Bitcoin Cash Explained
Bitcoin Cash Explained: Understanding Bitcoin’s Younger Sibling
Bitcoin Cash (BCH) is a cryptocurrency that has been around since August 2017. It is a hard fork of Bitcoin (BTC), which means that it is a separate digital currency created from a modification of the Bitcoin blockchain. As a result, Bitcoin Cash has some similarities to Bitcoin but also some differences, especially regarding transaction speed, fees and block size limit.
What is Bitcoin Cash and How Does It Work?
Bitcoin Cash was created to address some of the issues inherent to Bitcoin, namely its slow transaction times and high fees. In order to accomplish this, the developers of Bitcoin Cash increased the block size limit of the Bitcoin blockchain. This change allows for more transactions to be processed in each block, which in turn speeds up the overall transaction time and lowers the fees associated with using the currency.
Bitcoin Cash works similarly to Bitcoin in that it is a decentralized, peer-to-peer digital currency. Transactions are broadcast to the entire Bitcoin Cash network where they are verified by miners. Once verified, the transaction is recorded on the blockchain and is complete. Because Bitcoin Cash is not controlled by a central authority, it is accessible to anyone with an internet connection and is transparent and secure.
What Makes Bitcoin Cash Different from Bitcoin?
Bitcoin Cash differs from Bitcoin in a few key ways. Firstly, as mentioned earlier, Bitcoin Cash has a larger block size limit. Bitcoin’s block size limit is 1MB, while Bitcoin Cash’s is 8MB, with plans to increase it to 32MB in the near future.
Another major difference between the two digital currencies is their approach to scaling. Bitcoin Cash has opted for on-chain scaling, which involves increasing the block size limit to accommodate more transactions. Conversely, Bitcoin has opted for off-chain scaling solutions, such as the Lightning Network, which is a layer-two protocol designed to increase transaction speed and lower fees.
What are the Advantages of Bitcoin Cash?
One of the main advantages of Bitcoin Cash is its fast transaction speed and low fees. Because the block size limit is larger, more transactions can be processed at once, which speeds up the overall transaction time. Additionally, the larger block size limit means that fees are lower than on the Bitcoin network, making Bitcoin Cash an appealing option for merchants and businesses.
Another advantage of Bitcoin Cash is its accessibility. It is an open, permissionless digital currency, meaning that anyone can use it without needing permission or approval from a central authority. This makes it easy for people all over the world to use Bitcoin Cash for everyday transactions.
What are the Disadvantages of Bitcoin Cash?
One of the disadvantages of Bitcoin Cash is that it is still not as widely accepted as Bitcoin. While Bitcoin Cash may have some advantages over Bitcoin, many merchants, businesses and individuals still prefer to use Bitcoin over Bitcoin Cash.
Another disadvantage is that some people believe that increasing the block size limit could ultimately lead to centralization. This is because larger blocks require more computing power to mine, which could make it more difficult for smaller miners to participate in the network. Additionally, larger blocks mean that the blockchain will grow larger at a faster rate, which could make it more difficult for ordinary users to run a full node.
Conclusion
Bitcoin Cash is a cryptocurrency that has some similarities to Bitcoin but also some key differences. Its larger block size limit allows for faster transaction times and lower fees, making it an appealing option for merchants and businesses. However, Bitcoin Cash is still not as widely accepted as Bitcoin and its approach to scaling could ultimately lead to centralization. Despite these potential issues, Bitcoin Cash remains an interesting digital currency to watch and could prove to be a valuable addition to the cryptocurrency ecosystem.
Useful site: https://www.bitcoincash.org/