What is Bitcoin Cash?
Bitcoin Cash (BTH) is a popular cryptocurrency, sharing many of the characteristics of the Bitcoin (BTC). At the same time, Bitcoin Cash has some different features from Bitcoin.
Bitcoin Cash was created in 2017 from a “fork” in the original Bitcoin blockchain. It is decentralized and is processed on a blockchain. Just like Bitcoin, Bitcoin cash is Anonymous and only 21 million of it will ever be mined.
Where did BTH come from?
Bitcoin was created to be a peer-to-peer cryptocurrency, used for daily transactions. Over the years, it became an investment vehicle and not a digital currency. There appeared scalability issues, because of the increased number of transactions.
Bitcoin Cash resolved this problem, by increasing the size of blocks, and enabling the process of more transactions per block.
Other issues that Bitcoin seemed to have were signature data and the segregated witness technology. Actually, with more people joining the system, it became harder to scale. Transaction time and costs grew, and the response to this was the creation of the so-called Hard Fork — a deviation of the Bitcoin chain. The new chain had bigger scalable blocks and managed to speed up the processing times and reduce the costs. It lets Bitcoin be used like cash, and this is where the Bitcoin Cash name came from.
The average number of transactions per block on Bitcoin was around 1000 and 1500. Bitcoin Cash could handle around 25,000 transactions per block (according to a stress test).
Bitcoin Cash’s features
Bitcoin Cash is another peer-to-peer digital cash system, not relying on central authorities like a government or a bank. Its main features are:
It is open
Bitcoin Cash is not controlled by anyone, it has no CEO and anyone is allowed to use it.
Anonymous
You don’t need an identity to make a transaction. Bitcoin Cash remains open and free for everyone, without censorship.
Transparency
Transactions on the blockchain are being recorded, so anyone can easily see the history of ownership. This eliminates the potential for fraud.
Distribution
The blockchain is stored by a network of nodes (volunteers), which helps ensure the longevity of information.
Rules
Volunteers follow a protocol, so they can achieve consensus on the state of the blockchain. The consensus represents the truth about who owns what. The protocol can evolve, but there has to be a high-degree of consensus to make a change.
Permanent
Once deployed and recorded in the blockchain, transactions effectively cannot be changed.
Security
Bitcoin Cash is created through a Proof of Work protocol, which means that miners compete to add new blocks to the chain. This process is associated with hardware and energy costs, which contributes to the security of the network. Actually, attacking the network would be extremely expensive, and it will not be possible for the attacker to make a direct profit.
Fixed supply
Just like Bitcoin, only 21 million coins of Bitcoin Cash will ever be created. This makes the Bitcoin Cash a hard asset, providing an opportunity for people to store value in digital assets, as a long-term investment.
Bitcoin Cash use cases
Long-term value
The code that defines the Bitcoin Cash protocol says that the total supply of 21 million coins will never be exceeded.
Bitcoin Cash is a decentralized network, and its users are those who decide how the protocol evolves. It is not in their best interest to change the protocol, so the 21 million limits is expected to remain in place.
Bitcoin Cash’s fixed supply makes it a hard asset, often compared to the supply of gold. With the price rising, more miners have a reason to search for it.
Effective medium of exchange
With Bitcoin Cash, it is possible to make peer-to-peer payments, just like cash but with digital currency. Fees for sending Bitcoin Cash are usually less than a penny per transaction, which makes it useful for small daily transactions, tipping content creators or rewarding users.
Economic freedom
People are absolutely free to use their resources whenever and however they choose. Money can be used for storing and exchanging value, and this is the central tool for enabling economic freedom.
Is Bitcoin Cash a good investment?
As we already mentioned, Bitcoin Cash is not backed by any institution. Furthermore, it is complex and is built on an always-evolving technology, which makes it a risky investment. If we go back in time, we can see some crazy price swings, but they are a part of the whole cryptocurrency package.
So, before you make an investment in Bitcoin Cash, you must be aware of all the possible risks and opportunities and as we always say — you should not invest more than you are willing to lose.
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