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What Is Bitcoin Cash (BCH) And How Can You Use It?

Bitcoin Cash is a peer-to-peer digital payment system derived from the Bitcoin protocol. The native cryptocurrency of the Bitcoin Cash network is represented by the ticker symbol – BCH.


Why was Bitcoin Cash created in the first place? Well, network updates are pushed in the blockchain systems after a voting process. When the developers, miners, and other participants do not agree on a single truth, the network is ‘forked’ and different versions of the blockchain are formed.

In this article, we will dive deeper into how and why Bitcoin Cash (BCH) came into existence, how to use BCH, if Bitcoin Cash is any different from Bitcoin, and much more.

Let’s get started.

The Bitcoin Scalability Issues and its Solutions

A Bitcoin block is of 1Mb that holds around 2,500 transactions. Also, a new block is mined every 10 minutes. As a result, the Bitcoin network can process 4.6 transactions per second (tx/s). This is very low when compared to global payment giants like VISA which processes 1,700 tx/s.

With increased popularity, Bitcoin started receiving more and more transactions. This resulted in greater transaction delays. To jump up the queue and ensure quick confirmation of their transactions, users were required to pay astronomically high transaction fees (the fees were around $37 during August 2017). For Bitcoin to become a global payment network these scalability issues needed a fix.

What are forks?

In blockchain systems, forks represent an update to the existing protocol.

There are two types of forks –

  1. Hard Fork: A hard fork is a change in the blockchain protocol that is backward incompatible. That implies that non-updated blocks cannot push transactions on the blockchain.
  1. Soft Fork: A soft fork is a change in the blockchain rule that is backward-compatible. That means non-updated blocks can still push transactions on the blockchain as long as they do not violate the new rules.

The Bitcoin Camps

To scale the Bitcoin network, the community came up with two solutions.

  1. The ‘big block size camp’ led by Bitmain (Chinese mining giant) and Roger Ver proposed to increase the Bitcoin block size from 1Mb to 8Mb. Larger blocks can hold more transactions and thus, the network could process a large number of Bitcoin transactions.
  1. The ‘small block size camp’ thought of implementing techniques like Segregated Witness (SegWit) and Lightning Network to scale the blockchain protocol. SegWit will reduce the transaction size by 75% and thus a 1Mb block can accommodate transactions equal to a 4Mb block. Lightning Network is an off-chain solution that processes transactions outside the blockchain, thereby reducing stress on the main network.

Bitcoin Cash (BCH) – The Bitcoin Hard Fork

As discussed earlier, to push updates to the Bitcoin network, the participants should agree on a consensus. Unfortunately, the Bitcoin community was split into two as both the camps wanted their ideas to be implemented.

The small block size camp implemented SegWit on the Bitcoin protocol, while the big block size camp hard forked from Bitcoin to form Bitcoin Cash.

The Bitcoin Cash was created on August 1, 2017, with an 8Mb block size, which was further increased to 32Mb. All the users holding bitcoins were given one BCH per BTC unit.

Bitcoin Vs. Bitcoin Cash

Bitcoin Cash has the following key differences:

  1. Bitcoin Cash has a block size of 32Mb.
  1. A Bitcoin Cash block can hold over 25,000 transactions.
  1. It does not implement SegWit or Lightning Network.
  1. Bitcoin Cash has lower mining difficulty.

The Bitcoin Cash network was further hard forked in November 2018. It was split into Bitcoin Cash and Bitcoin SV.

How To Use BCH?

Like any other cryptocurrency, BCH can be used for many purposes ranging from trading to transfer value. You can use it as a peer-to-peer cash transfer or as a store of value. Currently, BCH is the fifth-largest cryptocurrency as per CoinMarketCap charts.

You can use BCH to –

  • Pay for goods and services
  • Trading
  • Investing
  • Transfer value to others

The Bottom Line

As Bitcoin is a decentralized network, updates are pushed only after a consensus. However, when a consensus is not reached the network is hard forked and a new blockchain is formed.

Bitcoin Cash is a hard fork of Bitcoin protocol formed to improve the scalability by increasing block size.

Nevertheless, Bitcoin(BTC) is the largest cryptocurrency in the world while Bitcoin Cash ranks 5th.

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