On August 1, 2017, Bitcoin-ABC development group initiated a hard fork of the Bitcoin blockchain to increase the block size. This new chain had 8MB blocks and was called Bitcoin Cash. The success of this particular Bitcoin fork with faster transaction times has recently made its way to be one of the top ten cryptocurrencies.
Its purpose was to achieve the original vision of the Satoshi Bitcoin white paper by creating a viable peer-to-peer electronic cash system.
Bitcoin’s transaction fees have become too high for use as a cash payment, with the cost of the transaction being multiple times higher than the cost of a cup of coffee, for example.
The Bitcoin Cash (BCH) ecosystem has struggled but traction is mounting with many locations that now accept BCH for POS (point of sale) payments.
Bitcoin vs. Bitcoin Cash
By replicating Bitcoin’s “peer-to-peer” transaction system, Bitcoin Cash allows for users to send money from anywhere in the world to anywhere in the world. There is no transaction that is too big, or too small. Bitcoin Cash offers a much easier and cheaper solution than Bitcoin. With the mass attention Bitcoin has, it is no surprise that Bitcoin Cash has been increasingly used year after year since its launch in 2017. The criticism surrounding Bitcoin’s transaction times led to the idea that Bitcoin would not be able to be used with ease like we do with cash. Instead, it was believed that Bitcoin would be more like gold and would be a store of value. The idea behind Bitcoin Cash is that by being quicker and cheaper to use, it would be more similar to fiat.
Bitcoin Cash solves Bitcoin’s network congestion issues by allowing Bitcoin Cash to solve its major scalability issues. There is a lot of criticism surrounding Bitcoin’s transaction times in times of volumes. Many people complained that it was much too slow due to high volumes of people sending transactions. Scalability issues are something that is brought up a lot in crypto. In order for a transaction to completely process, new blocks are created on the blockchain.
In the Bitcoin blockchain, new blocks are created every 10 minutes. In almost all blockchain mining situations, miners prioritize the transactions with the highest fees being paid out. Bitcoin has a limited number of transactions that can fit into a block because the block size is limited to 1MB per block. By having such a limited block size, transactions with higher fees would be added to the block sooner which caused the transactions with the lower fees to process much slower. In order to solve this problem, it was proposed to increase the size of the block to 8MB. The Bitcoin developers did not want to change the size of the block which caused a fork in the blockchain to occur.
Bitcoin Cash was created to combine the aspect of Bitcoin transactions with the quickness of cash transactions, hence the name. Bitcoin Cash transactions are a fraction of the cost as Bitcoin’s. Bitcoin Cash allows transactions to the blockchain to be added before confirming the transaction which makes the process almost instantaneous. Adding transactions before confirmation does include some risks which is why it is only allowed with smaller transactions.
Another major difference between Bitcoin and Bitcoin Cash is that Bitcoin Cash allows smart contracts on the network. The functionality of the smart contracts is very limited given the ecosystem, however, this is something that Bitcoin Cash has over Bitcoin. With the aspect of smart contracts, Bitcoin Cash could eventually be used as a DeFi platform. Konstantin Anissimov, executive director of the international cryptocurrency exchange CEX.IO, told CNN Business, “Bitcoin cash has proven itself to be one of the most resilient cryptocurrencies in the digital currency ecosystem today.”
The Argument Against BCH
There is an ongoing battle between the developers who believe in Bitcoin Cash versus the developers and community behind Bitcoin. Bitcoin Cash critics point out that although they have the capacity in the block for 8MB, they rarely ever fill up the full 8MB. They also argue that the extra space in the block is therefore useless.
The argument against why Bitcoin Cash shouldn’t be created was simply that instead, Bitcoin’s scalability issue should just be confronted and solved. The proposal was to keep the same block sizes and instead, reduce the transaction sizes to allow more transactions in each block which would then lead to quicker processing times. The solution that was proposed was called Segregated Witness, otherwise known as SegWit. SegWit reduces transaction sizes by 75%. This means that Bitcoin’s 1MB SegWit block would now be able to hold the same amount of transactions as a 4MB non-SegWit block.
The opposing side also believed that bigger blocks would mean that there would be more of a lag created within the network. They argued that an 8MB block would take a lot longer to travel through the network than multiple 1MB blocks. One of the reasons for this is because they will also take longer to be verified.
Another argument against Bitcoin Cash is that the increase of block size is only a short-term solution to scalability issues rather than a long-term solution. It is said that in the long term, there may be threats to the security of the blockchain with the larger block sizes which would eventually devalue Bitcoin Cash.
Although the two sides went back and forth on this matter for several years, eventually, Bitcoin Cash was created which ended the debate on how to effectively improve the Bitcoin network. Bitcoin Cash has become its own cryptocurrency with its own community, developers, and investors.
Updates and Partnerships
Since Bitcoin Cash is the most widely used cryptocurrency for day-to-day payments, Africa has shown a lot of interest in making BCH their continent-wide digital currency. Africa has historically had a hard time buying and selling Bitcoin in the past. The recent regulations on Bitcoin in Nigeria have caused a surge in the Bitcoin price since the only way to obtain Bitcoin was through peer-to-peer transactions. Since the ban in February, Bitcoin transactions in Nigeria are up 27%. For African’s abroad, it costs them 10% more than the average traveler to send money back to their families in Africa. Through a digital currency system such as Bitcoin Cash, would enable lower transaction fees and a much easier system. For example, if an African person living in the United States wanted to send $100 to their mother in Africa, they would take on a $10 fee as of right now. On the other hand, with Bitcoin Cash being the continent-wide digital currency, they could see a fee of as little as $.0026. With over 1 billion people in Africa, Bitcoin Cash adoption would drive the price up immediately.
Early Bitcoin investor and cryptocurrency enthusiast, Roger Ver, claims that he prefers Bitcoin Cash over Bitcoin. Roger Ver’s aggressive outlook on Bitcoin Cash has helped keep Bitcoin Cash relevant over the years. According to Roger Ver, “One of the things that most people don’t realize — there are already more transactions happening on the Bitcoin Cash network, right now, today, than there are on the Bitcoin network.” Roger Ver is the current executive chairman of Bitcoin.com and is very popular within the crypto community. His opinions are heard by many people in the space as he is a well respected early investor and entrepreneur. Since Ver is so bullish on Bitcoin Cash and the use case for lower transaction fees, this should allow the price to follow suit with the rest of the market and increase over time.
PayPal’s popular peer-to-peer transaction app, Venmo, has recently announced that users will now be able to trade Bitcoin, Ethereum, Litecoin, and Bitcoin Cash on their platform. Venmo has over 50 million users in the United States and in 2020 alone, has processed more than $159 billion in total payment volume. This partnership will bring attention to new users as they may see Bitcoin Cash as a cheaper alternative to Bitcoin.
Price Prediction and History
When the new altcoin first came on the market in 2017, it was originally trading at only $200. After only the first month, the coin saw a rapid increase of more than 120%. This initial dramatic increase in price caught the attention of traders and developers in the space. In December of 2017, only four months after its launch, Bitcoin Cash reached an all-time high of $3,785.
Within only a year, in December 2018 Bitcoin Cash dropped dramatically and went to as low as $76.93. This crash led to the price hovering around $200 for two whole years. As you may already know, in 2018, the market went into a severe bear market that lasted upwards of a year. Throughout the bear market, even the top cryptocurrencies Bitcoin and Ethereum struggled drastically. This crash wasn’t a direct reflection of Bitcoin Cash and the potential it has. Since the all time low, the price has risen 1257%
From May 2020 to May 2021, Bitcoin Cash has soared 411% from $252 to $1036. After a few years of little to no price movement at all, this dramatic price increase has attracted a whole new wave of investors and partnerships. According to many industry analysts, a $5000 BCH token is incredibly realistic during the 2021 bull run and beyond.