Introduction

Factional struggles in the blockchain have triggered hard forks, constantly promoting the emergence of new projects. Bitcoin Cash (BCH) was created by a group of developers, investors, entrepreneurs, and miners who were dissatisfied with Bitcoin's development plans. It was launched in August 2017 as a peer-to-peer electronic cash system designed to improve blockchain scalability and reduce transaction fees. The project is also known as "Bitcoin ABC" (Adjustable Block Size Limit).

Blockchain scalability

Bitcoin in 2017 It has been widely criticized for its long transaction confirmation times and rising transaction fees, which violates its original vision of achieving near-instant payments with extremely low fees. Before the creation of Bitcoin Cash, the Bitcoin community was deeply divided over whether to relax block size limits.

Bitcoin is decentralized, and proposed changes to the protocol must require broad consent. Therefore, changes and updates to the Bitcoin software should be agreed upon by all network nodes.

Bitcoin Cash is a more scalable cryptocurrency that reduces transaction fees and shortens confirmation times. The BCH community believes that this project is more in line with Satoshi Nakamoto’s proposal for peer-to-peer electronic currency. The main reason is that this altcoin creates a faster and cheaper payment system that is more suitable for daily use than Bitcoin.

Shortly after the Bitcoin Cash fork, the original Bitcoin blockchain underwent a long-awaited soft fork upgrade, applying a technology called SegWit (Segregated Witness). This upgrade was created in 2015 and was proposed by Bitcoin developer Pieter Wuille. It is used in the Bitcoin network to solve network congestion and other scalability issues.

The SegWit soft fork is planned earlier than the BCH hard fork, but Bitcoin Cash fans believe that the former is not an ideal solution for relaxing block size restrictions. Bitcoin’s Bitcoin Cash fork has won support from big names in the blockchain industry, including Jihan Wu (co-founder of Bitmain) and Roger Ver (CEO of Bitcoin.com).

How does BCH work?

Bitcoin Cash is forked directly from the original Bitcoin source code, and the two share many similarities. Both networks use a proof-of-work consensus mechanism, and everyone can participate and contribute. In addition, after the fork, all addresses that originally held BTC will receive equal amounts of BCH (the address strings are the same, but located on different networks).

Similar to Bitcoin, BCH’s target block time is 10 minutes and the maximum supply is 21 million. Every 210,000 blocks (about four years), the system will halve the issuance of BCH. The current block reward is 6.25 BCH per block.

Unlike Bitcoin, Bitcoin Cash has relaxed block size limits and has a higher number of transactions in each block. The block size limit initially increased from 1MB to 8MB, and continued to increase to 32MB in 2018.

However, since 2017, there have been only a handful of instances where BCH’s average block size has actually exceeded 1MB. We can compare the average block sizes of BTC and BCH at BitInfoCharts.com.

Both Bitcoin and Bitcoin Cash adjust mining difficulty through what is called a Difficulty Algorithm Adjustment (DAA). However, the former only adjusts the difficulty every 2016 blocks, while the latter adjusts the difficulty every time a block is produced.

In the past, Bitcoin Cash has also implemented an Emergency Difficulty Adjustment (EDA) algorithm in the hope of lowering mining difficulty and encouraging miners to join the network. However, this backfired and the algorithm was eventually abandoned due to poor stability. The EDA implementation is a big reason why the BCH blockchain is ahead of Bitcoin by thousands of blocks.

In 2019, Bitcoin Cash applied a technology called Schnorr signatures. This alternative algorithm changes the way digital signatures are applied. The Schnorr signature scheme is safe and convenient, and its privacy and scalability are better than the ECDSA scheme currently used by Bitcoin.

Main features of BCH

• The BCH source code is based on the original Bitcoin protocol.
• The total supply is 21 million.
• As a fork of Bitcoin, BCH also uses the Proof of Work (PoW) consensus mechanism to issue new coins.
• Block size increased from 1MB to 32MB.
• The community believes that BCH’s concept is more in line with Satoshi Nakamoto’s original plan.
• BCH adjusts the mining difficulty after each block is generated through the Difficulty Adjustment Algorithm (DAA).
• BCH does not implement SegWit.
• BCH applied Schnorr signature in 2019.
• Built-in smart contract development as a follow-up update.

Everyday payments

The Bitcoin Cash community believes that the goal of BCH is to become a daily payment of ordinary currency. You can use it to conduct fund transactions with any BCH wallet holder (individuals and businesses). Compared with Bitcoin, BCH transactions are fast and have low fees, making it undoubtedly a powerful tool for daily use (especially small payments).

While some stores and merchants accept Bitcoin Cash as payment, it still doesn’t seem to be widespread. As of June 2021, the Bitcoin.com map identifies thousands of stores that accept BCH payments. However, most of them do not mention or provide this payment method, proving that the identification results are inaccurate or outdated.

How to store Bitcoin Cash (BCH)

We recommend using Trust Wallet. Additionally, there are hundreds of cryptocurrency wallets capable of storing BCH, such as hardware wallets Ledger, Trezor, and Cobo Vault. You can also store BCH using desktop wallets like Electrum Cash.

Some Bitcoin Cash fans recommend using Bitcoin.com or Coinomi wallets to store BCH. Both software wallets support Windows, Mac, Linux, Android and iOS systems.

Please note that Bitcoin and Bitcoin Cash operate on different blockchain networks. Bitcoin cannot be sent to a Bitcoin Cash wallet address and vice versa.

Bitcoin SV

In 2018, some people in the Bitcoin Cash community forked the protocol, creating Another cryptocurrency called "Bitcoin Satoshi Vision" (also known as "Bitcoin SV" or "BSV") was released, and the block size limit was once again relaxed to 2GB.

This controversial hard fork was supported by Craig S. Wright and Calvin Ayre, and the incident was called the "Hash War." However, BSV’s failure to gain widespread support from the cryptocurrency community is likely related to Craig S. Wright’s false claims that he is Bitcoin inventor Satoshi Nakamoto.

Summary

Among the thousands of cryptocurrency projects resulting from the Bitcoin fork, BCH has remained relative correlation. Although it is not as well-known and popular as Bitcoin, there are still stores that accept BCH payments. After all, its transaction fees are low and the confirmation speed is fast.

Nevertheless, the increase in block size will inevitably cause users to pay attention to network security, so Bitcoin is still the most secure blockchain network in the public eye. In addition, Bitcoin is still the most popular cryptocurrency, and BCH's market liquidity and popularity cannot compete with it.