What is Bitcoin Cash?

Published On: October 12th, 2021


Bitcoin Cash (BCH) was created in 2017 by a group of miners, developers and entrepreneurs who were not entirely convinced with Bitcoin‘s development plan. What is Bitcoin Cash? 

If we take into account that blockchains incite decentralized governance in which its participants can participate and propose changes within the same network, this is not strange to us. The project, also known as Bitcoin ABC, is a peer-to-peer electronic cash system that focuses on greater scalability and low transaction fees. What is Bitcoin Cash? 


What is Bitcoin Cash and what problem does it intend to solve? 


In 2017, the Bitcoin network suffered from long transaction confirmation times and increasing transaction fees, which detracted from its initial premise of being near-instant payments with very low fees. To learn more about these concepts, you can read our blog post about the scalability of the blockchain and all that it implies. For this reason and prior to the creation of Bitcoin Cash, there was considerable debate within the Bitcoin community about the possibilities of increasing the block size limit.


Because Bitcoin is decentralized, proposed changes to the protocol require widespread agreement. Therefore, all nodes in the network must reach consensus when making changes and updates. Bitcoin Cash was presented as a more scalable cryptocurrency solution, with cheaper transaction fees and shorter confirmation times. The BCH community argues that the project is more in line with Satoshi Nakamoto’s proposal for a P2P e-currency, as the altcoin offers a faster and cheaper payment system that could be more suitable than Bitcoin for everyday use. However, Nakamoto also argued that “we can cue further change if we start to need it,” as it was predicted that, with increased Internet speeds and reduced storage costs, blockchains could increase in size without negatively impacting the decentralized currency concept. What is Bitcoin Cash? 


What is a hard fork in the blockchain? What is Bitcoin Cash? 


A hard fork is a major protocol update that forces all users to switch to the new software if they want to continue using the same blockchain. In this sense, there is a change in the code of a cryptocurrency that makes the new version incompatible with previous versions. This process causes what we call ‘network forking’; you have to choose between using the new version of the software or the previous one. This differs from a ‘soft fork’, in which there are changes to some of the network protocols but they do not turn out to be as drastic to its use and operation. 

The reasons for this can be “accidental” – due to a bug fix in the code – or premeditated, creating a new protocol proposal and implementing it in a new version of the code.

Forks (or hard forks) within Bitcoin and other cryptocurrencies are common, although a consensus is usually reached on which blockchain will be used. Otherwise, the two blockchains coexist and a new cryptocurrency is created. This is the case with Bitcoin Cash. 


How does BCH work? 


Bitcoin Cash is a sought-after fork of Bitcoin with the goal of improving some of its features.  The Bitcoin Cash fork was made directly from the original Bitcoin source code, so there are many similarities. Both networks run a Proof of Work consensus mechanism and are open for anyone to join and contribute. In addition, any address that held BTC before the fork received an equal amount of BCH after the fork. 


It inherits almost all of Bitcoin’s code, in fact both generate blocks every 10 minutes. The differences are that Bitcoin has 1MB blocks and supports 3.5 transactions per second among other things, while Bitcoin Cash blocks are up to 32 MB and supports about 24 transactions per second. Unlike Bitcoin, Bitcoin Cash has an increased block size limit, allowing more transactions to be included in each block. 


In 2019, BCH implemented a technology called Schnorr signatures, an alternative algorithm that changes the way digital signatures are used. This scheme is secure, simple and allows for more privacy and scalability than the ECDSA scheme currently used by Bitcoin.


Main features of Bitcoin Cash: 


  • Its source code is based on the original Bitcoin protocol
  • Supply is limited to 21 million
  • Like the Bitcoin fork, BCH also uses the Proof of Work (PoW) consensus mechanism to issue new coins
  • Increased block size from 1 MB to 32 MB
  • BCH did not implement SegWit
  • BCH implemented Schnorr Signatures in 2019
  • Development of integrated smart contracts as a subsequent upgrade
  • Community argues that the spirit of BCH is more aligned with Satoshi’s original plans
  • The community advocates that BCH is designed for daily and small payments because of its fast transaction times and low fees. However, it does not yet appear to be a widespread practice 




Among the thousands of cryptocurrency projects that have forked Bitcoin, BCH is one that managed to remain relevant. While it has not experienced the same impact and notoriety as Bitcoin, there are some stores that accept BCH as payment, due to its faster confirmation times and lower transaction fees. Still, the larger block sizes also raise concerns about network security; Bitcoin is still considered the most secure blockchain network. In addition, Bitcoin is still the most popular cryptocurrency, which means that BCH has lower liquidity and market adoption than BTC.


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