In celebration of our Let’s Build Bitcoin Together campaign!, we’ve created a blog series that will delve into the history and vision behind the three cryptocurrencies being supported. We hope the following post will provide background and inspire our community to get out there and VOTE for the project they want to see a donation go towards. So, without further ado, let’s build bitcoin together!
What is BCH?
The cryptocurrency ecosystem is continuously evolving. As users’ needs change, new forks appear in established blockchains, providing more token options than ever. This is how Bitcoin Cash, an offshoot of Bitcoin, came to be. But what is BCH, exactly?
BCH is the three-letter symbol that denotes Bitcoin Cash on crypto exchanges. It was created by Bitcoin Cash developers in 2017 as a response to rising fees and transaction delays created by BTC’s limited block space. Bitcoin’s 1MB block size was set back in 2010 — seven years is a long time in the tech world and, for some, that size proved limiting. As a result, unsatisfied users worked together to fork the Bitcoin blockchain, creating Bitcoin Cash.
Following this initial split, the Bitcoin Cash community fractured still further into Bitcoin ABC, Bitcoin Unlimited, and Bitcoin Satoshi Vision. Bitcoin ABC (Adjustable Blocksize Cap) is the conservative wing of Bitcoin Cash which seeks to protect Bitcoin Cash from radical changes. It is led, in part, by Roger Ver, one of the main proponents of the original split.
Bitcoin Cash increased the size of blocks on the blockchain from 1MB to 8MB, allowing more transactions to be published in a shorter amount of time. Though it’s not worth nearly as much as BTC as of this writing, it’s BTC’s most successful offshoot to date. Its creators used “cash” in the name because they want BCH to become a valid real-world currency usable for everything from a cup of coffee on up. Now their goal is to keep BCH competitive and ready for global adoption by investing continuously in its development.
A Fork in the Road
You might be wondering how Bitcoin Cash proponents were able to create an offshoot through sheer grit and determination? After all, it’s not like people can go to their local banks and ask for a different kind of dollar that better suits their needs! But that’s the difference between having a centralized financial institution for local fiat and a decentralized global digital currency: There’s room for growth, change, and evolution.
By 2017, Bitcoin users were split over its usage and limitations. Some thought that it should be more scalable, and the 1MB blocks were keeping transaction fees high. Others felt that it should remain as is, in order to preserve and encourage decentralization. So those in the former group created a hard fork, which Investopedia describes as “a permanent divergence from the previous version of the blockchain, and nodes running previous versions will no longer be accepted by the newest version.”
Bitcoin developers had reached a fork in the road. One path followed the established Bitcoin protocol (BTC), and a new path split off into unfamiliar territory — Bitcoin Cash (BCH). And while they share some similarities, BTC and BCH are not interchangeable.
BTC vs. BCH
Imagine there’s a type of software you use every day. A new version comes out, and it has some different features — but if you update your software, the new files won’t be compatible with the old version. So you are faced with a choice: You can keep the old version, which also has plenty of worthwhile features, or upgrade and start fresh. It’s all about what works best for you.
It’s like that with Bitcoin and Bitcoin Cash. Neither is inherently better than the other. After all, they were both founded with the same goal in mind — making crypto a legitimate, convenient, decentralized global currency. Both protocols have their own supporters, and both tokens come with advantages and disadvantages.
Here are the key differences between BTC and BCH:
- Value: Bitcoin hit its all-time high in late 2017, peaking at 19,783.06 USD; after a 2018 drop, its price began to rise again, currently fluctuating between 10,000 USD and 12,000 USD. BCH also hit its peak in late 2017, trading at 4,355.62 USD; it’s now valued at just over $300
- Block size: A core reason for the formation of Bitcoin Cash was Bitcoin’s 1MB block size. Over the years, this created a scalability problem: As BTC increased in popularity and circulation, transaction fees became more expensive. BCH block sizes can scale up to 8MB to offer significantly cheaper and faster transactions.
- Transaction throughput: Thanks to that block size, BCH can process many more transactions per second than BTC. Because of this, transaction fees for BCH are lower as well. It’s still not as fast as larger financial institutions, but it’s a pretty significant increase over the original Bitcoin protocol.
- Mining pools: Bitcoin is mined and validated by thousands of users globally, ensuring decentralization and permissionless access. BCH has far fewer mining pools, and because of the increased block size, it requires much more powerful computers to mine (and BTC mining requires beefy hardware, to begin with).
The Development of Bitcoin Cash
Over the last two years, BCH has received four substantial upgrades intended to help the platform and protocol scale. Here are a few of the highlights:
- Re-enablement of Satoshi opcodes: In May 2018, Bitcoin Cash developers re-enabled Satoshi opcodes (operation codes) that were a part of the original Bitcoin protocol. These opcodes, which were disabled due to a bug, were designed to perform functions through the Bitcoin Script language. By re-enabling this functionality, BCH developers made decision-based transactions, compilers, and other opcode functionality possible.
- Implementation of Op_Checkdatasig: This Script operation checks the validity of a signature using a message and a public key. This operation automates signature validation by calculating the hash within a transaction and validates imported data with the use of an oracle. Through this advancement, concepts like a noncustodial escrow system and a BCH recurring payment system are now possible.
- 32MB Block Size increase: In May 2018, Bitcoin Cash developers increased the BCH block size to 32MB. This is substantially bigger than BTC’s 1MB cap, and four times larger than the blocksize BCH had when it started out. Although 32MB block size are not processed yet, large blocks were tested on the BCH mainnet in September 2018.
- Graphene version 1: In July of 2018, the Bitcoin Unlimited team (BU) merged Graphene version 1 into the BU client. Graphene is a block propagation tool designed to make blocks that are ten times more efficient than compact blocks.
- Canonical transaction ordering: Before CTOR (canonical transaction ordering), consensus rules processed transactions in the form of a list that was topologically sorted. Following this upgrade in November 2018, blocks could now be ordered as a canonical set, rather than a list. BCH developers believe this functionality will make it easier to process very large blocks.
- Schnorr signatures: In February of 2019, Bitcoin Cash developers added Schnorr signatures to the BCH chain. This signature scheme, invented by Claus Schnorr, enables many improvements to privacy and scaling. Some even believe that the Schnor foundations could remove 4% of the current transaction storage. In the future, the scheme could also allow for sign-to-contract concepts and public signature aggregation.
To learn more about the many development milestones of BCH, check out this detailed overview from Bitcoin.com.
It’s been reported that over 900 online retailers accept Bitcoin Cash, as well as hundreds of brick-and-mortar stores. Payment service providers, like BitPay, offer BTC and BCH payments for its merchants, making it easier for token holders to use BCH regularly.
This is in line with the original goal of making BCH a medium of exchange for real-world transactions. According to its own website, Bitcoin Cash is meant to be spent, not held. Its usage spans the globe, making it a truly universal peer-to-peer fiat alternative. And at only two years old, BCH is just getting started.
If you’re ready for your own digital currency future to begin, you can get started on OKCoin today. As one of the world’s leading crypto marketplaces with top-notch security and KYC verification, OKCoin can provide the resources you need to trade with confidence.
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