Bitcoin Cash (BCH): The Fast and Affordable Payment System Inheriting Bitcoin’s Legacy

The world of cryptocurrencies isn’t just about Bitcoin. Following the revolution that Bitcoin started, numerous new projects emerged on the blockchain, each designed to meet different needs. One such project is Bitcoin Cash (BCH), which set out with the ambition of continuing Bitcoin’s original vision, aiming to make it a faster and cheaper payment instrument. In this comprehensive article, we will delve into what Bitcoin Cash is, why it came into existence, its differences from Bitcoin, and its future potential.

What Exactly Is Bitcoin Cash?

Bitcoin Cash is a cryptocurrency that emerged from a “hard fork” of the Bitcoin blockchain in August 2017. A “hard fork” refers to a radical protocol change within a blockchain network that is incompatible with the old rules, effectively creating a new chain. At the moment of this split, every user who held Bitcoin (BTC) automatically received an equal amount of Bitcoin Cash (BCH). So, if you had 1 BTC, you instantly became the owner of 1 BCH as well.

Bitcoin Cash’s core purpose was to return to Bitcoin’s original vision and make it a more effective “peer-to-peer electronic cash system.” But why did this need arise? As Bitcoin’s popularity grew, its network began to face scalability issues. Transaction fees were rising, and confirmation times were lengthening. Bitcoin Cash proposed to solve this problem by increasing the block size.

Why Did Bitcoin Cash Emerge? The Scalability Debate

If you’re new to the world of cryptocurrencies, it might be confusing to understand why Bitcoin experienced a fork. In reality, this was the culmination of a debate that had been ongoing within the Bitcoin community for years. The main topic of this debate was “scalability.”

The Bitcoin blockchain was designed to create a block of approximately 1 MB every 10 minutes. These blocks contain the transactions that occurred within that 10-minute window. However, as Bitcoin became more popular, the number of transactions that could fit into a 1 MB block became insufficient to meet demand. This led to network congestion, high transaction fees, and long confirmation times. Users could find themselves waiting minutes for a simple coffee purchase and having to pay high fees for it.

There were two different solutions proposed for this problem:

SegWit (Segregated Witness): This protocol suggested separating certain data (like signature data) within the block to optimize block size while keeping the main block size constant. This solution could theoretically increase the block size limit to up to 4 MB. Those who favored this approach believed the main Bitcoin chain should remain unchanged, with scaling handled by “Second-Layer Solutions” (such as the Lightning Network).
Big Blocks: This group, on the other hand, argued that the root of the problem was the 1 MB block size limit, and it needed to be increased. They believed that for Bitcoin to fulfill its “peer-to-peer cash” vision, the network needed to be able to process more transactions faster and cheaper. This, they argued, was only possible by directly increasing the block size.

Bitcoin Cash was the project brought to life by this second group—the big block proponents. A segment of developers, miners, and investors split from the Bitcoin blockchain on August 1, 2017, to create Bitcoin Cash (BCH). Starting with an 8 MB block size, Bitcoin Cash later increased this to 32 MB to reinforce its scaling goals.

What Are the Key Differences Between Bitcoin and Bitcoin Cash?

Although Bitcoin and Bitcoin Cash were born from the same codebase, they have evolved into two distinct cryptocurrencies with different philosophies and technical specifications. Here are the most important differences:

Block Size: This is the most fundamental difference. Bitcoin’s block size is limited to 1 MB, whereas Bitcoin Cash’s has been increased to 32 MB. This allows the Bitcoin Cash network to process a much larger number of transactions simultaneously.
Transaction Speed and Fees: Thanks to its larger block size, Bitcoin Cash offers significantly faster transaction confirmations and lower transaction fees compared to Bitcoin. While Bitcoin’s fees can become substantial during periods of high traffic, Bitcoin Cash fees generally remain at very reasonable levels.
Scaling Approach: Bitcoin aims to solve the scaling problem by keeping the block size fixed and using second-layer solutions like the Lightning Network. Bitcoin Cash, however, aims to scale the network itself by increasing the block size. These two different approaches reflect the projects’ differing visions for the future.
Community and Developers: The Bitcoin Cash fork caused a major division within the Bitcoin community. Today, two separate communities and development teams are continuing to advance their respective projects. The Bitcoin Cash community is particularly focused on its role as a widespread payment tool, emphasizing low fees and fast payments.

How Does Bitcoin Cash Work?

Like Bitcoin, Bitcoin Cash operates using a consensus mechanism called “Proof-of-Work.” Miners use powerful, specialized hardware (ASICs) to solve complex mathematical problems. The first miner to solve the problem earns the right to create a new block and confirm the transactions within it. In return, they receive both the block reward (currently 6.25 BCH) and the transaction fees.

The Bitcoin Cash blockchain records all transactions in a transparent and immutable ledger. This decentralized system allows users to send money to each other directly, without the need for a central authority or intermediary.

The Advantages and Disadvantages of Bitcoin Cash

Like any cryptocurrency, Bitcoin Cash has its own unique strengths and weaknesses.

Advantages:

Low Transaction Fees: It is a much more economical option for daily payments and small transfers compared to Bitcoin.
Fast Transactions: The large block size ensures that transactions are confirmed much more quickly, making it a more suitable payment method for e-commerce sites or physical stores.
Payment Tool Potential: Low fees and high speed give Bitcoin Cash the potential to become an ideal electronic cash system for everyday use.
Decentralization: Like Bitcoin, Bitcoin Cash has a decentralized, censorship-resistant structure.

Disadvantages:

Lower Network Security: The Bitcoin Cash network has fewer miners and therefore a lower “hash rate” (the network’s total processing power) compared to Bitcoin. This could theoretically make the network more vulnerable to a 51% attack.
Community Division and Brand Power: Bitcoin Cash has less brand recognition compared to Bitcoin, which is often perceived as “digital gold.” The community split can also pose challenges in the project’s development and adoption.
Market Cap and Liquidity: Its market capitalization and trading volume are lower than Bitcoin’s, which means it has less liquidity.

How to Acquire Bitcoin Cash and Where to Store It

The most common way to acquire Bitcoin Cash is through a cryptocurrency exchange. Many popular crypto exchanges around the world, including those in Turkey, allow for the buying and selling of Bitcoin Cash using the symbol BCH. Once you have an exchange account, you can buy BCH with fiat currency (such as USD, EUR, or TRY) or another cryptocurrency.

To store your Bitcoin Cash, you will need a cryptocurrency wallet. Wallets are essentially software that securely holds your crypto’s private keys. Wallet types include:

Hardware Wallets: One of the most secure storage methods. They keep private keys offline on a physical device, protecting them from cyberattacks. Ledger and Trezor are well-known brands.
Software Wallets: Wallets you can download and use on your computer or smartphone. While most exchanges offer their own internal wallet services, it’s generally safer to store your cryptocurrencies in a wallet you control, separate from an exchange.
Online Wallets: The wallet services offered by cryptocurrency exchanges. They are easy to use but carry a higher security risk because you do not have control over your private keys.

Conclusion and Future Outlook

Bitcoin Cash is a significant cryptocurrency project that strives to uphold Bitcoin’s core vision: making it a fast, cheap, and global payment tool. While Bitcoin has positioned itself as “digital gold,” Bitcoin Cash has positioned itself as a practical instrument for daily transactions.

Although Bitcoin’s popularity and market dominance are undeniable, Bitcoin Cash’s low transaction fees and fast confirmation times make it an attractive option for specific use cases. Its future value and position will be determined by its further adoption in global payments or its integration with other blockchain projects. If you’re looking for a payment tool in the world of cryptocurrencies, Bitcoin Cash is an alternative worth considering due to the advantages it offers.

The future of Bitcoin Cash and other cryptocurrencies depends on many factors, including technological developments, regulations, and community support. Before making any cryptocurrency investment, it’s always crucial to do your own research (DYOR) and understand the risks of the market.