What is Bitcoin Cash (BCH)?

We know Bitcoin, but what is Bitcoin Cash? Bitcoin, the first decentralized peer-to-peer network, emerged in January 2009. A transparent and decentralized network that aims to become a new financial network. But what happens when users of the network disagree about the developments after a certain period of time?

Despite Bitcoin's popularity and its goal of replacing the current payment system, Bitcoin also has its limits. The blockchain of Bitcoin suffers from scalability issues and limited capacity. To solve this issue, Bitcoin Cash was created in 2017.

Bitcoin Cash (BCH) is a hard fork of Bitcoin, it separated from the current blockchain. However, Bitcoin Cash also aims to fulfil Bitcoin‘s goal: to become a secure and decentralized payment system that is scalable for all its users, worldwide.

How does Bitcoin Cash work?

Bitcoin and Bitcoin cash are connected. In fact, until 2017, they were one blockchain. Yet, there is a significant difference between these two. Transactions are recorded in different blocks, which together form a blockchain. Minders add blocks to the blockchain to validate transactions and receive Bitcoin Cash as a reward. Exactly the same as Bitcoin.

But how many transactions can the blockchain process? That depends on the block capacity. And this is where they differ from each other. Let‘s see how.

Bitcoin Cash a payment method

Both Bitcoin and Bitcoin Cash want to be a new payment method. No longer paying in euros or dollars, but in Bitcoin or Bitcoin Cash. But is this even possible on a large scale?

Bitcoin has a capacity of 1MB. This means about 2,000 transactions per block, which translates to 3 to 7 transactions per second. To establish a global payment network, this capacity is too limited. This means that users would have to wait too long for their transaction to be approved. Bitcoin Cash on the other hand, has a capacity of 32MB, more than 1,000 transactions per second.

What is the difference between Bitcoin and Bitcoin Cash?

Bitcoin and Bitcoin Cash have the same goal in mind: to be a global and decentralized payment method. Essential is a scalable network in which transactions are processed quickly worldwide. With an original block size of 1 MB, this is not achievable. To solve this scalability problem, Bitcoin implemented the Lightning Network and SegWit. Processing data off-chain or reduce the size of transactions to increase the capacity.

Bitcoin Cash on the other hand, decided to increase its block size; processing more transactions in the same amount of time. The difference between Bitcoin and Bitcoin Cash is different solutions to the scalability problem.

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