If you’ve been trying to pay cryptocurrency anywhere or just looking at the top cryptocurrencies by market capitalization, you might have noticed that Bitcoin Cash is quite a popular digital asset. With a market cap of over $3.5 billion and a unit price of over $200, Bitcoin Cash ranks fourth in our list of top cryptocurrencies. So… what is Bitcoin Cash and what has it got to do with Bitcoin?
The Story of Bitcoin Cash
Bitcoin Cash’s story starts in early 2017 when a group of cryptocurrency activists felt that Bitcoin development took a turn towards creating an investment or store of value, instead of usable digital currency.
As a result, these activists – notably the early Bitcoin investor Roger Ver and Chinese mining giant Bitmain – developed their own variant of Bitcoin with increased block size, effectively allowing more transactions to be processed per second.
The Hard Fork
This disagreement on the future of Bitcoin resulted in what’s known as a hard fork, where a set of users split away from the main blockchain (in this case, Bitcoin’s blockchain) to create their own. The result was a new cryptocurrency called Bitcoin Cash, which had its own blockchain and software favoring a larger block size.
About Bitcoin Cash
In terms of its fundamentals, Bitcoin Cash is a very similar currency to Bitcoin. For example, it uses the same consensus mechanism (Proof of Work), with the same hashing function (SHA-256), and has the very same supply – 21 million Bitcoin cash, with 12.5 more minted every 10 minutes.
Apart from the increase blocksize and resulting throughput of transactions, probably the biggest difference is its name, Bitcoin Cash, and ticker symbol, BCH (instead of BTC).
Pros and Cons of Using Bitcoin Cash
If you’re a user of cryptocurrencies, you might be wondering what the advantages and disadvantages of using Bitcoin Cash over Bitcoin are. Here are some of the most important:
- Faster, cheaper transactions
As a result of its increased blocksize, Bitcoin Cash is able to offer faster transactions. Also, because miners can process the transactions faster, they charge a lower fee, which means that Bitcoin Cash transactions are also cheaper than their Bitcoin equivalents.
- Brand acceptance
Bitcoin Cash has a well-established brand, spearheaded by the enthusiastic Roger Ver. Thanks to its more organized marketing efforts, you can pay with Bitcoin Cash in about as many places – if not more – than you can with Bitcoin.
- Blockchain size
Since each block is bigger, the total size of the Bitcoin Cash blockchain is bigger than it would otherwise be. This means that miners and some users need more storage space on their devices in order to use the currency.
A large portion of Bitcoin Cash is owned by the enthusiasts who pushed for its creation, which means that coins aren’t distributed as evenly as you’d hope. Also, the majority of the network’s power is maintained by just a few mining groups (and that majority will grow as the blockchain gets bigger), so they could theoretically hold the currency hostage.
Bigger Isn’t Always Better
Having read the pros and cons above, Bitcoin Cash – with its increased blocksize allowing for faster, cheap transactions – might seem like the better option. So why is it that Bitcoin has remained the more popular currency?
The answer to this question really does lie in those two cons of Bitcoin Cash: the blockchain size, and the associated centralization. As the chain gets bigger and bigger, it becomes less feasible for smaller groups and individuals to mine Bitcoin Cash, thereby allowing the network power of bigger mining groups (like Bitcoin Cash supporter Bitmain) to continually grow. While this gradual increase in centralization might not seem like a big deal, it goes against some of the very fundamentals of cryptocurrency – a decentralized asset that anyone can use and mine.
This really means the Bitcoin Cash debate is a matter of personal preference. Would you take the trade-off of using a faster, cheaper currency if it meant it wasn’t as decentralized?
2018 Bitcoin Cash Hard Fork
In November 2018, there was another bout of controversy – this time in Bitcoin Cash circles. While original Bitcoin Cash proponents Roger Ver and Bitmain supported the coin as it was, self-proclaimed Bitcoin creator Craig Wright and billionaire Calvin Ayre wanted to modify the coin to better represent the original vision for Bitcoin.
This resulted in yet another hard fork, with the original Bitcoin Cash labeled BCH ABC (Adjustable Blocksize Cap) and the modified version labeled BCH SV (Satoshi’s Vision – in reference to pseudonymous Bitcoin creator Satoshi Nakamoto).
A third coin was also introduced, albeit significantly less popular than its contenders, which is known as Bitcoin Unlimited. This branch is considered a compromise for Bitcoin Cash ABC and SV supporters.
The result of this controversy was a hash battle, where each of the Bitcoin Cash variants competed for computing power from the original network’s miners. This would decide which currency remains on top, and which falls to the side as an alternative. As of 20 November 2018, the Bitcoin Cash ABC team is winning the battle, and it looks like BCH ABC will prevail as the “real” Bitcoin Cash.
Bitcoin Cash vs Bitcoin: Price History
Which of these two coins is here to stay isn’t a question we can answer. With that said, looking at Bitcoin and Bitcoin Cash’s price histories can be a good indicator as to how the market values these two coins relative to one another.
Looking back to 1 August 2017, which is roughly when Bitcoin Cash launched, Bitcoin Cash traded at $240 while Bitcoin itself traded at $2,700. Both currencies then followed an upwards trend to their respective peaks of $4,000 and $20,000 in December 2017, representing a more than 16x increase in Bitcoin Cash’s price but only a 7x increase in Bitcoin’s price.
Since then, Bitcoin has fallen to $4,500 while Bitcoin Cash – the total value for which is now the sum of BCH ABC and BCH SV – is worth around $290. This means that since its inception, Bitcoin Cash has only grown by around 20% (in terms of its current ABC and SV derivatives), while Bitcoin has grown more than 60%.