You've probably heard of Bitcoin, the digital currency that took the world by storm. So, what is this Bitcoin Cash all about then? 🤷
Whilst its name suggests a relation to the more famous cryptocurrency, Bitcoin Cash – or BCH – is now a separate currency in its own right. It was the result of a “fork” in Bitcoin – and is intended as a faster and more scalable alternative, with lower transaction fees.
Yet, that’s not all. Here’s everything you need to know about Bitcoin Cash...
Firstly, What is Bitcoin?
First things first. Bitcoin – or BTC – was the first mainstream cryptocurrency. Launched in 2007 by the pseudonymous Satoshi Nakamoto, Bitcoin was intended as a digital alternative to fiat currencies such as the Euro or US Dollar. The intention was that it would be a fast, safe and secure type of electronic money which could be sent instantly, in any amount, to anywhere in the world.
However, whilst conventional currencies rely on institutions like central banks and governments, Bitcoin has always been completely decentralized. Both Bitcoin and Bitcoin Cash work through blockchain, a list of “blocks” that permanently record transaction data verified by other users.
This means that nobody owns or controls the currency, and that decisions as to its future are taken collectively. Yet, it’s also this that means that new Bitcoin currencies – including Bitcoin Cash – have emerged since.
The origins of Bitcoin Cash? Who created it? 🧐
Launched in August 2017, Bitcoin Cash was created by a group of developers who were originally part of Bitcoin, following disagreements within the Bitcoin community over how best to scale Bitcoin to support future transaction volumes.
By May 2017, a single Bitcoin transaction could take up to four days to complete and had an average cost of $28. In comparison, sending money abroad via a SWIFT transfer would have cost roughly the same amount and, in some cases, taken less time to arrive in the recipient’s account.
As such, some eight years after Bitcoin’s creation, some believed the cryptocurrency was becoming more impractical for everyday use. Rather than being used as an actual transactional currency, it was starting to be used more as a type of digital investment – similar to buying and holding gold, for example.
Bitcoin vs Bitcoin Cash?
In a reaction to the route Bitcoin had travelled, Bitcoin Cash was created with the sole purpose of being a fast, cheap way to send money across the globe.
Part of the development community suggested changing Bitcoin’s code, in order to cut fees and speed up transaction times. But some developers weren’t so happy about the proposed changes, and wanted to maintain the original codebase – which was built with undeniable pride and patience.
In the end, the solution was to split Bitcoin into two different cryptocurrencies. After much controversy and debate within the crypto community, this split came into effect on the 1st August 2017. Such a split is known as a hard fork – because the blockchain (the ledger holding the currency’s entire transaction history) branches out to form a new one, thus giving birth to a new crypto offspring.
From the original Bitcoin (BTC), the new Bitcoin Cash (BCH) was born.
So, What is Bitcoin Cash? What makes BTC is special?
Bitcoin Cash does have many things in common with BTC. Yet, there are key differences between Bitcoin Cash and Bitcoin that you should really know.
Firstly, Bitcoin Cash has an increased block size of 32Mb – as opposed to Bitcoin’s 1Mb. This is hugely important, as the blockchain is the technology on which Bitcoin runs. The bigger the block, the more computation power is needed to process the transactions. On the flipside, though, the higher the block size, the faster the network. As such, the speed of transactions is one of the benefits of Bitcoin Cash.
There are technical elements that differ too. Bitcoin Cash also doesn’t have a SegWit integration – a controversial upgrade that was added to Bitcoin (BTC) to allow for more transactions to be processed. It also has a different transaction signature hashing algorithm too – which was added to provide replay protection for Bitcoin Cash transactions against the Bitcoin chain.
Can You Spend Bitcoin Cash?
Whilst Bitcoin (BTC) remains the most widely-used cryptocurrency in the world, there are increasing opportunities to spend Bitcoin Cash. The speed and lower costs of its transactions mean that vendors – both online and in-store – are beginning to accept payment in this cryptocurrency more widely.
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