A Beginner’s Guide to Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is a cryptocurrency and proof-of-work blockchain network designed to address some of the long-standing challenges of Bitcoin (BTC). It offers faster and more cost-effective transactions compared to its predecessor. By forking from the original Bitcoin blockchain, Bitcoin Cash has established its own community and gained acceptance among certain merchants.
The creation of BCH aimed to fix the scalability issues that have been a topic of concern since Bitcoin's inception. While Bitcoin's blockchain prioritizes security and stability, it sacrifices scalability.
Bitcoin Cash emerged when a group of Bitcoin miners and developers, sharing concerns about scalability, decided to take a different approach than the majority of BTC miners. Disagreeing with the SegWit2x update, they chose to increase the block size in the blockchain. This divergence led to the official separation of Bitcoin Cash as a distinct cryptocurrency in August 2017, following a hard fork from the Bitcoin blockchain.
The Idea Behind Bitcoin Cash
In 2017, the concept of Bitcoin Cash emerged as a solution to address the transaction speed challenges faced by Bitcoin. Bitcoin Cash is essentially a hard fork of the Bitcoin blockchain, resulting in the network splitting into two separate entities at a specific block, namely block 478,558. This block introduced a significant protocol change that rendered all previous blocks invalid, necessitating nodes to upgrade to the new chain in order to continue its usage.
This hard fork can be compared to an extensive software update, where the previous network moves in a distinct direction from the new one. In this case, the previous network refers to Bitcoin, while the Bitcoin Cash fork charted its own independent path.
Interestingly, Bitcoin Cash itself experienced subsequent forks, namely Bitcoin Cash ABC (BCHA) and Bitcoin SV (BSV). Bitcoin Cash ABC closely resembles the original Bitcoin Cash with only minor differences. It allocates 8% of each block reward to foster innovation within the network, serving as a form of compensation for open-source developers. In contrast, Bitcoin Cash solely relies on donations, making Bitcoin Cash ABC more developer-centric in a sense.
If you desire to bolster your privacy and embrace privacy coins for your business, incorporating a dependable payment gateway into your website or online store is an excellent starting point. An appealing choice to contemplate is the Plisio platform, which provides a user-friendly and effective solution for merchants seeking to accept various cryptocurrencies, including Bitcoin Cash.
How Does BCH Work?
Bitcoin Cash and Bitcoin share many similarities due to their similar underlying code. The user experience of operating Bitcoin Cash is essentially identical to that of Bitcoin.
Bitcoin Cash also employs the same proof-of-work consensus mechanism as Bitcoin, utilizing the Secure Hash Algorithm (SHA).
Technically speaking, Bitcoin Cash functions in the same manner as Bitcoin. Both cryptocurrencies have a maximum supply of 21 million assets, employ nodes for transaction validation, and use a proof-of-work consensus algorithm. Miners validate transactions by leveraging computational power and receive BCH as a reward for their contributions.
However, Bitcoin Cash operates with faster transaction speeds and lower fees compared to its predecessor, thanks to its larger block size. This makes it more suitable for smaller transactions, such as purchasing a cup of coffee with cryptocurrency.
Additionally, Bitcoin Cash supports smart contracts and applications like CashShuffle and CashFusion.
Users holding BCH in certain wallets can utilize CashShuffle, a coin mixing protocol that blends their Bitcoin Cash with that of other users before conducting a transaction. This enhances transaction privacy and makes tracing transactions on the public ledger of Bitcoin Cash more challenging.
On the other hand, CashFusion takes a different approach by consolidating users' BCH into a single large transaction along with other CashFusion users. The mixed BCH is then returned to the user's wallet, making it extremely challenging for anyone to trace the path of the individual's holdings.
These applications represent just a fraction of the broader Bitcoin Cash ecosystem. BCH has inspired numerous protocols and projects aimed at expanding the technology and making it more accessible to a wider audience.
How is BCH Different From Bitcoin?
So, what sets Bitcoin and Bitcoin Cash apart? Bitcoin Cash has the capacity to handle over 100 transactions per second wwith the block size of 32 MB. This significant increase in block size, from 1MB to 32MB, played a pivotal role in building a dedicated user base. As a result, Bitcoin Cash has become one of the most popular Bitcoin forks and ranks among the top 20 cryptocurrencies.
It's important to acknowledge that Bitcoin was actively working on its own solution to address these issues when the Bitcoin Cash fork occurred. Segregated Witness (SegWit) was an upcoming upgrade aimed at shifting transactions to off-chain solutions, with the goal of improving transaction speed. However, this solution was not satisfactory to many, leading to the occurrence of the Bitcoin Cash hard fork.
Bitcoin Cash initially launched at approximately $240 per coin and has experienced significant price growth since then. Although its price hasn't reached the heights of Bitcoin, the fact that BCH is designed as a form of payment may work in its favor. In contrast, Bitcoin's higher price makes it more suited to serve as a store of value.
It's worth noting that larger block sizes and faster transaction validation primarily cater to businesses. Bitcoin Cash offers an advantage to establishments such as restaurants, as it can efficiently handle smaller-priced transactions, which is an ongoing challenge for Bitcoin. This aspect also makes Bitcoin Cash suitable for tipping online content creators or making donations. These smaller-scale use cases help explain why some individuals prefer Bitcoin Cash over the original cryptocurrency, Bitcoin.
Increasing the block size of Bitcoin Cash was implemented to address the limitations related to transaction capacity. By accommodating larger blocks, Bitcoin Cash is capable of accommodating a higher number of transactions per block, ultimately increasing the network's transactions-per-second (tps) rate.
While increasing the block size is a viable solution for most blockchains, Bitcoin Core supporters, commonly referred to as Bitcoinists, have reservations about altering the core protocol of the coin. They argue that the 1MB block size serves essential functions, such as ensuring broader participation in the network regardless of computer capability and preventing the network from being overwhelmed by spam data. However, the introduction of ASIC mining rigs has challenged these arguments, prompting ongoing debates.
On the other hand, proponents of Bitcoin Cash believed that enlarging the block size to 32MB was the optimal approach to cater to the needs of daily Bitcoin users. These larger blocks enable a higher volume of transactions to be processed per block, thereby reducing fees and transaction delays for Bitcoin users.
This increase in transactional capacity eliminated the necessity of incorporating the Segregated Witness (SegWit) protocol in Bitcoin Cash. SegWit is a feature integrated into Bitcoin's core coding today, which reduces the amount of data transmitted for each transaction.
How to Start Accepting Bitcoin Cash?
If you wish to work with Bitcoin Cash and use all of its advantages for business, you will need a crypto payment gateway that has multiple coin support.
The Plisio cryptocurrency gateway presents a variety of offerings, including access to 19 different cryptocurrencies, as well as Bitcoin Cash. Moreover, Plisio provides a free cryptocurrency wallet that fully supports the Bitcoin Cash coin.
One notable advantage is that merchants can seamlessly integrate the payment gateway into their websites or online stores without requiring any specific coding knowledge. This accessibility makes it suitable for a broad range of users. Additionally, Plisio offers one of the lowest fees in the market, standing at only 0.5%. This fee applies to various tools such as mass payouts, bookkeeping tools, customizable donation pages, and more.
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