Bitcoin is the first and most popular cryptocurrency in the world. It is the one that began the wave of new decentralized money where you do not have to depend on or take permission from any central authority. Through this peer-to-peer technology, it is possible to send money to another person via a computing network. However, today, we are going to discuss Bitcoin Cash and will find out whether it is the best alternative to its senior sibling, Bitcoin, or not. To get updates on this altcoin, you can stay abreast with Bitcoin Cash latest news today.
But before we get into it. One must know that bitcoin is actually a well-known cryptocurrency in the world economy. Still, it has some drawbacks that you should be aware of. A major issue is scalability. Technology like this makes it difficult to scale. And finally, it becomes very challenging for an average person to trace the use of bitcoins for daily needs like milk or gas.
Bitcoin Cash coming as a solution to the shortcoming of Bitcoin
To resolve this scalability issue of Bitcoin, came the emergence of Bitcoin Cash, a fork that happened after the split in the blockchain. But to know the difference between BTC and BCH, it is important to know the brief history of Bitcoin. This latter crypto coin is the innovation of an anonymous developer and founder named Satoshi Nakamoto.
The crypto came during the phase of the economic crunch back in 2009. Its services began from 3rd January same year. It introduced itself as a P2P currency that is not answerable to central authorities like banks. Contrary to it, fiat money like the dollar is subject to sudden changes made by the governments.
There is a maximum total circulating supply of 21 million bitcoins. until it reaches the maximum. Till then new coins will continue to be generated through the mining process. Where calculations are done by strong computers to confirm the validity of the transaction. For use of the machines, miners get paid after depositing a fee on the transaction upon confirmation. And they also get BTC, which are newly created.
even though bitcoin was used for digital cash. The volatility of new cryptocurrencies has caught the attention of investors. whereas it was not found suitable for its use as legal tender. The problem with the limits of the bitcoin network has been around for a long time before the first block was mined. The first reaction from the public was to increase the scalability of bitcoin. “The way I understand your proposal. It doesn’t seem to scale to the size needed. “
The production of new blocks is done every ten minutes, limiting to 1 megabyte in size. Because of this, the Bitcoin network has failed in making more than 8 transactions each second. It only processes around 3 to 7 as per the size. In an attempt to resolve this issue, a technique of segregated Witness got introduced by developers.
What is the main function of SegWit?
The main function of the SegWit is to detach the digital signature from the transaction info that is essential for checking a transaction. When implemented, it brings down the size of effective transactions letting multiple transactions get settled in one block. SegWit keeps on updating as signature fills up 65% of a block. And when the space is freed, then the size of the block is expanded to 4MB from 1MB.
Bitcoin Cash: the spinoff of Bitcoin
When the proposal of change in the Bitcoin protocol came into being, then it went through a process of approval that involved developers and users. The term here is referred to as ‘governance’. After some years, the participants came up to the point of disagreement regarding solving the issue of scalability.
After so much discussion, it came as to whether the actual size of every block should be enhanced or to crop some sections or complete transactions to another layer, giving space for only those transactions that are large and to be settled on the base layer. Those who were in the favour of SegWit joined this camp and asserted to let the original limit to 1MB.
In the end, Bitcoin Cash came with its own rules. With that, the maximum block size increased to 32 MB from 1MB. This also led to the drastic change in the speed at which the processing of transactions was done, letting Bitcoin process an average of one hundred and sixteen transactions each second.
Which makes the better option?
Now there must be a curiosity in one’s mind if Bitcoin Cash comes as a new version of the original Bitcoin with a new set of rules. Then can we say that it is better than its older cousin? Well, it would be too early to say that. And it is all because Bitcoin, no matter its shortcomings in terms of scalability and transaction speed, still holds global importance among the big companies that accept it as payment. Moreover, while Bitcoin Cash is the least known in comparison to Bitcoin, its adoption level is also low. Stay abreast of the latest price status of Bitcoin Cash by staying abreast with BCH crypto news.