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Bitcoin Cash is an alternative to Bitcoin that is faster and costs less. Due to a disagreement in the cryptocurrency community, it was made through a hard fork of Bitcoin. This means that its own blockchain was split off from the Bitcoin blockchain.
Supporters of Bitcoin Cash think that it does what Bitcoin was supposed to do, which was to be peer-to-peer electronic cash. But people have also called it a scam, trash, and, worst of all, useless.
Bitcoin Cash is popular with new crypto investors who want a cheaper alternative to Bitcoin because it costs a lot less than Bitcoin. In this guide to Bitcoin Cash, we’ll talk about what it does and whether or not you should buy it.
What makes Bitcoin Cash Unique?
Bitcoin Cash is built similarly to Bitcoin, but with a few small changes. Bitcoin Cash is meant to be the digital equivalent of cash, while Bitcoin is more of a store of value, like digital gold. This is the simplest way to explain the difference.
The block size limit, which is the most data that can be stored in a block, is the biggest difference between Bitcoin Cash and Bitcoin. Since a cryptocurrency’s transactions are stored in blocks, the block size is important for processing transactions.
The maximum size of a Bitcoin Cash block used to be 8MB, but it has since grown to 32MB, much bigger than Bitcoin’s maximum block size.
This changes the speed and cost of transfers on each network in a big way. Here’s how Bitcoin Cash is better than its predecessor:
- On average, Bitcoin Cash can handle 116 transactions per second. Bitcoin can do about seven things at once.
- Bitcoin Cash has fees that are less than $0.01. Fees for transactions with Bitcoin are usually between $1 and $5, but they can be much higher when the network is busy.
Considering these differences, why wouldn’t developers want to make blocks bigger? The problem is that the number of people who can run a node that verifies transactions is limited by the size of the blocks. If you set it too high, only large organizations will have enough processing power, making the network more centralized.
Where Bitcoin Cash Came From
The people who worked on Bitcoin Cash started as members of the Bitcoin community. In 2017, Bitcoin was having trouble with network congestion, and transaction fees were increasing.
Bitcoin miners voted to approve a software update to help fix the scalability problems, but not everyone was happy with the decision. Roger Ver was one of the first people to invest in Bitcoin, and he was part of a group that thought the update would make Bitcoin more of an investment than a digital currency. Instead of making the upgrade, they wanted to raise the maximum size of a Bitcoin block from 1MB to 8MB.
Through a hard fork on August 1, 2017, Bitcoin Cash was made. At the time of the split, anyone with Bitcoin also had Bitcoin Cash.
How Bitcoin Cash Works
Bitcoin Cash works a lot like Bitcoin in many ways. It employs cryptocurrency mining to validate transactions and issue new currencies and has the same 21 million coin cap as Bitcoin.
Since Bitcoin Cash uses a consensus method called “proof-of-work,” miners must show that they have used computing power to validate transactions. To do this, they need to be able to solve hard math problems. A block of transactions can be confirmed and added to the blockchain by the first miner.
For every block they add, miners get a reward of BCH coins called a “block reward.” Every 210,000 blocks, the reward for a block is cut in half. This is done to slow down the supply over time.