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Bitcoin Cash: A Beginner's Guide


I know for sure that you already have heard the cryptocurrency Bitcoin Cash or commonly known as BCH. But for starters and to those people who are new in the cryptocurrency world, let us define BCH:

What is Bitcoin Cash?

Bitcoin cash, from a fork of Bitcoin, is a cryptocurrency produced in August 2017.  The size of blocks was increased by Bitcoin Cash, which allowed more transactions to be processed and improved scalability.  In November 2018, the blockchain experienced another fork and split into Bitcoin Cash ABC and Bitcoin Cash SV. Bitcoin Cash, since it uses the original Bitcoin Cash client, is referred to as Bitcoin Cash.

Understanding Bitcoin Cash

Bitcoin was intended to be a peer-to-peer cryptocurrency that was used for regular transactions, as suggested by Bitcoin founder Satoshi Nakamoto. Over the years, Bitcoin became an investment vehicle instead of a currency, as it gained popular popularity and its price soared. Since it could not accommodate the increased number of transactions, the block-chain faced scalability problems. The confirmation period and charges for a transaction on the blockchain of bitcoin have increased. This was mainly due to the limitation of the 1 MB block size for bitcoin. Transactions were queued up, waiting for confirmation, because blocks were unable to handle the transaction size increase.

By raising the size of blocks to between 8 MB and 32 MB, BCH proposes to remedy the situation, thereby allowing the processing of more transactions per block. At the time Bitcoin Cash was proposed, the total number of transactions per block on Bitcoin was between 1,000 and 1,500. The number of transactions on the blockchain of Bitcoin Cash increased to 25,000 per block during a stress test in Sep. 2018.

Bitcoin Cash History

The average size of a block on Bitcoin's blockchain was less than 100 KB in 2010 and the average transaction cost was just a few cents. This left its blockchain vulnerable to attacks that could potentially cripple its infrastructure, consisting entirely of inexpensive transactions.

The size of a block on the bitcoin blockchain was limited to 1 MB in order to avoid such a scenario. Every 10 minutes, each block is created, allowing for space and time between successive transactions. Another layer of protection on bitcoin's blockchain was introduced by the restriction on size and time needed to create a block.

But as bitcoin gained mainstream popularity on the basis of greater understanding of its potential and changes to its platform, those protections proved to be a hindrance. By Jan. 2015, the average size of a block had risen to 600K. The amount of transactions using Bitcoin increased, allowing unconfirmed transactions to accumulate. The average time for a transaction to be verified also shifted upwards. The transaction confirmation fee also rose correspondingly, undermining the case for bitcoin as a competitor to costly credit card processing systems.

To fix the problem, developers have suggested two solutions: increasing the average block size or removing some parts of a transaction to fit more data into the blockchain. In order to raise the block size, the Bitcoin Core team, which is responsible for designing and maintaining the algorithm that drives bitcoin, blocked the request. Besides that, a new coin was produced with a flexible block size. But the new coin was hacked and failed to gain momentum, calling it Bitcoin Unlimited, leading to concerns regarding its effectiveness as a regular transaction currency.

Concerns About Bitcoin Cash

Bitcoin Cash has promised some changes compared to its predecessor. But on those promises, it has yet to deliver.

Regarding block size, the most significant one is. The average size of blocks mined on the blockchain of Bitcoin Cash is much smaller than those on the blockchain of Bitcoin. The smaller block size means that it has yet to theoretically test its key thesis of allowing more transactions across larger blocks. Bitcoin transaction fees have also fallen dramatically, rendering bitcoin cash for regular usage a viable rival.

Other cryptocurrencies aiming to become a conduit for everyday transactions with similar goals have added another wrinkle to the initial ambitions of Bitcoin Cash. They have staked out ventures and alliances, at home and abroad, with organizations and governments. For instance, in troubled economies like Venezuela, Litecoin announced partnerships with event organizers and professional organizations, and others, such as Dash, claim to have already gained traction, although such claims are contested.

 

REFERENCES: Investopedia

These are just some of the things you should learn about BCH. There are more information you may need. You can search it up on google or other platforms.

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SassySissy
SassySissy

A frustrated writer. Even more frustrated in life.


Anything Cryptocurrency
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