The Beginner’s Guide to Bitcoin Cash
Bitcoin Cash (BCH) was forked from Bitcoin on 1st August 2017 due to a dispute about increasing the block limit size from the 1MB, as set by Satoshi Nakamoto, to 8MB. Satoshi’s 1MB limit size made the Bitcoin network very slow, especially when its number increased significantly in 2017.
Bitcoin Cash in a Nutshell
- Launched on August 1, 2017, as a hard fork of Bitcoin.
- Its block limit size is 8MB as compared to 2MB on the bitcoin network.
- It’s the fourth cryptocurrency with the highest market cap, according to CoinMarketCap.
- It’s cheaper and faster to use than bitcoin, but more expensive and slower when compared to Bitcoin SV, whose block limit is 128MB.
What is Bitcoin Cash?
A forked cryptocurrency of Bitcoin which aims at improving the transaction speed of Bitcoin. BCH is also a digital currency that can be used in making payments over a decentralized peer-to-peer blockchain network. Whilst Bitcoin can confirm on the average 7 transactions per second. Bitcoin cash does 61 transactions per second. This, in theory, this makes it more suitable to be used as a payment mode compared to its mother coin. The vision of improving upon the transaction’s speed led to bitcoin’s fork at block height 478559.
The history behind the fork of Bitcoin Cash
Satoshi anticipated the possibility of an attacker trying to load the bitcoin network with spams of the transaction for his/her own dubious intentions, hence limiting the block size to 1MB to regulate the number of transactions that are confirmed from time to time. As bitcoin news started spreading wildly, transactions broadcast to the network increased, which slowed throughput across the network.
Those who wanted their transactions confirmed as early as possible had to incentivize miners across the network by increasing their transaction fees per transaction. This is contradictory to Satoshi’s whole mission in reducing the cost of transaction fees that users must endure when making payments by establishing a peer-to-peer network. This is also why bitcoin is not suitable for making small payments, hence further disregarding it as a currency.
What solutions were proposed?
After a series of discussions, the bitcoin community came up with two solutions to solving this problem, namely; Segregated Witness (SegWit) and Bitcoin Unlimited.
The proposal of SegWit would seek to store part of the transaction information outside the blockchain to free up space for more transactions to be added into one block. This solution was rather seen as a much more complex procedure.
Just as the name goes, Bitcoin unlimited sought to remove the size limitation on a block hence, making miners confirm enormous transactions into one block. Though this sounds like a perfect idea, it poses the network to centralization as other miners with low hash rates would not compete with companies who have set up mining rigs. Since the Bitcoin community did not fully accept both solutions, another proposal was made, and that was known as SegWit2x. Implementing this solution would increase the block size limit to 2MB and store some information about the transaction outside the blockchain. This proposal was more like combining strategies to increase the throughput of the network, but this was not scalable enough to increase new users of bitcoin.
Amaury Sechet and a group of developers thought it wise to increase the block limit size to 8MB to increase the network’s scalability. This led finally to a hard-fork, which occurred on 1st August 2017. There was a 1:1 ratio coin distribution of BCH among all bitcoin holders.
How to mine Bitcoin Cash
Mining is the act whereby complex mathematical equations are solved to confirm transactions across a blockchain network. Computer rigs set up to perform this are called miners, and they get a reward for this activity. Through the activities of mining, new coins of the network are added into circulation.
You can decide to set up your own mining rig or join a mining pool to mine the coin. Setting up your own mining rig is very expensive, looking at all the expenses that you would have to incur in acquiring the gadgets for mining and the cost of electricity. The block reward of 12.5 BCH if the miner owns one. On the other side, joining a mining pool also comes with some risks as some platforms have been reported of scamming its members. Since there is a combined hash rate in mining pools, block rewards are shared with miners depending on the hash rate donated to the mining process pool. Joining mining pools increases your chances of winning block reward with the network’s increasing level of difficulty. Examples of Bitcoin Cash Mining pools are BTC.com, BitClub, Antpool, etc.
Mining cryptocurrencies require users to install some software onto their computers, as well as purchasing some hardware. Sophisticated Application Specific Integrated Circuits have preferred hardware in mining these days as they have high performance compared to mining with GPU systems. Software that is suitable for mining Bitcoin Cash is CGminer and BFGminer.
Bitcoin Cash Wallets
These are similar to bank accounts that we save our funds to with banking institutions. However, with digital wallets, users are in full control of their funds, and they can choose to spend them whenever they want without any restriction. There are basically four types of wallets that you can use in saving your Bitcoin Cash coins. They are software, hardware, paper wallets. You can download the bitcoin node wallet or rely on third-party systems like Trust Wallet, Blockchain wallet to store your bitcoin cash coins.
Hardware wallets such as Ellipal, Trezor, and Ledger Nano S are also available for users to download to keep their funds safe. A paper wallet is simply printing their softcopy of your wallet.dat file on a piece of paper whiles deleting the copy on the computer. This leaves you with another form of a hardware wallet. Both paper and hardware wallets are considered the most secure wallets since they are not connected to any network, making it vulnerable to hackers’ attacks.
NB: Whichever wallet you are using, keep your private keys safe and from any online computer to prevent hackers from accessing your funds. Once anybody has access to your private keys, he/she has direct access to your funds. Hence keep it safe.
Where to buy Bitcoin Cash
You can buy bitcoin cash from several platforms if you are not mining, but care must be taken to get scammed along the line. You can purchase bitcoin cash from certified cryptocurrency exchanges such as Binance, Kucoin, Bittrex, etc. and on over-the-counter platforms such as Coinbase, Zebitex, Robinhood, etc.
How much is Bitcoin Cash worth?
BCH’s total supply is set at 21M, and its price is currently trading at $384.25 at the time of writing. There are about 18.2M BCH in circulating supplying with a market cap over $6 Billion.
The bitcoin cash launch was trading at $240, and it later surged to $4,355.62 on Dec 20, 2017. This is the highest price it has ever recorded in history. The crypto bearish season in 2018 took its toll on BCH as well, making it record the lowest price of $75.03 on Dec 15, 2018.
Benefits of using Bitcoin Cash
Just like most cryptocurrencies out there, Bitcoin Cash allows users to make anonymous transactions without the invasion of any centralized institutions. Another breakthrough from Bitcoin Cash is the increased number of transactions per second that it can conduct more than bitcoin.
This brings us to the main reasons why the Bitcoin Cash community claims to be the real bitcoin as envisioned by Satoshi Nakamoto. The increase in block limit size to 8MB enables transactions to be confirmed faster on the network, and users pay very cheap fees for their transactions compared to the fees on the bitcoin network.
The Risks of using Bitcoin Cash
Bitcoin cash is very volatile in case you decide to invest in it as a store of value. If you decide to use it as a payment mode, you will likely pay higher or lesser than the normal value if it undergoes any sharp volatility.
There are always hackers trying to pry on crypto starters’ novices to steal their private keys to access their funds. If one mistakenly loses his/her private key, you have lost access to your funds forever.
Bitcoin Cash has been acknowledged from its beginning, especially due to the renown of Roger Ver. He has since recurred to alternative methods, which would imply BCH (Bitcoin Cash) as the “original Bitcoin.” The most relevant method to induce this idea is using the “bitcoin.com” website to promote BCH. On Reddit, the channel used for their dedicated discussions is “r/BTC,” thus also implying the idea of them being “the first Bitcoin.”