Bitcoin Cash (BCH) emerged from a hard fork of Bitcoin (BTC) in August 2017, driven by a disagreement within the Bitcoin community over how to scale the network. While Bitcoin aimed to retain its block size at 1 MB to preserve security and decentralization, proponents of Bitcoin Cash advocated for increasing the block size to enable more transactions per block, reducing fees, and improving transaction speed, thus making it more practical for everyday use as digital cash.
Bitcoin Cash increases the block size limit to 32 MB, significantly expanding the network's capacity compared to Bitcoin's original limit. This adjustment aims to address scalability issues, allowing Bitcoin Cash to process transactions more efficiently and at a lower cost, making it suitable for microtransactions and everyday payments. The primary rationale behind Bitcoin Cash is to adhere to Satoshi Nakamoto's original vision for Bitcoin as a peer-to-peer electronic cash system, emphasizing transactional utility over the store of value proposition.
The fork that created Bitcoin Cash was not just a technical divergence but also represented differing philosophies within the cryptocurrency community about Bitcoin's identity and future direction. Bitcoin Cash supporters argue that the cryptocurrency's utility as a medium of exchange is paramount, and that by increasing the block size, BCH can serve a broader user base for daily transactions, from buying coffee to international remittances.
Since its inception, Bitcoin Cash has implemented additional features and improvements beyond the block size increase. These include the introduction of Schnorr signatures, which enhance privacy and efficiency, and the capability for smart contracts and token issuance through the Simple Ledger Protocol (SLP), expanding the functionality of Bitcoin Cash beyond simple transactions.
Bitcoin Cash also utilizes a proof-of-work (PoW) consensus mechanism, similar to Bitcoin. To ensure the security and fairness of mining activities post-fork, Bitcoin Cash implemented a new mining difficulty adjustment algorithm. This adjustment aims to maintain regular block times and a stable network, even with fluctuating numbers of miners.
