Bitcoin Cash

Bitcoin Cash emerged from a long-running dispute within the Bitcoin community over how to scale the network. As Bitcoin's popularity grew, its 1 MB block size limit caused congestion and rising transaction fees, sparking debates about increasing the limit to process more transactions. Proponents of larger blocks argued that Bitcoin should function as a peer-to-peer electronic cash system, while opponents favored keeping the limit and implementing off-chain solutions like the Lightning Network.²

In August 2017, a group of developers and miners activated a hard fork that increased the block size to 8 MB, creating a new cryptocurrency called Bitcoin Cash. The fork was executed via a user-activated soft fork (UASF) and a miner-activated hard fork, with the first block mined on August 1, 2017.³

Bitcoin Cash retains the core proof-of-work consensus mechanism of Bitcoin (SHA-256) but differs in several technical parameters. The most notable is the block size limit, which was initially 8 MB and later increased to 32 MB in May 2018 via a protocol upgrade. This allows for a higher transaction throughput, with the network capable of handling over 100 transactions per second, compared to Bitcoin's ~7.⁴

Other features include the removal of Segregated Witness (SegWit), which was activated on Bitcoin in 2017, and the implementation of a new transaction signature hashing algorithm (SIGHASH_FORKID) to prevent replay attacks between the two chains. Bitcoin Cash also introduced a difficulty adjustment algorithm (DAA) that adjusts every block to maintain a stable block time, and later implemented the ASERT DAA in 2020.⁵

Bitcoin Cash is accepted by a number of merchants and payment processors, including BitPay and CoinGate, and has been used for remittances and microtransactions due to its low fees. It is also listed on major cryptocurrency exchanges such as Coinbase, Binance, and Kraken.

In 2019, the Bitcoin Cash network underwent a scheduled upgrade that introduced the Simple Ledger Protocol (SLP), enabling the creation of tokens on the BCH blockchain, similar to Ethereum's ERC-20 standard. This has facilitated use cases such as stablecoins and security tokens.⁶

Bitcoin Cash itself has experienced internal conflicts, leading to a hard fork in November 2018 that split the network into Bitcoin Cash ABC and Bitcoin SV (Satoshi Vision). The split was driven by disagreements over protocol changes, particularly the introduction of a new opcode (OP_CHECKDATASIG) and the block size limit. Bitcoin Cash ABC retained the name BCH, while Bitcoin SV (BSV) was led by Craig Wright.

In May 2023, Bitcoin Cash underwent another upgrade that introduced a new smart contract language called CashTokens, allowing for more complex decentralized applications on the network.⁷

One lesser-known fact is that Bitcoin Cash was initially proposed by Chinese miner Jiang Zhuoer, who published a blog post in March 2017 outlining a plan for a hard fork. The name "Bitcoin Cash" was suggested by Haipo Yang, founder of ViaBTC, one of the first mining pools to support the fork.

Another notable detail is the "stress test" conducted in September 2018, when the network processed over 2.1 million transactions in a single day, demonstrating its capacity. This was organized by a group of BCH supporters to showcase the network's scalability.

Bitcoin Cash also has a unique feature called "mempool" management that allows for "zero-confirmation" transactions, which are considered secure enough for small purchases due to the network's low congestion.

Hard fork

A permanent divergence in the blockchain, resulting in two separate networks.

Block size limit

The maximum size of a block in bytes, determining how many transactions can be included.

SegWit

Segregated Witness, a protocol upgrade that separates transaction signatures, increasing capacity.

Replay attack

A malicious action where a transaction on one chain is replayed on another.

Difficulty adjustment algorithm (DAA)

A mechanism that adjusts the mining difficulty to maintain consistent block times.

Simple Ledger Protocol (SLP)

A token protocol on Bitcoin Cash for creating and managing tokens.