place in what is referred to as the “New York Agreement”, where an agreement was reached to support SegWit and a 2MB hard fork. Known as SegWit2x, this proposal was backed by over 80% of the network’s hash rate. Despite the desires of miners, users wanted to activate SegWit without the block size increase. They set a date (August 1, 2017) where Bitcoin would soft fork to support SegWit and keep the 1MB block size. Enough nodes signaled support for it that they forced miners to accept or have their blocks rejected by the network. A faction of the bigger blocks camp, rejected SegWit altogether, citing frustrations with the prioritization of SegWit over bigger blocks, and on August 1, 2017 they launched a hard fork of Bitcoin called Bitcoin Cash, with 8MB block limits. The 8MB block limit was later increased to 32MB in 2018 after another contentious hard fork regarding a minority faction's desire to raise the block limit to 128MB. This hard fork resulted in the creation of Bitcoin SV, a fork of Bitcoin Cash.
Although increased block capacity could increase transaction throughput on-chain, it could potentially restrict the universe of participants who could be capable of running full nodes, thus making this something the community needs to address in order to be able to execute on its vision of a decentralized peer-to-peer cash system. In addition to pursuing on-chain scalability through larger block sizes, Bitcoin Cash prioritizes fast-paced development of technological improvements in opposition to the more conservative philosophy of Bitcoin. To date, Bitcoin Cash has 6 competing node implementations: BitcoinABC, Bitcoin Unlimited, BXT, Parity, Bitprim, and Bitcoin Cash. Bitcoin Cash has also had a variety of upgrades, the most recent of which taking place of 05/15/2021. This upgrade made a variety of changes including the removal of the unconfirmed transaction limit, the enabling multiple OP_RETURNS, the implementation of double-spend proofs, , the inclusion of Cash Improvement Proposals (CHIPs) to introduce new specification changes to the protocol, and the inclusion of a new mining block default limit size of 8 MB.
$BCH is used as a native currency within the Bitcoin Cash network. $BCH can be used for peer-to-peer payments and value storage within the Bitcoin Cash network. With its larger block sizes (relative to Bitcoin), Bitcoin Cash aims to offer high throughout and on-chain scalability through increased block sizes, aiming to reduce the reliance on off-chain scalability solutions for transactions.
Bitcoin Cash ABC ($BCHABC) is a fork in November 2018 of Bitcoin Cash, a hard fork version of the original Bitcoin. Its protocol is similar to Bitcoin: Proof-of-Work SHA-256 hash, 21,000,000 supply, same block time and reward system. However, the two main differences are the block size limit, which as of August 2017 is 1MB for Bitcoin, while Bitcoin Cash ABC ($BCHABC) proposes 8MB. Also, $BCHABC adjusts the difficulty every 6 blocks instead of every 2016 blocks like Bitcoin. Bitcoin Cash ABC is a proposal from the viaBTC mining pool and the Bitmain mining group to execute a UAHF (User Activated Hard Fork) on August 1st at 12:20 PM UTC. They rejected consent consensus (aka BIP-91 or SegWit2x) and decided to fork the original Bitcoin blockchain and create this new version called "Bitcoin Cash". Bitcoin Cash can be raised by BTC owners who have private keys or store Bitcoins in a service that will split $BCHABC for customers. Bitcoin ABC takes security very seriously.