What started as a much debated and controversial hard fork of the Bitcoin blockchain in 2017 turned into a heated debate over which is the ‘true’ Bitcoin. In this article, we’ll delve into the history, key features, and controversies surrounding Bitcoin Cash, exploring its journey to the top 100 of cryptocurrencies.
Bitcoin Cash (BCH) is a cryptocurrency that was created as an alternative to Bitcoin. It emerged due to disagreements within the Bitcoin community over how to handle scalability issues.
This hard fork or split was primarily motivated by the need to improve transaction speeds and reduce fees associated with Bitcoin, which struggles with slow block times of 10 minutes and finality that could extend up to an hour.
This review of Bitcoin Cash (BCH) was created for informational purposes. This article is not intended for promotion.
A hard fork in cryptocurrency is a significant, permanent modification to a blockchain’s protocol that creates two separate versions of the blockchain: one following the old rules, and one following new, incompatible rules.
The fork that created Bitcoin Cash was driven by a key disagreement within the Bitcoin community over how to scale the network. As transaction volumes grew, it became clear that the 1MB block size limit was insufficient.
Some community members advocated for increasing the block size, while others opposed this change, fearing that it could lead to centralization and other issues. This period was referred to as the “Bitcoin civil war” or “Big blocks vs. Small blocks”.
The scalability debate essentially split the Bitcoin community into two camps: the “Big Blocks” camp, which supported increasing the block size, and the “Small Blocks” camp, which advocated for maintaining the current block size and exploring alternative scaling solutions.
The Small Blockers argued that increasing the block size could undermine Bitcoin’s decentralization and functionality in the long term. Larger blocks take more time to propagate through the network and require more resources to process, which could lead to a lag in verifying transactions.
This lag could, in turn, create disputes about the current state of the Bitcoin ledger. Moreover, larger blocks would increase the overall size of the blockchain, which could price out participants with less powerful computing resources, impacting the network’s famous decentralization aspect.
In 2018, Bitcoin Cash’s block size was further increased to 32MB. This expansion was strategic, with the intention to validate more transactions simultaneously.
While a single Bitcoin block can handle between 1,000 to 1,500 transactions, a Bitcoin Cash block can manage over 25,000 transactions, based on data from 2018.
The most famous figure behind Bitcoin Cash was Roger Ver, born January 27, 1979, who was also known as “Bitcoin Jesus” for his early and enthusiastic support for Bitcoin. He was an early investor in notable crypto startups like Ripple, Blockchain.com, and Kraken.
Raised in Silicon Valley, Ver’s early career involved selling fireworks, which led to legal issues and a ten-month prison term. Moving to Japan in 2005, he later renounced his U.S. citizenship in 2014 in favor of Saint Kitts and Nevis. He actively promoted Bitcoin from 2011 and co-founded the Bitcoin Foundation in 2012. Recently in April 2024, he was arrested in Spain for tax evasion involving $240 million in Bitcoin sales.
Another backer of Bitcoin Cash is Jihan Wu, born in China and co-founder of Bitmain Technologies, the world’s leading producer of Bitcoin mining hardware. Wu entered the crypto world in 2011, buying 900 bitcoins and translating Satoshi Nakamoto’s Bitcoin white paper into Chinese.
His major business achievement is the founding of Bitmain in 2013 alongside Micree Zhan and propelling the company to a reported revenue of $2.5 billion in 2017.
Bitcoin Cash (BCH) has undergone several significant forks on their own, each leading to the creation of new cryptocurrencies.
The first major fork was the one we described, and that occurred on August 1, 2017, when Bitcoin Cash was created from Bitcoin (BTC).
Another contentious fork led to the creation of Bitcoin SV (BSV) on November 15, 2018. This split was driven by key disagreements among BCH community leaders, notably between Roger Ver and Craig Wright.
BSV was launched with an even larger block size limit of 128 MB to support more extensive transaction processing and claimed to more ‘faithfully’ represent Satoshi Nakamoto’s original intentions.
The most recent major fork from Bitcoin Cash resulted in the creation of Bitcoin ABC (BCHA), now known as eCash (XEC), on November 15, 2020. This fork introduced governance and protocol changes and later incorporated features like a proof-of-stake mechanism.
Despite the significant difference in block size, Bitcoin Cash and Bitcoin share many fundamental characteristics, because one is a fork of the other. So both are peer-to-peer cryptocurrencies and have a maximum supply of 21 million.
Bitcoin Cash was engineered to support a higher volume of transactions, boasting the ability to handle approximately 25,000 transactions per block. This is a significant increase compared to Bitcoin’s capacity, which ranges between 1,000 to 1,500 transactions per block.
One of the key differences between Bitcoin and Bitcoin Cash lies in the difficulty adjustment algorithm. Both networks use the same SHA-256 hashing scheme, which allows miners to switch between mining Bitcoin and Bitcoin Cash, depending on which is more profitable at the time.
While neither is primarily designed for complex smart contracts like those found on platforms such as Ethereum, both Bitcoin and Bitcoin Cash offer basic scripting capabilities for programmable transactions. With the advent of layer two blockchains on Bitcoin this could change in the future of course.
Bitcoin Cash incorporates features that enhance user privacy through technologies such as Cash Shuffle and Cash Fusion. Cash Shuffle is a coin mixing protocol that combines a user’s BCH with others’, making transaction origins more obscure.
However, it’s important to note that coin mixing can sometimes depend on the reliability of third-party services, which might pose trust issues.
Cash Shuffle isn’t completely foolproof and does not provide absolute anonymity. Its effectiveness largely depends on user adoption; the more participants in the mixing process, the better the privacy outcomes.
Tutorial: How to use CashShuffle to Have Anonymous Bitcoin Cash Transactions by Roger Ver
Unlike Bitcoin, which does not currently support smart contracts, Bitcoin Cash has introduced smart contract languages like CashScript. This allows for more complex functions and aims to bring DeFi to the Bitcoin Cash network.
This language uses OP codes for logical, mathematical, and cryptographic functions, and enables users to set precise conditions for transaction validity. Although Bitcoin’s smart contract development was overshadowed by Ethereum’s launch in 2015, Bitcoin Cash has continued to evolve its capabilities. It is even possible to launch tokens on Bitcoin Cash.
With a maximum supply capped at 21 million coins, Bitcoin Cash aims to adhere to the original premise of Bitcoin.
The distribution of BCH relies on three interconnected mechanisms:
The question of which is the “true Bitcoin” is subjective and often depends on individual perspectives within the cryptocurrency community. Both Bitcoin and Bitcoin Cash adhere to the original vision of a decentralized peer-to-peer electronic ‘cash’ system, albeit with different technical approaches to scalability and transaction efficiency.
But controversies have surrounded Bitcoin Cash, particularly regarding its naming and purpose. Proponents argue that it aligns more closely with the original intent of Bitcoin as a transactional currency rather than merely a store of value. Detractors, however, have sometimes referred to it pejoratively as “Bcash” or “Btrash.”
Because the coin has already withstood the test of time, it can perhaps survive whatever time that will come. We wait to see if any updates on the situation of Roger Ver are going to disrupt or bring attention to his vision of how Bitcoin should be.
While proponents argue that Bitcoin Cash aligns more closely with the original intent of Bitcoin as a transactional currency, detractors have criticized its approach and questioned its legitimacy.
Only time will tell how Bitcoin Cash will navigate the challenges and opportunities that lie ahead.
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