What is cryptocurrency Bitcoin Cash (BCH) and how does it work?

What is Bitcoin Cash (BCH)?

Ever since its inception, many have posed questions surrounding Bitcoin’s ability to scale effectively. While blockchain is a revolutionary ledger-recording technology, Bitcoin’s blockchain chooses security and stability over scalability.

This makes Bitcoin slow, especially in comparison to credit card transactions such as Visa, which can process roughly 1,700 transactions per second. On the other hand, Bitcoin can process only 7, with each batch of transactions taking up to 10 minutes to process (depending on the block timing).

Bitcoin Cash was created by a group of Bitcoin miners and developers equally concerned with the future of the cryptocurrency’s ability to scale effectively. However, unlike the majority of the BTC miners, this group of miners didn’t like the SegWit2x update, and they opted for increasing the size of each block in the blockchain.

This is how Bitcoin Cash officially became a separate cryptocurrency in August 2017, performing a hard fork from the Bitcoin blockchain.

How Does Bitcoin Cash Work?

Due to its code being so similar to Bitcoin’s code, the two cryptocurrencies have much in common. The way a user operates Bitcoin Cash is no different from a user operating Bitcoin.

The difference is found only in its scaling preferences; where Bitcoin chooses to opt for technologies that would help it scale without the increase in block size, Bitcoin Cash opts to use an increased block size, while dismissing all scaling efforts done through integrating new technology.

Bitcoin Cash also operates on the same proof-of-work consensus mechanism as Bitcoin, utilizing what is called a Secure Hash Algorithm (SHA).

Who Are The Founders of Bitcoin Cash?

Bitcoin Cash was founded by a group of miners and developers who grew tired from fighting over a scaling solution and decided to publish code that altered it, forcing what is known as a hard fork.

The Bitcoin ABC software that would then create Bitcoin Cash was first revealed in June 2017. The cryptocurrency was released to the public on August 1, 2017, after it finished the testing period.

Roger Ver is often regarded as the most vocal Bitcoin Cash promoter. However, he did not create Bitcoin Cash, but rather aligned with the project as he supported the vision of this fork of Bitcoin.

What Makes Bitcoin Cash Unique?

Unlike Litecoin, which tries to act as a sibling of Bitcoin, Bitcoin Cash is Bitcoin’s direct competitor. Its uniqueness comes from its scaling solution being the increased block size rather than Bitcoin’s SegWit or Lightning Network.

At the moment, Bitcoin Cash can process up to 61 transactions per second, meaning that its current network transaction ceiling is much higher than Bitcoin’s.

What Gives Bitcoin Cash Value?

Bitcoin Cash derives its value from its limited supply (21 million), meaning that there is a flat rate at which BCH enters circulation until all the coins are mined.

On top of that, the ever-increasing demand for cryptocurrencies that can handle transactions in a quick and cost-effective manner certainly brings BCH much value.

How Many Bitcoin Cash (BCH) Coins Are in Circulation?

Bitcoin Cash has the exact same number of coins as Bitcoin, with the total BCH supply counting 21 million coins. Its current circulating supply counts just over 18.5 million coins, around 89% of the total supply.

Just like with Bitcoin, the miners act as validators and are rewarded for their computing power. At the moment, each block puts 12.5 additional BCH in circulation until the number reaches 21 million. However, Bitcoin Cash will face a halving in April 2021, where its miners’ reward will be cut down in half.

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How Is the Bitcoin Cash Network Secured?

There is no difference between how Bitcoin’s network is secured from how Bitcoin Cash’s network is secured. Both networks operate under the same set of rules, and both have the same consensus mechanism.

The structure of the proof-of-work algorithm and a set of miners that utilizes it to verify transactions are at the forefront of Bitcoin Cash’s security.

How to Use Bitcoin Cash

Bitcoin Cash is intended to be used as a payment method, and its use cases correspond with this claim. The cryptocurrency is still underused as not many merchants accept it. However, Bitcoin Cash strives to reach its goal of becoming a peer-to-peer electronic payment system.

How to choose a Bitcoin Cash wallet

There are many wallets that can store Bitcoin Cash. Depending on their need for security and functionality, users will choose the wallet that suits them. Kriptomat exchange is a great place to store BCH, as it offers great functionality (buying, selling, exchanging for other cryptocurrencies) without ever compromising on security.

The Bottom Line

Bitcoin Cash is a cryptocurrency created for people that like Bitcoin, but don’t exactly support its scaling solutions. Bitcoin Cash aims to never use off-chain solutions such as Lightning Network, and wants to create a digital payment solution in the vision of Satoshi Nakamoto, the creator of Bitcoin.

At the moment, Bitcoin Cash has much better scaling than Bitcoin, but still nowhere near the desired transactions per second in order to be considered a viable means of payment.

That may change, however, and even with all of the work being put into Bitcoin’s layer-2 solutions, Bitcoin Cash’s scaling may lead to it surpassing Bitcoin one day.

Bitcoin Cash FAQ

Is Bitcoin Cash better than Bitcoin?

While Bitcoin and Bitcoin Cash share a lot of similarities, they both have distinct features that set them apart. Choosing BCH over BTC (or the other way around) is a matter of personal preference.
However, no one needs to pick sides, as each user can buy, sell, hold, or exchange both of these cryptocurrencies on Kriptomat.

How will Bitcoin Cash scale further?

Bitcoin Cash decided not to utilize any side-chain or second-layer technologies, meaning that they intend to scale only by increasing their block size.

How to buy Bitcoin Cash (BCH)

Buying Bitcoin Cash (BCH) is as easy as visiting our guide on how to buy Bitcoin Cash.

How to sell Bitcoin Cash (BCH)

If you already own Bitcoin Cash and hold it on the Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.

Bitcoin Cash Price

The current Bitcoin Cash price is EUR.

The 24-hour trading volume of Bitcoin Cash is EUR. Bitcoin Cash is currently ranked of all cryptocurrencies by total market capitalization, with a market cap of EUR. It has a circulating supply of BCH and the max. Supply is 21 million BCH.

Your Crypto Adventure Awaits

We’ve made it as easy and exciting as possible to jump in and purchase Bitcoin Cash (BCH) and any other cryptocurrency. Our team is committed to offering the best products on the market, having taken everything we learned in 2020 about currency and crypto related products and fine tuning our technology.

Register now to begin your journey into the world of Bitcoin Cash and cryptocurrencies with Kriptomat!

If you’re experiencing any issues or have any questions at all, please don’t hesitate to reach our Customer Support Team. We’re always here to help!