What is Bitcoin Cash and how does it work?
What is Bitcoin Cash (BCH)?
Bitcoin Cash came into being as a hard fork of Bitcoin. It is faster than Bitcoin. It is built for spending rather than storing. Its purpose is to solve the scalability issue of bitcoin and provide more day-to-day utilities.
The block size of Bitcoin is 1 MB, while that of Bitcoin Cash is 32 MB. So, the block size is the main difference between Bitcoin and Bitcoin Cash. And also, that is what makes Bitcoin Cash transactions cheaper and faster compared to Bitcoin.
Bitcoin vs. Bitcoin Cash
Bitcoin is the first cryptocurrency. In 2015, they encountered the scaling problem of Bitcoin. After that, some favoured small-block solutions while the rest favoured large-block solutions. And Bitcoin Cash was born as a result of large-block solutions.
Now, speed and decentralization exist on the same spectrum, so it’s an either-or situation. You can’t have both! So, Bitcoin Cash gives faster transaction speed while sacrificing decentralization. On the other hand, Bitcoin is more decentralized as compared to Bitcoin Cash, as it has a slower speed.
How does Bitcoin Cash work?
Bitcoin Cash, with its larger block size, enables faster transactions. Because of this, its day-to-day utility increased as you could use it for smaller and on-the-go purchases, like buying a cup of coffee.
Just as we use different modes of payment for various purchases, there are different cryptos suitable for each purchase. While Bitcoin can be used for purchases where time isn’t a critical factor, Bitcoin Cash is more suitable for grab-and-go retail purchases.
Even with its benefit of speed and lower transaction fees, Bitcoin Cash isn’t yet widely used. Crypto payments for everyday use are still to catch up. But many hope that it won’t take long.
Final Thoughts
The creation of Bitcoin Cash, which is the result of a hard fork of Bitcoin, provides a solution to the scalability problem of Bitcoin. Its increased block size makes the transactions faster and cheaper. But as speed and decentralization are on the same spectrum, the increased speed is due to a compromise with decentralization.
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