Bitcoin Cash Explained

Bitcoin Cash Explained

By RelyOnCrypto | The.Crypto.blog | 10 Jun 2021


The origin of Bitcoin Cash, also known as BCH, go far beyond the development of a new cryptocurrency. It was one of the most extensive assessments of Bitcoin's decentralization. Often individuals that are new to Bitcoin or cryptocurrencies in general are confused as they learn that there are several types of Bitcoin.

Bitcoin Cash, Bitcoin Gold, and Bitcoin Diamond, for example, are all forks of Bitcoin. A fork may be thought of as a modified version of the original coin. Soft Forks and Hard Forks are the two kinds of forks. Soft Forks are variations of the coin that can interact with both the original and alternative versions of the coin, allowing you to select which version to run without worry. The original version, on the other hand, does not play well with Hard Forks. This means you'll have to decide whether you want to upgrade the program to run the alternative version or continue with the original. In other words, for Hard Forks, if the alternative is not adopted by 100% of users, the network will break, and a new coin will appear that is similar to but not equal to the first.

Bitcoin Cash and other Bitcoin variants was the products of proposed changes to the Bitcoin Protocol that were not unanimously approved. Then what happened was that an alternative version of the coin, known as a Hard Fork, was produced from the original Bitcoin, and a new coin was born.

In order for a transaction to be deemed confirmed, it must be confirmed within a short period of time. It must be used in a block of transactions on the blockchain, which is the Bitcoin ledger. A new block of transactions is added to the blockchain every 10 minutes or so.

Adding Bitcoin transactions to a block, like any other form of digital data, needs storage space, and each block of transactions has a limited capacity of 1 MB. When you consider the average size of a Bitcoin transaction, a block will contain about 2,700 transactions. There were 2,700 transactions total. Every ten minutes, that equates to 4.6 transactions per second, which isn't much. Visa, on the other hand, will validate transactions at a rate of 1700 per second. This means that during price rallies, for example, where a large number of people try to transfer Bitcoin, transactions get trapped in a very long line, waiting to reach a block and be confirmed. If you wish to skip the line, you may pay a higher transaction rate in Bitcoin, but this can cause fees to skyrocket as more people want to cut the line with their transactions. This is the last thing you expect to happen. As a result of the scalability dilemma, two camps have arisen if you're developing Bitcoin to become a global payment method.

The big blocks camp was the first camp. Big blockers were concerned that Bitcoin's scalability problem would preclude it from being what Satoshi Nakamoto wanted. This camp was headed by Chinese mining giant Bitmain and Roger Ver, an early Bitcoin investor who was involved with a variety of startups when Bitcoin was only gaining initial acceptance.

People would not use Bitcoin for day-to-day purchases if it were a peer-to-peer trading mechanism with such long processing periods and heavy fees. Instead, they would see it as a store of money similar to gold. This camp's supporters proposed a very simple alternative. Let's get the blocks bigger. If we raise the block size of Bitcoin to 8 MB, we'll be able to validate up to eight times the number of transactions per second, reducing the network's current congestion. And will increase the block size if expected in the future.

The small blocks camp stood in the way of Bitcoin's continued adoption. Supporters of this camp argued that the existing 1 MB block sites should be preserved while strategies for maximizing transaction size and processing were sought in order to allow scaling. One such approach was “Segregated Witness,” or SegWit, an update to the Bitcoin Protocol that, among other aspects, decreases transaction size by 75%. As a result, a 1 MB SegWit block will contain the same number of transactions as a 4 MB non-SegWit block. Small blockers have discussed the creation of the lightning network. A second layer built on top of the Bitcoin protocol that enables feeless and instant transactions.

But why were the small blockers initially opposed to increasing the block size? The explanation behind this is because small blockers thought it will damage Bitcoin's decentralization and usefulness in the long run. Here are some of the reasons they use to support their position. For one thing, navigating across the network with an 8 MB or even 32 MB block takes longer than for a 1 MB block. Furthermore, if the block hits a network server, the computer must now validate all of the transactions contained within that block. If the block is so large, it will not be able to complete the verification of all transactions until the next block arrives in around 10 minutes. As a result, the network will begin to lag behind new transactions, potentially causing conflicts about the state of the Bitcoin ledger.

Furthermore, by not optimizing transactions, you're not optimizing the blockchain's capacity, which is now several hundred GBs. Requiring computers to validate oversized transactions limits the number of computers that can hold the blockchain on their hard disk, reducing the network's decentralization. This intense conflict between the two opposing camps raged for years, culminating in August of 2017. The network was getting pretty busy due to an overflow of purchases at the time, as Bitcoin was making its first moves above $1,200. As a result of people outbidding each other to cut in line to get confirmed quicker, several transactions were postponed and transaction fees skyrocketed. About the time, the total processing fee was as high as $37.

You may be asking why no one tried to prevent this from happening. In order to address this question, we must first comprehend who makes decisions on the Bitcoin network. You know, Bitcoin is decentralized, which means that no single person makes decisions. The network's participants vote in their acts. Their vote is simply based on the Bitcoin protocol version that they have installed on their device. The Bitcoin network has a number of participants. The miners and mining pool managers, for example, are in charge of building blocks and updating the transaction ledger. Some contend that they have the final say on what improvements to the Bitcoin network are approved. And there are the developers, that are a community of people who work together to create Bitcoin's source code, and others say that while they're the ones that write the code that powers the network, they have the most control. Exchanges, which serve as entry points for cryptocurrency adoption, will choose which variant of Bitcoin to list under the ticker symbol BTC. They are the ones that have the ability to connect people to real coins. The wallet providers are another significant party. They develop the app that helps users to keep track of their coins. We also have nodes, which are various machines that run the Bitcoin code to ensure that no one is violating the rules. These nodes are the Bitcoin network's backbone, and their owners may choose to allow only transactions that endorse unique adjustments. Finally, Bitcoin users have the option of selecting which coins to purchase, which exchange to use, and which wallet to download. They have the most influence without ever realizing it.

Now you know that any update to the Bitcoin specification is so difficult to get authorised. What you have to do now is for all of these groups to consent.

There have been many instances of such settlements in Bitcoin's history, but as the network became broader, reaching a consensus became more difficult. Going back to 2017, the end outcome of the standoff between the two camps was that each side did just as they had planned, leaving it up to the users to determine which coin to accept as the real Bitcoin.

Small blockers triggered SegWit on the original Bitcoin Protocol on August 1st, 2017, while major blockers developed Bitcoin Cash, a Bitcoin fork with an 8 MB block scale. It was initially uncertain which variant of Bitcoin would triumph, as winning in cryptocurrency terms entails getting a longer blockchain or transaction ledger. The more miners a coin has, the more computing resources it has, resulting in a longer blockchain and more stable network. Since Bitcoin Cash was backed by mining behemoth Ventmate, the initial Bitcoin's hashing power was virtually halved when the fork happened. Even after the fork, it became apparent that the initial Bitcoin was already going high.

Bitcoin Cash has steadily remained at the top of the cryptocurrency rankings after the fork. Roger Ver, a libertarian who reportedly controls about 100,000 Bitcoins, making him one of the first Bitcoin billionaires, is the biggest supporter of the coin. He has bought the domain name bitcoin.com to support Bitcoin Cash instead of bitcoin.org, which is the original Bitcoin's website.

With a few variations, Bitcoin Cash is somewhat similar to Bitcoin. When it initially started out, the block size was larger. The size of a Bitcoin Cash block was limited to 8MB. Later, the coin received another upgrade, raising the block size limit to MB. In reality, Bitcoin Cash isn't as common as Bitcoin, and blocks of transactions barely exceed 1 MB. Second, neither SegWit nor the Lightning Network are supported by Bitcoin Cash. Finally, Bitcoin Cash adjusts the mining complexity to allow it to mine new blocks faster than Bitcoin.

Bitcoin Cash underwent its own Hard Fork in November of 2018. The original Bitcoin Cash, also known as ABC, and Bitcoin SV, which stands for Satoshi's view, were the two camps this period. Roger Ver and a Bitmain employee led Bitcoin ABC's camp. Craig Wright, an individual who recently claimed to be Satoshi Nakamoto but never provided any evidence, and Calvin Ayre, the owner of the largest Bitcoin Cash mining pool CoinGeek, led the Bitcoin SV camp.

The two Bitcoin Cash models vary mostly in two ways. Bitcoin ABC kept its overall block size at 32 megabytes, while Bitcoin SV expanded it to 128 megabytes, with further changes expected in potential updates. Furthermore, Bitcoin ABC applied smart contract-like features to its code, while Bitcoin SV refused to embrace this update. For the time being, it seems that Bitcoin ABC has grown in popularity and is widely regarded as the real Bitcoin Cash.

The simple solution to a dilemma isn't always the right solution. Low transaction fees are critical to Bitcoin's usability, but not at all prices. And a hasty solution always has unintended effects. Imagine if, instead of investing in and improving file compression technology, we actually had to buy more hard drives to save all of our uncompressed records, images, videos, and projects to our devices. Considering how much longer it would take to send those files over the internet to our friends, family, colleagues, or clients, it appears that optimizing data within small blocks while ensuring decentralization will pay off in the long run.

Increasing the block size will be appropriate in the future, but for now, it should be used sparingly. The Bitcoin Cash Hard Fork saga is a tribute to the Bitcoin network's decentralized existence. It highlighted the system's impartial nature and the fact that no one person will decide what happens. And where there are very strong pressure groups involved.

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RelyOnCrypto
RelyOnCrypto

I am an avid crypto enthusiast writing about cryptocurrency


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