What Is Bitcoin Cash And How Is It used?
Many people who are familiar with Bitcoins are not familiar with Bitcoin Cash or BCH. It was developed and launched to offer more decentralization to digital coins. Bitcoin Cash offers more transactions in one block when compared to Bitcoin. This will help to reduce transaction time and lower fees.
What Is Bitcoin Cash?
Bitcoin Cash can be considered as a cryptocurrency developed out of a blockchain hard fork developed in 2017 from a Bitcoin blockchain. When a blockchain breaks, a hard fork is created. There won’t be any connection between the forks formed. It is a radical change to the protocol of a network that helps to make the earlier invalid transactions and blocks valid or the other way around. A blockchain hard fork needs all users or nodes to level up to the new version of the current protocol software.
BCH is created to be utilized as an affordable payment system, similar to the main aim of Bitcoin. The transaction fees will be lower than $.01 and the confirmation time of the transactions lower than that of Bitcoin, mostly within seconds.
BCH was developed and is supported by a functional developer community. They still consider BCH as an efficient replacement for Bitcoin because, according to their perception, Bitcoin is considered to be more like an investment tool than an effective payment system. BCH was created as a P2P payment system, eliminating the regulatory authorities as well as middle parties in transactions.
BCH runs on the BCH Node, an ecosystem to helps users to carry out the transactions of Bitcoin Cash. The ecosystem can be considered as the blockchain created for Bitcoin Cash and is also a virtual machine to operate the network to execute transactions.
Bitcoin Cash was developed in 2017 during a time when there were disagreements among developers on the path Bitcoin must follow to address the arising issues from the blockchain. Transaction fees, which are a reward given to the miners for completing their work in the form of an incentive to encourage more people into mining increased from 2009 to 2016.
Mostly a hard fork happens when a group of developers and miners do not agree on the software updates administering a specific digital token. Thus, one group will follow the same rules, and the other diverge and develop a new blockchain using an updated setup of the software. During the process, a new digital currency will be formed.
The blockchain of Bitcoin has problems related to its scalability as it could not manage the rising transactions. The fees and confirmation time for a transaction on the blockchain of Bitcoin increased. It happened mainly because of Bitcoin’s 1MB block size limitation. Transactions were queued up and the confirmation time was delayed as blocks could not manage the rise in transaction size.
Along the way, Bitcoin Cash also faced a few forks. Bitcoin Satoshi Vision or BSV was forked from the original Bitcoin Cash and in 2018, Bitcoin Cash ABC, or BCHA was formed from Bitcoin Cash. The name was converted to eCash in 2021.