This cryptocurrency guide explains what Bitcoin Cash is and how it came to exist following community disputes with Bitcoin.
If you already know about Bitcoin Cash, you can jump to our comparison of Bitcoin and Bitcoin Cash, or you can check the live price of Bitcoin Cash.
Read on to understand the mining mechanism behind Bitcoin Cash and why mining is necessary to keep the Bitcoin Cash ecosystem working. We also cover the brief history of Bitcoin cash below.
Interested trading or buying Bitcoin Cash? Here are brokers and exchanges available in that offer Bitcoin Cash and other cryptocurrencies:
Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.
Contents
What Is Bitcoin Cash?
Bitcoin Cash is a direct split from Bitcoin and is trying to define the direction of Bitcoin. Many view the emergence of Bitcoin Cash as a battle for the soul of Bitcoin.
Bitcoin Cash has proven to be deeply controversial and it has the potential to completely change the cryptocurrency market.
Is Bitcoin Cash A Currency Or A Commodity?
You might be wondering why we’re covering Bitcoin Cash and other cryptocurrencies here at Commodity.com – a site all about commodities.
At this point, cryptocurrencies like Bitcoin are more akin to a commodity than a currency.
If you want to find out where you can buy or trade Bitcoin Cash, see our Bitcoin Cash Trading Guide.
They are an emerging asset class that can act as a store of value, can be traded on an exchange and geopolitical issues have an impact on their price. In fact, the CFTC specifically labeled Bitcoin and Bitcoin Cash as commodities.
What Was Bitcoin Cash Designed For?
Put simply, Bitcoin Cash is a hard fork from Bitcoin. It is designed to solve Bitcoin’s scalability problem by directly increasing the blocksize on the chain.
The fact that Bitcoin Cash is a hard fork is important. Once a cryptocurrency undergoes a hard fork there is no going back. There is no backward compatibility and it forces users to choose which fork they want to continue transacting on.
Bitcoin Cash is described as:
“a peer-to-peer electronic cash for the Internet. It is fully decentralized, with no central bank and requires no trusted third parties to operate”.
The main selling point is its ability to process transactions rapidly.
How Does Bitcoin Cash Mining Work?
In order to ensure transactions are always processed smoothly Bitcoin Cash operates a scalable mining difficulty.
If there are fewer miners on the network the mining difficulty algorithm adjusts and becomes easier ensuring that transactions are still processed quickly.
Bitcoin Cash believes that they are following Satoshi’s vision for the future of Bitcoin. This is an assessment that has been met with some resistance from the cryptocurrency community.
Interesting Facts About Bitcoin Cash
- Bitcoin Cash (BCH) is a cryptocurrency created from a hard fork of Bitcoin. The fork occurred at block 478,559.
- Anyone who held and was in control of their Bitcoin private keys at the time of the fork automatically became a holder of the same amount of Bitcoin Cash on the new fork – various exchanges also honored this ‘airdrop’ to their customers.
- At launch, Bitcoin Cash immediately raised the block size limit from 1MB to 8MB as part of a massive on-chain scaling approach
- A Bitcoin Cash Visa debit card will be launched soon according to a tweet by Roger Ver on Dec 11th.
- Bitcoin Cash enables virtually instant payments with low fees
History Of Bitcoin Cash: What’s The Story?
Bitcoin Cash is the result of a long-running argument between different factions of the Bitcoin community. The argument is about scalability.
As Bitcoin has grown, the transaction speed of the network has become slower and slower.
The number of transactions on the block-chain has increased exponentially as more people use the network. The size of each block has not grown with the number of users. This is called the scalability problem.
Over the years many investors and miners have argued for an increase in the blocksize to facilitate faster transactions.
Why Were Bitcoin Transactions Becoming Slow?
One of the biggest drags on transaction speed is the digital signature. This signature is designed to verify that the sender has the necessary funds to make a transaction.
In August 2017, Bitcoin implemented the Segregated Witness (SegWit) solution.
SegWit is designed to resolve the scalability debate by stripping the signature from the input and moving it to the end of the transaction. In theory, this solution increases the 1MB limit of a block up to around 4MB.
Stripping The Signature Vs. Increasing The Block Size
Many users disagreed with this approach.
They instead want to directly increase the blocksize from 1MB to 8MB. Their argument was based on the fact that a blocksize increase will be necessary down the line anyway, so why not bite the bullet and do it now?
This disagreement fractured the Bitcoin community and once SegWit was implemented it led to a section of the community adopting a hard fork from Bitcoin.
This hard fork led to the birth of Bitcoin Cash (BCH). BHC’s proponents hope that the increased blocksize will allow Bitcoin Cash to process a significantly larger number of transactions, with a view towards competing with the likes of Visa and Paypal.
Live Bitcoin Cash Price
You can see the live price and historical chart of Bitcoin Cash below:
Tip: Click the ‘Advanced’ button below the chart to access technical indicators and oscillators. Click ‘Reset’ to start over.
Bitcoin Cash is a very young cryptocurrency but it still follows many of the same rules as other cryptocurrencies.
BCH value has generally risen and fallen in line with the rest of the market.
How Does Media Attention Impact Prices?
Like other cryptocurrencies, Bitcoin Cash is heavily influenced by media attention. You should keep an eye on the headlines when deciding how to invest in Bitcoin Cash.
As Bitcoin and other currencies hit the headlines, expect to see new traders pile in. This will inflate the value of cryptocurrencies across the board. Once it hits a peak then you will probably see a huge drop in value as savvy investors engage in profit-taking.
Bitcoin Cash’s Competition With Bitcoin
Unlike other cryptocurrencies, Bitcoin Cash is in direct competition with Bitcoin itself. Bitcoin Cash is a hard fork of Bitcoin. Both cryptocurrencies are proposing their own solutions to the scalability problem.
A key factor in Bitcoin Cash’s potential for success will be whether users decide that directly increasing the blocksize is more effective than SegWit.
You also need to keep in mind that in the early stages, Bitcoin Cash will “take” from Bitcoin.
Although Bitcoin Cash and Bitcoin are in direct competition for user attention, there is the potential for Bitcoin Cash to carve out its own niche in the cryptocurrency ecosystem.
Support From Institutional & Large Investors
The price of Bitcoin Cash has jumped previously when mining groups provided their support.
You should keep an eye out for any major mining groups or large investors declaring their support for Bitcoin Cash. If this happens then expect to see a spike in value as miners and investors pile in.
How is Bitcoin Cash Mined?
Bitcoin Cash is mined similarly to Bitcoin. Unlike banks or Governments, which physically print currency, Bitcoin Cash is created digitally by its community.
The technology behind Bitcoin Cash is called a blockchain. It acts as a general ledger, recording every transaction ever made.
In order to process these transactions users, or “miners” use their computers to process the transactions. These miners are then rewarded with Bitcoin Cash.
What Is The Purpose Of Mining Bitcoin Cash?
This has two purposes. Firstly, It acts an incentive for users to process the transactions on the blockchain.
They are rewarded with BHC that they can then sell. Secondly, it controls the number of coins in circulation. The only way to create new coins is to “mine” them.
Over time the difficulty of mining coins is designed to increase steadily. This is to prevent the market becoming saturated.
When Will Bitcoin Cash Reach Maximum Circulation?
Eventually, Bitcoin Cash will a 21 million cap and no more coins will be produced. At this point, miners will instead be rewarded with a small cut of each transaction.
One interesting thing to note is that Bitcoin Cash operates on a scalable difficulty. This means that when fewer miners are operating remaining miners find it easier to mine BHC.
This has encouraged some miners to adopt BHC as they can make more money but it also has the side effect of flooding the market with a large number of coins at once, thus pushing down the value of Bitcoin Cash.
Bitcoin Cash vs Bitcoin: Similarities & Differences
How does the fork Bitcoin Cash compare to its leading bigger brother Bitcoin? What are the key differences? See below for our head-to-head comparison:
| Bitcoin Cash (BCH) | Bitcoin (BTC) | |
|---|---|---|
| Purpose | Scalable decentralized digital currency (Bitcoin Cash can process a larger number of transactions simultaneously) | Decentralized digital currency |
| Founded | 2017 | 2009 |
| Founder | Created by a faction of the Bitcoin Community, Bitcoin Cash has no one founder | Satoshi Nakamoto (alias) |
| Market Cap | Over $4 billion | Over $300 billion |
| All time High | $4,147 (December 2017) | $19,850 (November 2020) |
| All Time Low | $144.01 (March 2020) | $0.06 (July 2010) |
| Notable Supporters | John McAfee (McAfee Associates) Jihan Wu (Bitmain) | Jeff Currie (Goldman Sachs) Peter Theil (Venture capitalist) Christine Lagarde (IMF) Marc Andreessen (Early internet Pioneer) |
| Supply Cap | 21,000,000 | 21,000,000 |
| Initial Distribution | Users received one Bitcoin Cash token for every Bitcoin token they held | Mining |
| Mining Method | ASIC | ASIC |
| Consensus Method | Proof of work | Proof of work |
| Network Hash Rate* | Up to 6.4 Eh/s | Up to 100 Qh/s |
| Difficulty Increase | Every 6 blocks | Every 2,016 Blocks |
*Total number of coins mined hourly on the blockchain
Where Can I Trade Bitcoin Cash?
See our full guide to trading Bitcoin Cash, or start your research with reviews of these regulated crypto brokers available in .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Further Reading
If you want to find out more about cryptocurrencies or Bitcoin Cash, you can:
- Learn how and where to trade or buy Bitcoin Cash
- Learn how to avoid crypto scams
- Read our Bitcoin guide to find out more about Bitcoin Cash’s big brother
We also have other cryptocurrency guides on altcoins like Ethereum, Dash, Decred, Monero, Ripple, and NEO.
FAQs
What can I do with Bitcoin Cash?
While many traders and investors argue that Bitcoin Cash’s primary use case is speculation on price movements, anyone who runs an e-commerce website has the ability to accept Bitcoin Cash. Well known retailers like Lush, Overstock, and Newegg use the BitPay platform that allows users to pay with Bitcoin Cash.
Does Amazon accept Bitcoin Cash?
At this time, Amazon does not accept Bitcoin Cash, you can’t pay Amazon directly with Bitcoin Cash. Some services like Purse.io have made it possible for users to indirectly purchase items from Amazon through their third-party software, and some digital gift card retailers accept Bitcoin and Bitcoin Cash as payment.
What wallets support Bitcoin Cash?
Various desktop, mobile, and hardware wallets are available to store your Bitcoin Cash. BitcoinCash.org recommends users to use one of their featured wallets like Bitcoin.com’s online wallet, Coinomi, BitPay, Edge, Jaxx, Mobi, Copay, Badger Wallet, Exodus, Ledger, and Trezor. Alternatively, you can store your Bitcoin Cash on a paper wallet.
