What is Bitcoin Cash (BCH)?


When politics attacks blockchains, hard forks can be the source of new projects. Bitcoin Cash (BCH) was created by a group of developers, investors, entrepreneurs, and miners who were unhappy with Bitcoin’s development strategy. Created in August 2017, Bitcoin Cash is a peer-to-peer e-money system that focuses on increased scalability and low transaction fees. The project is also referred to as Bitcoin ABC (Adjustable Blocksize Cap).

The scalability of the blockchain

In 2017, Bitcoin suffered from long transaction confirmation times and increasingly high transaction fees, which diverted it from its original principle of near-instantaneous payments with very low fees. Prior to the creation of Bitcoin Cash, the implications of increasing the block size limit were hotly debated within the Bitcoin community.

Because Bitcoin is decentralized, proposed changes to the protocol require general agreement. Therefore, all nodes on the network must reach a consensus when making changes and updates to the Bitcoin software.

Bitcoin Cash has been touted as a more scalable cryptocurrency, with lower transaction fees and confirmation times. The BCH community argues that the project is more in line with Satoshi Nakamoto’s proposal for a peer-to-peer electronic currency. Mainly because altcoin offers a faster and cheaper payment system that might be more suitable than Bitcoin for everyday use.

Soon after Bitcoin Cash forked, the original Bitcoin blockchain underwent a long overdue soft fork upgrade to implement a technology known as SegWit (Segregated Witness). One such upgrade was created in 2015 by Bitcoin developer Pieter Wuille. It was implemented on the Bitcoin network to address network congestion and other scalability issues.

The SegWit soft fork was planned before the BCH hard fork, but Bitcoin Cash proponents felt that SegWit was an inferior alternative to increasing the block size limit. The forking of Bitcoin Cash from Bitcoin has been supported by some notable members of the blockchain industry, including Jihan Wu (co-founder of Bitmain) and Roger Ver (CEO of Bitcoin.com).

How does BCH work?

BCH is taken directly from the original Bitcoin source code, so there are many similarities. Both networks use a proof-of-work consensus mechanism and are open to anyone who wants to join and contribute. Also, any address that had BTC before the fork received an equal amount of BCH after the fork (the same chain of addresses, but on different networks).

Like Bitcoin, BCH also has a target block time of 10 minutes and a maximum supply of 21 million coins. The emission rate of BCH halves every 210,000 blocks, approximately every four years. The current reward per block is 6.25 BCH per block.

Unlike Bitcoin, BCH has an increased block size limit, which allows more transactions to be included in each block. The block size limit was initially increased from 1MB to 8MB, then again in 2018 to 32MB.

However, in reality, BCH’s average block size has only exceeded 1MB a few times since 2017.

Bitcoin and Bitcoin Cash both adjust their mining difficulty because of the so-called Difficulty Adjustment Algorithm (AAD). However, Bitcoin adjusts the difficulty every 2016 blocks, while Bitcoin Cash mining difficulty is adjusted after each block.

In the past, Bitcoin Cash has also implemented an Emergency Difficulty Adjustment (ADU) algorithm to decrease mining difficulty and incentivize miners to join the network. However, the algorithm was later removed due to instabilities. The implementation of the ADU is one of the reasons why the BCH blockchain is thousands of blocks ahead of Bitcoin.

In 2019, Bitcoin Cash implemented a technology called Schnorr Signatures, an alternative algorithm that changes the way digital signatures are used. The Schnorr signature scheme is simple and secure and allows more privacy and scalability than the ECDSA scheme currently in use

The main features of BCH

  • BCH source code is based on the original Bitcoin protocol
  • Supply is capped at 21 million
  • As a Bitcoin fork, BCH also uses a Proof of Work (PoW) consensus mechanism to issue new coins
  • Block size increased from 1MB to 32MB
  • The community says ethics of BCH is closer to Satoshi’s original plans
  • The difficulty of mining BCH has adjusted after each block thanks to the Difficulty Adjustment Algorithm (AAD).
  • BCH has not implemented SegWit
  • BCH implemented Schnorr signatures in 2019
  • Smart contract development is integrated into a later update.

Daily payments

The Bitcoin Cash community claims that it is designed to be used like cash. You can use it to quickly send and receive money to anyone with a BCH wallet, whether individuals or businesses. With fast transaction times and low fees, BCH may be more suitable for everyday use than Bitcoin, especially for making small payments.

While there are stores and merchants that accept Bitcoin Cash payments, it doesn’t appear that this practice is widespread yet. 

How to store Bitcoin Cash (BCH)?

We recommend using Trust Wallet. There are hundreds of other cryptocurrency wallets that support BCH, such as Ledger, Trezor, and Cobo Vault hardware wallets. You can also store BCH on a desktop wallet like Electrum Cash.

Some Bitcoin Cash proponents recommend using Bitcoin.com or Coinomi wallets to store this crypto. Both of these software wallets are available on Windows, Mac, Linux, Android, and iOS.

It is important to keep in mind that BTC and BCH operate on separate blockchain networks. You cannot send Bitcoin to a Bitcoin Cash wallet address and vice versa.

Bitcoin SV

In 2018, part of the Bitcoin Cash community forked the protocol to create another cryptocurrency called Bitcoin Satoshi Vision, also known as Bitcoin SV or BSV, which has an even larger block size limit of 2 GB.

The contentious hard fork was backed by Craig S. Wright and Calvin Ayre and the event is known as the Hash War. However, SV failed to garner widespread support from the crypto community. This lack of support and adoption is likely related to false claims by Craig S. Wright, who claims to be the inventor of Bitcoin, Satoshi Nakamoto.

Final Thoughts

Among the thousands of cryptocurrency projects that have forked from Bitcoin, BCH is one of those that has managed to remain relatively relevant. Although it hasn’t had the same highs and notoriety as Bitcoin, you can still find stores that accept BCH as a form of payment, especially due to its lower transaction fees and faster turnaround times. faster confirmation.

However, larger block sizes also raise concerns about network security, and as such, Bitcoin is still considered the most secure blockchain network. Additionally, Bitcoin remains the most popular cryptocurrency, meaning BCH has lower market liquidity and adoption than BTC.

Do you want to know more? Explore our other Cryptocurrency articles

Shall you want to explore your banking options related to cryptocurrency- do not hesitate to book a free consultation with our friendly team.


Widelia and its affiliates do not provide tax, investment, legal or accounting advice.  Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, investment, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Please consult https://widelia.com/disclaimer/ for more information.


Jared Young

Entrepreneur Leadership Network Contributor
I’m a digital nomad from Germany. I help companies thrive in their digital marketing strategies and help them build sustainable remote work strategies.
I have been running a digital marketing agency for 8 years. Light Spark helped more than 60 happy customers.I recently launched Gpoint, a company focused on remote work productivity and well-being for companies, freelancers and digital nomad.
Over the last 6 years, I have been working remotely as a digital nomad from 40+ destinations such as Kazakhstan, Chile, Budapest, London.
I love writing and want to share insights and advice to remote workers and digital nomads.

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