Bitcoin Cash (BCH) was created in 2017 due to a hard fork of the main Bitcoin network. The idea was to design an altcoin to address Bitcoin’s shortcomings, such as slow and expensive transaction throughput. Since then, Bitcoin Cash has presented itself as a cryptocurrency that is faster, cheaper, and more scalable than Bitcoin.
Despite Bitcoin dominating the cryptocurrency market, Bitcoin Cash offers different opportunities. This article presents the history of Bitcoin Cash, how it works, its strengths and weaknesses, and other relevant factors to understand its current place.
The Origin of Bitcoin Cash: The Hard Fork Debate Â
Bitcoin Cash was invented due to the Bitcoin network’s incapacity to deal with scalability. With a 1 MB block limit, Bitcoin transaction processing took longer, especially when there were high volumes of transactions. This raised doubts over its prospects as a digital currency. To address this issue, a faction of the Bitcoin community suggested an increase in the block size limit. However, it was opposed by those who were concerned about the security and decentralization of Bitcoin.
The dispute resulted in a hard fork, which led to the creation of Bitcoin Cash. While Bitcoin maintained a 1 MB block size, Bitcoin Cash introduced an 8 MB and then a 32 MB block size to accommodate more transactions. This fundamental difference placed BCH in a better light as a more convenient currency for everyday use.
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How Bitcoin Cash Works Â
Bitcoin Cash’s underlying principles were identical to Bitcoin, in terms of structure and technological support. However, it has a greater block size, so transactions can be executed more faster and at lower costs. These factors made BCH optimal choice for people offering low-value transactions. This is crucial, especially in comparison to Bitcoin, which, in recent times, has become more of a savings instrument than a transactional unit because of high fees and delays.
Nevertheless, BCH employs the identical proof-of-work consensus algorithm to Bitcoin, so miners confirm transactions and add new blocks to the chain. Bitcoin Cash maintains Bitcoin’s decentralized and secure nature while trying to provide a more usable solution for everyday use.
Bitcoin Cash’s Market Performance Â
During its first period, Bitcoin Cash gained a relatively high level of recognition and rapidly increased its market capitalization. However, it failed to sustain its growth and performed less than Bitcoin, Ethereum, and other top-ranked cryptos.
Currently, Bitcoin Cash is ranked 16th based on market cap and has a daily volume of over $123M. BCH has been pretty much range-bound for the past few months, with an average of $360 to $370 per coin. Experts expect that by the end of 2024, BCH may rise slightly to about $382.
However, long-term predictions of BCH are rather ambiguous. Prices are speculated to move to $780 by 2030 due to possible advancements in the underlying technology, blockchain, and cryptocurrencies. However, some still stick to the sidelines, pointing to the cryptocurrency’s inability to stand out in the market or attract more consumers.
Advantages of Bitcoin Cash Â
Faster Transactions: Bitcoin Cash’s biggest strength is its transaction speed. Due to its large block size, BCH can easily process more transactions in a second than Bitcoin, making it suitable for daily use.
Lower Transaction Fees: Bitcoin Cash is a scalable currency, which means lower transaction fees. While Bitcoin consumers may incur a few dollars per transaction fee, BCH charges a few cents, which is cheaper for small purchases.
Enhanced Scalability: Bitcoin Cash can transact more currency because of its large block size. This feature solves one of Bitcoin’s primary drawbacks.
Community Support: Bitcoin Cash has an active community that remains engaged, extending its efforts to promote and develop the cryptocurrency. This has resulted in constant development and growth to ensure that BCH remains competitive within the market.
Challenges and Risks Facing Bitcoin Cash Â
1. Adoption Struggles: Despite Bitcoin Cash’s technical advantages, it has not gained much popularity and is still overshadowed by Bitcoin. Compared to BTC, BCH has less adoption and backing from companies and organizations.Â
2. Competition from Other Cryptocurrencies: Bitcoin Cash is not the only digital currency designed to solve Bitcoin’s problems. Other examples of altcoin include Litecoin and Dash, which support fast transactions at low fees. This tends to pose stiff competition to Bitcoin Cash in the area of peer-to-peer payments.
3. Price Volatility: Like most cryptos, BCH exhibits tremendous price fluctuations. While it tries to be a stable and usable form of digital currency, its value changes drastically within short intervals, raising concern for users and investors.
4. Regulatory Risks: Global governments regulate cryptocurrencies by providing legal and regulatory measures that pose risks to the existence of Bitcoin Cash and other digital assets. This affects the future of their adoption and market performance.
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The Future of Bitcoin Cash Â
The future of Bitcoin Cash cannot be predicted. Though it is convenient as a payment method based on its fast and low-cost transactions, it has stiff competition. However, BCH could benefit if the developers of the digital currencies improve their functionality.
Also, by integration decentralized finance (DeFi) can attract new opportunities for Bitcoin Cash. If BCH integrates with smart contracts and other features of DeFi, then an increase in demand for BCH can be witnessed, further surging its price.
Conclusion Â
Overall, Bitcoin Cash was created out of necessity to develop a cheaper type of Bitcoin. Despite overcoming the various challenges of Bitcoin, it still experiences various issues in adoption, competition, and market performance. The future of Bitcoin Cash will depend on its capacity to innovate and attract users. Nevertheless, due to its benefits, Bitcoin Cash is still a suitable choice for those who are interested in efficient and practical cryptocurrency for everyday use.
