Ines AissaniBitcoin Cash (BCH) is the first cousin of Bitcoin so to speak. In fact, in technical terms, bitcoin cash is what we call a “fork” of the Bitcoin blockchain. Created in 2017, bitcoin cash is today at market capitalization.
The creation of Bitcoin Cash (BCH) was motivated to “improve” the Bitcoin Core network. However, the history of bitcoin is full of twists and turns.
Before seeing if it would be good to invest in Bitcoin Cash, let's go back to its history.
Why was Bitcoin Cash created?
As we said in the intro, bitcoin cash was originally created to solve the problems of bitcoin. However, what were these “problems”?
In fact, around this time in 2017, cryptocurrencies suddenly gained popularity. Thus, the bitcoin network became less “dough” to process the ever more numerous and growing transactions from users. When Satoshi Nakamoto designed Bitcoin, he could not imagine the exponential growth rate that the network would experience. The original development of Bitcoin placed more emphasis on network security. Making it inviolable and almost unattackable (excluding 51% attack).
However, the speed and number of transactions were not the “priority” so to speak of the original design of bitcoin core. This is due to the block size limitation of 1 MB.
This is how, faced with the increase in transaction volume, the need to reduce processing speed time appeared.
In fact, this problem dates back to 2010. However, it was in 2017 that the issue of transaction speed became stronger.
Proposals were then made by the community.
A war of ideas with the birth of two ideologies
To resolve this problem, there have been two main schools of thought. The bitcoin community has split into two, with each taking part in a group/solution.
There were the staunch defenders of the original and authentic bitcoin. This group did not want to touch or modify anything in Bitcoin. We could qualify them as the most “conservative” in the idea. That said, they were still tolerant of a modification, but slight, of Bitcoin Core.
Opposite, there were those who wanted to modify Bitcoin more profoundly. The goal is to make it more efficient for mass use. It is said that this group was more in favor of the use of cryptocurrencies rather than bitcoin as such.
These are in fact two approaches and two very different conceptions of cryptocurrency which opposed each other in the year 2017.
Proposals from each group
The group of most conservative bitcoiners proposed the following solution: create a new, similar blockchain known as Bitcoin Cash. You can see the site here.
One of the most well-known supporters of Bitcoin Cash is Roger Ver. The idea behind bitcoin cash was to make bitcoin a payment service. Making Bitcoin a real alternative to multinational bank card trading organizations like Visa and Mastercard.
Here is the heart of the bitcoin cash proposal: Exclude the signatures used in transactions to make them lighter. So the solution also consisted of increasing the average block size to be able to process more transactions. This involved increasing the block size between 8 MB and 32 MB.
What appealed about this proposal was the fact that the Bitcoin Core code was not drastically changed.
This solution is known as SegWit2x:
- Enabling SegWit code optimization (Segregated Witness). This then modifies the storage of certain data on the blockchain.
- Increase the size of blocks so they can store more data.
Ultimately, the debate on SegWit was very long and very passionate. The community had arguments for and against. There were the first crypto disputes at that time. The Bitcoin forums were literally on fire. Each group preaching for its parish.
Finally, after a memorable battle of ideas, it was agreed that SegWit would be implemented. Thus, the birth of Bitcoin Cash took place in August 2017 and was made for those who refused SegWit.
The bitcoin “fork”, at the origin of bitcoin Cash (BCH)
We now need to understand what a (hard) fork is. In fact, it is when there is a separation of a main blockchain to create a second different one. (For example, Ethereum is a hard fork of the first blockchain called Ethereum Classic).
So, when the community implemented SegWitt, it was my first update made to the Bitcoin network.
What is the big difference with Bitcoin? In fact, BCH simply has a larger block size. This allows it to be faster. However, as the developers knew, security is weaker than on the Bitcoin network. This is the big difference between BCH and BTC.
(Note: Bitcoin Core has since increased the block size).
Despite their philosophical differences, you should know that Bitcoin Cash and Bitcoin have several technical similarities. For example, they operate the same consensus mechanism and have a maximum supply of 21 million units.
The case of opponents like Bitmain
The debate was intense among the community. There were opponents. For example, the manufacturer of ASICS machines (to mine bitcoins) was initially resistant to this idea. Bitmain feared that implementing SegWitt would make Bitcoin mining more expensive. The prices of ASIC having exploded at that time...
Then, bitcoin cash gained visibility despite everything since the promise was strong, remember: create a bitcoin for everyday life. Ultimately, Bitmain sided with bitcoin cash. The company has openly displayed its support for the new blockchain created. Miners could use the same machines to mine BTC or BCH.
Mining for Bitcoin Cash is also done with ASIC miners.
Likewise, some exchanges that did not support Bitcoin Cash simply decided not to list the cryptocurrency. This was the case for Coinbase and itBit. They boycotted Bitcoin Cash at first before later listing them. Remember that when an exchange platform does not list a crypto, this takes away enormous visibility. This has a direct impact on its credibility, its knowledge among the public and its trading volume… In short, a crypto that is not widely listed is necessarily a crypto that is little “known” and therefore naturally, “inexpensive”.
A new fork of bitcoin cash..
As some had feared, Bitcoin cash failed to be effective in its scalability, transaction speed and security. The other problem encountered is that there is no clearly defined governance protocol (voting rights). It is not really clear how to vote and how to decide on important Bitcoin Cash decisions.
Thus, a year later, bitcoin cash created its own hard fork which gave birth to Bitcoin SV (Satoshi Vision). For purists, it is the network closest to the idea of Satoshi Nakamoto. This network is led by Craig Wright…He is the one who claims to be the first and true Satoshi Nakamoto without ever having given any tangible proof.
His reputation is very mixed by the community due to this “claim” which he has never managed to prove. He also rejected the use of smart contracts on the platform for payment transactions.
Then, another hard fork took place in 2020, which saw the birth of Bitcoin Cash ABC (BCH ABC). Bitcoin Cash ABC uses original Bitcoin Cash, but has incorporated several modifications, such as Canonical Transaction Ordering Route (CTOR). In effect, this reorders transactions in a block towards a defined order.
Then there was Bitcoin Cash Node, a new fork created from a new community disagreement…
Of all the forks of Bitcoin, very clearly, the most successful is Bitcoin Cash.
What are the disadvantages of Bitcoin cash?
The biggest drawback to Bitcoin Cash is certainly the fact that the average block size mined on BTC is much smaller than on the bitcoin blockchain. So, if initially the idea of BCH was to be faster than BTC, today it is totally outdated.
The very reason for the creation of BCH has therefore lost all credibility. Unless the developers decide to update the blockchain. We have not received any news on this side.
Then, another disadvantage is that since 2017, many competitors have appeared. We could cite Litecoin (LTC) for example which has achieved many more partnerships than BCH….
The decision-making protocol is very unclear and not very transparent. We do not know concretely how decisions are made. BCH holders have no more decision-making power than developers.
Ultimately, Bitcoin transaction fees prove affordable. It becomes less useful to look for an alternative.
Should you buy BTC or BCH?
Bitcoin is absolutely a better investment. Bitcoin Cash does not have the same level of adoption, acceptance and does not have the same level of demand. BCH is not often the basis in trading pairs like BTC. Likewise, BCH has a much lower market capitalization or price per token.
Indeed, what determines the value of a crypto is its demand among the public. However, BCH does not have much attraction among the crypto community.
However, if further updates take place, then it would not be impossible for BCH to gain ground.
Why has Bitcoin Cash not been adopted by the community?
In theory, one would have thought that the community would have preferred BCH rather than BTC. After all, bitcoin cash was created to enable everyday payments. BCH does not have the same demand as BTC. The community prefers BTC because the promises of BCH have not been kept. The eventful history with different forks means that the public is rather disappointed with its developers... They give the impression of having many differences. Worse still, they give the impression of developing alone, without interacting with the community...
The problem would also come from the rise of several alternatives. There are so many cryptos appearing every day that it is difficult to get “seen”.
However, we can see on Twitter (@BitcoinCashA) in particular, that the BCH community is expanding more and more, with more stores, partnerships, etc.
For some, it is precisely because BCH is the crypto closest to BTC that it deserves attention.
Up to you…
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Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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