Bitcoin Cash explained: BTC hard fork for faster transactions

ProductDec 23, 2022
Bitcoin Cash explained: BTC hard fork for faster transactions

The Bitcoin blockchain is notoriously inflexible, but its BCH fork is faster and cheaper to use. Based on Proof of Work, Bitcoin Cash offers another way to transact value and solves some of its predecessor's long-standing issues. Find out more about BCH crypto in our Bitcoin Cash review.

What is Bitcoin Cash?

Bitcoin's popularity has grown exponentially since the first (genesis) block mined on January 3, 2009. That said, the transaction fees gradually rose, reaching $54.64 per transaction in December 2017. Along with modest speeds and a lack of scalability, this imperfection prompted developers and miners to create a lighter variation — Bitcoin Cash — that same year.

What is BCH coin?

Described as "peer-to-peer electronic cash," the Bitcoin Cash coin (BCH) was designed to fulfill Bitcoin's original promise and remove its inhibitions. It is reliable, secure, fast, and cheap to use. The coin exists on a blockchain called Bitcoin Cash Node, which powers all transactions on the network.

Understanding Bitcoin Cash fork

The term hard fork refers to dividing a blockchain in two, a typical consequence of disagreement between developers and miners. BCH proponents wanted to increase the blocks to accommodate more transactions, thereby decreasing transaction fees. The original block size (1 MB) caused delays as transactions queued up.

The Bitcoin Cash fork — a fundamental software upgrade — occurred at Bitcoin block 478,558. This event took the original network in a separate direction from the offspring. The protocol change the block carried invalidated all previous ones, so nodes had to "upgrade" to the new chain. Over the years, Bitcoin Cash has also experienced some forks itself:

  • In 2018, a part of the BCH community suggested a block size increase to 128 MB and launched Bitcoin Satoshi Vision (BSV). Its leader Craig Wright faced criticism for attacking those who doubted he was Satoshi Nakamoto, and major exchanges delisted BSV. Yet, according to BCH news, BSV's growth has recently been spurred by integration into the Boardz social platform.
  • In 2020, Bitcoin Cash split into Bitcoin Cash ABC and Bitcoin Cash Node, with the latter becoming the dominant software of the network. The team behind the other blockchain had proposed a contentious 8% tax on miners as a means of development funding.

Difference between Bitcoin and Bitcoin Cash

So, how does Bitcoin Cash work? In terms of the underlying technology, it closely resembles its parent. The supply of the BCH coin is also capped at 21 million, which makes it "sound money," according to the creators. Nodes validate transactions in both BTC and BCH, and Proof of Work requires substantial computing power.

Miners get BCH rewards for Bitcoin Cash mining. These payouts are cut in half every four years or 210,000 blocks during Bitcoin Cash halving. At press time, the block reward is 6.25 BCH. The Bitcoin Cash calculator below tracks miners' estimated earnings, costs, and profit.

BCH calculator for miners. Source: minerstat.com
BCH calculator for miners. Source: minerstat.com

Holders can keep their coins in a cold or online BCH wallet and make transactions globally without centralized oversight. You can check out this best Bitcoin Cash wallet rating on Finder to compare popular options.

Bitcoin Cash vs. Bitcoin: Main differences

As a solution to Bitcoin's flaws, Bitcoin Cash offers superior efficiency and ease. Moreover, while BCH block explorer sites like Blockchair list all transactions, holders can anonymize their transfers completely. Here are five critical differences between BCH vs. BTC:

  • Faster processing — 25,000 BCH transactions per block instead of 1,000—1,500 BTC transactions per block. Transactions take seconds.
  • Lower transaction fees — sending money globally generally costs less than one US cent.
  • Increased block size — 32 MB (previously 8 MB) instead of 1 MB.
  • Support of smart contracts and apps like CashShuffle and CashFusion (coin mixing protocols that make BCH non-traceable).
  • A sidechain for Dapps (decentralized applications) and Bitcoin Cash NFT projects (SmartBCH).

CashFusion anonymizes funds by engaging users' wallets in "jumbo-sized transactions" with numerous inputs and outputs. Due to their sheer number, it is impossible to connect specific inputs and outputs to individual users via any Bitcoin Cash explorer. CashShuffles, which works similarly, is incorporated into some popular BCH wallets.

BCH explorer. Source: blockchair.com
BCH explorer. Source: blockchair.com

Advantages of BTC vs. BCH

Larger blocks underlie BCH's superior speeds and fees. Therefore, it is more convenient than Bitcoin for smaller transactions, such as paying for a cup of coffee. Bitcoin Cash is better suited to businesses, charities, and content creators who receive tips online.

That said, BCH has some weak points, too. First, it is not as valuable as BTC and less prominent in terms of market dominance — as of December 21, 2022, converting 1 BCH to USD gives around $100, while BTC is worth over $16,800.

Consequently, miners could be less motivated to mine BCH rather than BTC. Secondly, the asset has fewer trading pairs, while BTC can be swapped for hundreds, if not thousands, of other digital assets.

Finally, some investors may misconstrue the coin due to its name alone. For example, those unfamiliar with hard forks may presume that BCH is a copy of the top cryptocurrency rather than its variation for replacing cash payments.

What is Bitcoin Cash used for?

The list of merchants supporting BCH includes over 250 stores and service providers, from Walmart to the Met. Holders may:

  • Make direct transfers from a BCH wallet
  • Use BCH with the BitPay app or card
  • Buy gift cards (Mastercard Digital Gift, AMC Theaters, and more)
  • Make P2P transactions
  • Donate to charity (American Red Cross, Sea-Watch, and more)
  • Earn interest (users of popular crypto platforms can stake BCH)

The products you can buy for Bitcoin Cash include games, computer parts, crypto tax software, pet supplies, and even luxury watches. Travelers can spend it at Air Baltic and Airbnb. However, despite its flaws, BTC still reigns supreme as more entities support it.

What is BCH coin worth?

BCH initially changed hands at roughly $240 per coin. At press time, BCH/USD is worth $101.12, with a 7-day change of -7.9% and a 30-day change of -3.6%. Bitcoin Cash is the 29th cryptocurrency by market cap (just under $1.95 billion).

Bitcoin Cash chart (BCH to USD). Source: CoinGecko
Bitcoin Cash chart (BCH to USD). Source: CoinGecko

The price of Bitcoin Cash to USD peaked on December 20, 2017. According to CoinGecko, the BCH coin price reached $3, 785.82, a modest peak compared to BTC, which rose above $69,000 in November 2021. The all-time low occurred a year later — on December 16, 2018, BCH fell to $76.93.

This coin was conceived as a means of payment rather than a store of value, and the Bitcoin Cash value is not formally pegged to the pioneering crypto. However, the BCH price typically follows BTC's growth, partly as investors diversify their portfolios when the market is bullish.

How to buy Bitcoin Cash

Unlike WBTC, a wrapped version of Bitcoin, BCH is minted without a custodian locking equal amounts of BTC. This coin is independent, and anyone can buy Bitcoin Cash in just a few clicks.

Where to buy Bitcoin Cash

BCH is listed on popular crypto exchanges and platforms like CoinLoan. Depending on the provider and location, users can buy BCH with a credit card or debit card, via SWIFT or SEPA transfers, and other methods.

Alternatively, you can buy Bitcoin Cash with cash using some cryptocurrency ATMs — Coin ATM Radar features a global map. In some countries, it is also possible to use PayPal.

Bitcoin Cash on CoinLoan

Borrow, buy, swap, collateralize, or earn interest on BCH on CoinLoan. Our products and support are always at hand, with ironclad protection and competitive rates. The currency of the most popular Bitcoin hard fork works with Wallet, Fixed Account, Flexible, and Loans.

As a regulated financial institution, CoinLoan complies with Estonian law and boasts multi-layer security procedures. We ensure our asset protection means the highest standards at all times so you can confidently manage your crypto portfolio. Discover multiple ways to benefit from your BCH holdings:

Earn Bitcoin Cash interest

Grow your BCH coins in one or more ways after transferring them from your BCH wallet or using our Exchange. We allow up to 50 Fixed Account deposits, while the Flexible feature comes with daily accruals, monthly compound interest, and withdrawals at any time. Moreover, staking our CLT token will unlock the best rates:

  • Up to 4.25% in Flexible Account
  • Up to 5.25% in Flexible Account with CLT Staking
  • Up to 6% in Fixed Account

BCH loans

Borrow BCH or turn it into collateral for loans with immediate approval! The loan currencies include other cryptos, stablecoins, and fiat. No lock-ins, no credit checks, and no additional documents are required. The process is simple and transparent.

  • Click or tap on Get Loan in the Loans section.
  • Select the currencies and enter the amounts for your loan and collateral.
  • Select an LTV rate from 20% to 70% and a loan term from one month to three years (standard or customized).
  • Review the summary and click or tap on Get Loan.

Bitcoin Cash exchange

CoinLoan offers 200+ pairs, including BTC, BCH, and WBTC. Swap your holdings in a flash on our user-friendly Bitcoin Cash converter:

  • Select the ticker symbols for the pair
  • Enter an amount
  • Launch Exchange

The available range covers other cryptocurrencies (for example, BCH/ETH and BCH/BTC), stablecoin pairs like BCH/USDT, and fiat currencies like EUR and GBP. You can also use BCH as an intermediate asset for BTC-WBTC swaps. CoinLoaners can turn WBTC to BCH and BCH to BTC, or vice versa.

Final word

Bitcoin Cash eclipses Bitcoin in many respects, although its market share pales in comparison. This 2017 hard fork accelerated transactions by increasing the blocks and lowering the fees, even for minuscule amounts.  On CoinLoan, you can borrow or buy BCH in seconds. Whether you earn a yield on the coins or use BCH crypto to borrow other assets, keep track of Bitcoin Cash news to stay informed of new features and opportunities.

Disclaimer:

The information provided by CoinLoan (“we,” “us,” or “our”) in this text is for general informational purposes only. All investment and financial opinions expressed by CoinLoan in this text are from the personal research and open information sources and are intended as educational material. All outlined information is provided in good faith. However, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information in this text.

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