What Is Bitcoin Cash (BCH)?
What Is Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is a digital currency and a peer-to-peer electronic cash system that allows online payments to be sent directly from one party to another without going through a third party such as a financial institution. It was created from a hard fork from the original Bitcoin blockchain in August 2017 as an alternative to Bitcoin (BTC) and addresses the limitations of Bitcoin, primarily related to transaction speed and cost.
The Bitcoin Cash hard fork took place as the community was split on how best to improve Bitcoin’s scalability. There were two main camps: one supported increasing Bitcoin’s block size while the other favoured using scaling solutions like the Lighting Network, which enables off-chain transactions without having to increase Bitcoin’s block size.
A hard fork happens when a blockchain network diverges and two different versions of the network are run separately. A blockchain network typically undergoes a hard fork when there is a need to add or fix features of a blockchain where the nodes following the new rules are unable to communicate with nodes following the old rules.
One version will follow the current rules while the second version will follow a new set of rules. This leads to the creation of two separate blockchains, each with its transaction history and for some its cryptocurrency.
Bitcoin Vs Bitcoin Cash
While both Bitcoin Cash and Bitcoin emerged from the same blockchain, they have several key differences after the hard fork:
Block Size: Bitcoin has a 1MB block size limit, which limits the number of transactions that can be processed in each block. Bitcoin Cash, on the other hand, has a larger block size limit of 32MB. As such, Bitcoin Cash can handle more transactions per block which allows it to have faster confirmation times compared to Bitcoin.
Transaction Fees: With its larger block size limit, Bitcoin Cash can handle more transactions per block and offer lower transaction fees compared to Bitcoin.
Use Cases & Development Roadmap: Proponents of Bitcoin Cash argue that, with its faster transaction times and lower fees, Bitcoin Cash is seen as more suitable for everyday transactions and as a medium of exchange. Believers in Bitcoin, on the other hand, view it as a store of value, a long-term investment, and as a hedge against inflation.
How Does Bitcoin Cash Work
Bitcoin Cash uses a Proof of Work (PoW) consensus mechanism to secure its network. Miners on the Bitcoin Cash network solve complex problems and prove that they have expended computational power (i.e., work) to create new blocks on the blockchain.
In a Proof of Work network, individuals and/or organisations that verify transactions are called “miners”. To become a miner on the network, one needs to own powerful computers and hardware to solve complex mathematical puzzles.
Miners use these powerful computers and compete with one another to be the first to find a specific hash value that meets the network’s difficulty target. The first miner that finds this hash value will broadcast their solution to the network for other nodes in the network to verify the solution.
If it is valid, the winning miner will be rewarded with the newly created cryptocurrency, which is minted in the mining process, and any transaction fees included in the transaction that they have confirmed.
The new block created will be added to the cryptocurrency’s blockchain. The blockchain will then be updated and distributed to all other miners, who each will maintain the updated copy.
Consensus mechanisms ensure that all participants have a consistent view of the blockchain’s history without relying on a central authority. This helps maintain trust, prevent double-spending, and secure the blockchain’s network.
BCH Tokenomics
BCH has a total supply of 21,000,000 coins of which 19,526,406 tokens are in circulation as of October 2023. Bitcoin Cash, like Bitcoin, has a fixed supply limit of 21 million coins which creates scarcity.
BCH experiences a halving event that occurs approximately once every four years or after every 210,000 blocks that are mined on the Bitcoin Cash blockchain. A halving event reduces the block reward that miners receive which directly impacts the rate at which new BCH coins are created and introduced into circulation.
When a halving event occurs, miners receive half the number of BCH coins that they received previously as rewards for mining a block. For example, when Bitcoin Cash was first introduced, the block reward was set at 50 BCH per block. After the halving, it will be reduced to 25 BCH coins. Subsequent halving events will continue to reduce the block reward until the maximum supply of 21 million BCH is reached.
The Halving, coupled with the scarcity model, helps Bitcoin Cash maintain a decreasing rate of coin creation and prevent excessive inflation.
BCH reached an all-time price high of $3,909 on August 28, 2021. Since its all-time high, the price of BCH has fallen by more than 90% as of October 2023. With a circulating supply of 19.5 million BCH tokens, Bitcoin Cash has a market capitalisation of $4.49 billion as of October 9, 2023.
Who Created Bitcoin Cash
Bitcoin Cash was created by a team of Bitcoin developers, led by Haipo Yang, CEO of ViaBTC and one of the earliest investors in BTC. He also had previous experience as a developer at Tencent and FUTU. Other key figures include Roger Ver and Jihan Wu.
Roger Ver was a prominent early Bitcoin investor and advocate for Bitcoin adoption. Jihan Wu is the co-founder of Bitmain, one of the largest manufacturers of Bitcoin mining hardware.
The three were proponents of increasing Bitcoin’s block size to allow for faster transaction times and lower fees, as well as increased scalability. It is important to note that the Bitcoin Cash fork was not solely the work of the few mentioned individuals but it involved the help and support from community members, miners, developers, users, and businesses.
How to Trade Bitcoin Cash (BCH) on Flipster
Sign up for an account on the Flipster website or by downloading the Flipster app (Android or Apple).
Click the [Trade] tab.
Search for BCH, and click on it.
Select the leverage (up to 25x).
Select either a Trigger Order or Market Order.
Input the amount of crypto you wish to trade, or select a percentage of your available funds to use.
Once you have confirmed the details, click the [Long] or [Short] button to open a position.
BCH Perpetual Swap Contract Specifications
Disclaimer: This material is for information purposes only and does not constitute financial advice. Flipster makes no recommendations or guarantees in respect of any digital asset, product, or service. Trading digital assets and digital asset derivatives comes with significant risk of loss due to its high price volatility, and is not suitable for all investors.