How Bitcoin Cash Works?
Bitcoin Cash is a fork of the world’s most popular cryptocurrency — Bitcoin. Why was it created in the first place, and is it promising enough to invest in it?
Let’s start with the basics. What is a fork? Fork refers to the activity of branching or splitting. Bitcoin Cash tokens are a kind of addition to the main coin. It is like a child product that is based on the same code as the parent, but with several changes.
After tens of thousands of users started using Bitcoin, the creators of the cryptocurrency faced the problem of scaling the product. It was necessary to find a solution that would solve the problem relating to the speed of the transactions, as well as the structure of the blocks. The emergence of Bitcoin Cash was the solution to this problem. Bitcoin cash has some distinct advantages over its parent, some of which are improved security of transactions, the ability to create more complex blocks, and increased transaction speeds.
Today, the digital currency ranks sixth in terms of capitalization among all crypto money in the world. Only Bitcoin, Ethereum, XRP, Litecoin, and EOS are ahead of it. The total market cap as of today is $2,3 billion, compared to the astounding $69 billion of Bitcoin. The price, meanwhile, for Bitcoin Cash hovers around the $130 mark.
The Concept of Bitcoin Cash
Users have had the opportunity to buy bitcoin cash coins starting August 1, 2017. It happened at the right time. In Bitcoin’s blockchain, entire queues for making a transaction were already lined up. Users had to wait for days to make and receive transfers. It was possible, of course, to increase the transfer speed by paying a fee, but this was not a viable long term solution.
What is Bitcoin Cash for? The main objective is to remove the load from the main network, and it can be said with confidence that the developers have coped with their task.
Some of the developers behind the popular cryptocurrency offered to change the Bitcoin code itself rather than creating a new fork. The cost of such an operation would be very high, and on top of that, the operation did not guarantee success. Therefore, Bitcoin Cash was developed in the late summer of 2017 after a hard fork.
Many experts and enthusiasts say that BTH is the coin that has the potential to completely replace Bitcoin. With it, you can practically do all operations available on the original coin. Technical analysis of Bitcoin Cash has shown that this cryptocurrency is even more convenient for transfers and other financial transactions.
Differences and similarities between BTC and BTH
Let’s start with features that they both share:
- • Both currencies are developed using the same protocol;
- • Same algorithm for hash counting;
- • Matches between the algorithm for mining and receiving rewards POW (Proof of Work);
- • The same coin mining speeds and the number of coins that can be mined.
Now let’s take a look at some of the differences that are impossible not to notice:
• Increased block size in the network – users can create blocks of 8 megabytes in size, which is 8 times larger than the bitcoin block;
• The complexity of generating new blocks changes much more often – after every 6 mined blocks of the blockchain. In the case of Bitcoin, the figure was every 2016 blocks.
It is important to note that the two cryptocurrencies share the same blockchain. Where do new coins come from then? A network separation appeared at a particular moment. A branch in the blockchain that divided it into two and began to develop along two parallel paths. One is BTC and the other is BTH. There are other minor differences between the two, which include:
- • Bitcoin Cash appears to have transaction protection systems that are more reliable;
- • A new transfer type has been introduced with which you can specify the transaction sizes for different accounts separately.
In general, this fork fulfilled its purpose, and many users switched to using Bitcoin Cash. This led to the fact that the fee for transactions fell for both sides. Reducing the commission is not the only plus though. Transfers began being carried out at satisfactory speeds and users had more space to work with.
Bitcoin Cash price history
When choosing a crypto coin for investments, one should focus on studying the history of its development, growth, and declines in prices. A week before the launch of Bitcoin Cash, you could buy cryptocurrency futures for $550.
As soon as the coin appeared on the market, its value was equivalent to $280. After a few hours, it had already jumped to $500. Soon enough, the coin began to experience a steady decline, until it was growing again and being sold at more than $1000. The peak value of the coin was reached on December 20, 2017. The cost of the fork increased to $5,000. After that, it began to decline again. Today, Bitcoin Cash is worth $130, a fraction of what it used to.