Bitcoin Cash increased Bitcoin’s block size from 1 MB to 8 MB. This increased the number of transactions that can be processed in each block. But large blocks make it more expensive to operate full nodes and more difficult for small miners to compete with the larger-scale operators.
On May 15, 2018, Bitcoin Cash raised its block size further, to 32 MB, and added the potential to run smart contracts similar to Ethereum. This major update to the protocol is meant to help Bitcoin Cash scale more effectively in the future. It also increased the differences between Bitcoin Cash and Bitcoin.
BITCOIN CASH ESSENTIALS
- The result of a hard fork from the Bitcoin blockchain.
- Main difference is bigger block size.
- Peer-to-peer digital cash intended for everyday purchases.
- Decentralized currency with a limited supply and irreversible transactions.
What is a hard fork?
Bitcoin Cash was hard forked from the Bitcoin blockchain. A hard fork is a split of the blockchain allowing developers to introduce changes in a new chain without changing the original chain. A hard fork creates two separate blockchains. Up to the fork, both chains have an identical history. After the fork, the networks pursue separate paths.
Hard forks usually happen when the community, miners and core developers cannot agree on an important issue. Because they cannot reach a consensus, they form a new blockchain and continue independently.
Why was Bitcoin Cash created?
In 2010, Bitcoin’s block size was limited to 1 MB. There is no known reason why Satoshi Nakamoto, the mysterious creator of Bitcoin, introduced this limitation. The most likely explanation is that it was to prevent transaction spamming. As Bitcoin started gaining popularity, block size constraints became more and more noticeable. By 2015, the average block size got to the point of bottlenecking and transaction delays became a real possibility.
The Bitcoin community proposed several scaling solutions to prevent this from happening. A possible step forward was to introduce slight modifications to the code in the form of Segregated Witness. Segregated Witness (or SegWit) is a piece of code that virtually increases block size by separating transactions into two segments. However, not all core developers agreed with the introduction of SegWit.
The developers who opposed SegWit proposed a different solution. They wanted to increase block size from 1 MB to 8 MB. This would permit more transactions to be processed in each block, but it would also be harder to coordinate mining, giving the miners connected to many nodes an advantage over the rest.
Since the development community could not agree on a single solution, a hard fork was introduced. It resulted in the creation of Bitcoin Cash. But for the new cryptocurrency to really come to life, it had to amass a following. The community had to choose which chain to follow – original Bitcoin or Bitcoin Cash. Once the fork was finalized, the two currencies continued independently of one another.
Bitcoin Cash further deviated from Bitcoin on May 15, 2018. Developers implemented a hard fork to increase the block size to 32 MB. They also made it possible to start developing smart contract technology for Bitcoin Cash.
But this didn’t bring an end to changes in BCH. It has undergone another fork and split into Bitcoin Cash ABC and Bitcoin SV in November 2018. The former is a continuation of BCH, while the latter, named Satoshi’s Vision, is a new cryptocurrency intended to mimic Bitcoin as it was in the beginning, before forks and updates.
How to buy BCH
You can buy the Bitcoin Cash coin on Bitstamp. Sign up for a Bitstamp account and start trading BCH today!
- Buy Bitcoin Cash (BCH) with Euro
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- Buy Bitcoin Cash (BCH) with Bitcoin BTC
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