Bitcoin Cash (BCH) is a competitor cryptocurrency to Bitcoin which emerged in 2017 from a fork of the original Bitcoin.
BCH the fourth largest cryptocurrency by total market cap with a current valuation of around $7.5 billion US Dollars.
Bitcoin Cash BCH
Current Price: $437
Total Market Cap: $7.6 bn
(Data as at 19 October 2018)
Bitcoin Cash or BCH is based on the same blockchain technology as Bitcoin but with a number of structural tweaks to allow for speedier transaction processing and to support a potentially greater volume of users.
Bitcoin Cash was created by a dissenting group of Bitcoin miners, developers and users, of which the best known are Roger Ver, Jihan Wu and Deadal Nix. These were the main drivers behind the implementation of the fork.
Over the years Bitcoin has been seen to have serious capacity and proce3ssing problems which are still ongoing today. Suggestions were made to deal with this problem over the years, in particular suggestions to increase the block size.
This resulted in some groups creating breakaway separate blockchain ledgers through a process known as forking. Several forks have already taken place over the years, creating competitor coins such as Bitcoin Unlimited and Bitcoin XT, but these have so far failed to find mainstream support.
An alternative Bitcoin proposal was implemented which introduced a blockchain modification called Segregated Witness or SegWit which went some way to help speed up the processing of transactions on the network.
Bitcoin Cash, launched in August 2017, is another fork of Bitcoin BTC. The fork came about as a way to implement an increased blocksize, something which had been opposed by many miners in the Bitcoin network.
As with Bitcoin BTC, the Bitcoin Cash blockchain system allows for a maximum of 21 million coins to be mined, using the same mining procedure as is used for BTC. Some 17.4 million BCH tokens have so far been issued.
Advantages of Bitcoin Cash Compared to Bitcoin BTC
So what are the advantages of Bitcoin Cash as compared to BTC?
Greater Transaction Throughput
Bitcoin Cash uses a block size of 8 MB compared to Bitcoin BTC’s 1 MB. Block sizes of up to 23 MB can also be supported if necessary.
Bitcoin Cash also removed the Segregated Witness (SegWit) adjustment that was implemented by Bitcoin BTC.
This larger block size means BCH can process a greater volume of transactions at any one time than is possible for BTC.
However, the total volume of transactions on the BCH blockchain being processed has so far been somewhat smaller than for Bitcoin BTC, so these modifications have not yet been able to fully prove themselves.
Lower Transaction Fees
Transaction fees for BCH are much lower than for BTC. This is an important benefit for users, since Bitcoin BTC transaction fees have been increasing substantially over the last few years.
In the case of low-value payments the transaction fee required for the BTC system can sometimes be even more than the value of the transaction itself. This clearly makes no sense. So this is a definite plus in BCH’s favor.
Ease of Use
btc.com provides its own easy to use wallet which can be used for both Bitcoin as well as Bitcoin Cash. The wallet is available free in both web-browser and mobile app versions.
BCH founder Roger Ver also owns Bitcoin.com which plays a key role in promoting BCH and Bitcoin.com plays an important role in promoting Bitcoin Cash.
Having a corporate involvement is generally seen as a strategic advantage for a cryptocurrency, over a solely voluntary distributed one with no leadership, though there can also be issues of centralized control resulting from this – see below.
Disadvantages of Bitcoin Cash
Bitcoin Cash mining is seen by some as more centralized than BTC Bitcoin, with fewer miners and far fewer nodes than BTC.
Since fewer participants in the network means increased centralization and the fact that the network hashrate for BCH is smaller than BTC, this can theoretically make it easier for a 51% attack to occur.
BCH can be said to be a more corporate cryptocurrency than Bitcoin BTC. This has advantages, particularly in terms of promotion and marketing, but it can also bring with it risks. It means its future is more dependent on one single group of people and what they may decide to do or not do in the future.
Bitcoin Style Technology
The technical differences in BCH compared to BTC are so far largely confined to block size tweeks.
Other than that, Bitcoin Cash uses the same 10 years old blockchain technology that BTC uses. This means it has the same structure of unpaid nodes, Proof of Work miners relying on wasteful electricity consumption, and the clunky wallet technology that Bitcoin possesses.
Competition From More Innovative Cryptocurrencies
BCH faces strong competition from altcoins such as Litecoin, which offers faster transaction speeds and lower processing fees compared to Bitcoin BTC.
There are also many other altcoin competitors such as Monero, Dash, ZCash and ZEN which offer anonymous transactions and other technical advantages compared to BCH.
My Assessment of Bitcoin Cash
BCH clearly offers some benefits to users: faster transaction processing and much lower fees. Partly though these are due to the current lower usage levels of the BCH system compared to BTC.
Bitcoin BTC on the other hand has not proven itself either to be a great innovator. BTC is still hamstrung by its slow and cumbersome consensus process which impedes innovation.
BCH may have a slight edge in performance at least for now. But neither of these two currencies could be called state of the art innovators in the sector.
Nonetheless BCH is certainly an interesting currency from the investment trader point of view and is one of the top ten cryptocurrencies, but the future path of BCH is unclear.