What are BTC and BCH
What is Bitcoin Cash (BCH)?
Bitcoin is considered to be one of the greatest innovations in the recent past. However, the rapid development also brought problems that one had not expected so soon.
In particular, scalability became a challenge. In response, Bitcoin was eventually hard forked Bitcoin Cash. The prognosis for the performance and the position of this coin compared to Bitcoin is a much discussed topic.
What is Bitcoin Cash and how did the hard fork come about?
Bitcoin's transaction speed is very slow at around 7 transactions per second. By comparison, Visa performs around 24,000 transactions per second.
It was clear that Bitcoin cannot grow in the long term if the transaction rate is not set significantly high. The community could not agree on how best to solve this problem.
Some advocated increasing the block size limit in order to process more transactions. However, the opponents criticized that too large blocks could lead to new problems.
The increased throughput of transactions could lead to security risks and instability of the system.
Since the community could not come to an agreement, the hard fork finally occurred on August 1st, 2017. That was the hour of birth of Bitcoin Cash.
The new coin uses the same code base as Bitcoin with a few changes.
The difference between Bitcoin Cash and Bitcoin
When naming the new blockchain, it made a conscious decision to add “Cash”. This is to emphasize the intention of the coin.
As the company writes about themselves, they see themselves as Peer-to-Peer digital currency for the internet. The focus is therefore primarily on the transaction rate with the lowest possible fees.
The first step in achieving this goal was to increase the block size. As already mentioned, this measure also carries risks.
However, Bitcoin Cash is aware of these weaknesses and has made protective adjustments to close these loopholes and make the system more secure for everyone.
- Replay and wipeout protection: When Bitcoin was separated, all users were given the same amount of BCH as they had in Bitcoins. To prevent users from maliciously double spending, Bitcoin Cash uses a different hashing algorithm than Bitcoin. A repetition between the two chains is no longer possible.
- On-chain scalability: Bitcoin Cash technology allows the block size to be adjusted. The block size is currently 32 MB (according to a new hard fork dated May 15, 2018), which enables a performance of around 20 million transactions per day.
- New transaction signatures: Bitcoin Cash has a different transaction signature to confirm the distinction from Bitcoin.
- Emergency Difficulty Adjustment (EDA): A new algorithm that ensures normal chain work in the event of drastic changes in the number of miners. This gives added stability to the currency as a whole.
- Scripting commands: With OP_RETURN, additional information can be saved on the blockchain (what is blockchain?) (E.g. for smart contracts)
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