What is Bitcoin Cash?
Bitcoin
To understand what bitcoin cash is, first, we need a basic idea of bitcoin. Bitcoin is a cryptocurrency that is completely decentralized and exists without support of a single bank or any other financial institution. The cryptocurrency can be sent from one peer to another (also known as peer-to-peer) on the bitcoin network without any third person’s involvement. It was introduced by an unknown person/s known as Satoshi Nakamoto.
The bitcoin protocol came into existence in January 2008, sometime right after the Wall Street Crash of 2008. Bitcoin transactions can be carried out through cheques, wire transfer or cash. Bitcoin can be used to make a transaction when the holder sends ‘a signature’ to the retailer in exchange for goods and services. The ‘signature’ is a 16 digit alpha-numeric code that is responsible for validating the transaction.
There are several advantages of bitcoin:
- Transactions are irreversible: If a bitcoin transaction is made, that is the final transaction. There are no opportunities for people to go back and rectify a transaction, in case there are errors in the provided bitcoin wallet.
- Global: Bitcoin can be sent to anyone regardless of geographical boundaries. Transactions can be cleared within 10 minutes. However, if the bitcoin network is congested, the network may take 3–4 hours to confirm the transaction.
- Safe and secure: Bitcoin funds are locked in a public key cryptography system. This means that only a person having private keys can send them across to another person.
Bitcoin Cash: A Brief Summary
Coming to Bitcoin Cash, it was formed in August 2017, when certain community members were not happy about the escalating prices of Bitcoin transactions. To cut down on spam transactions, the original bitcoin developers had only put 1MB (megabyte) block size. Those community members also wished to have a larger block size and wanted it to increase it to 2MB.
Apart from that, another important factor in how Bitcoin Cash came into existence, was Segregated Witness or Segwit . In a 1 MB block, a signature for bitcoin (including details about the sender and receiver) takes up 65% of the space. However, with Segwit, one block will be reserved for sender and receiver details known as the main block and signatures would go into another block known as the extended block. This was introduced by Dr. Peter Wuille. Although some websites claim that Bitcoin Cash does not have Segwit, it in fact does but in some of the blocks. Segwit has not been fully implemented in all blocks of Bitcoin Cash.
Bitcoin Cash was brought into existence in the hope that it would someday increase the number of transactions processed and it would compete with fiat money transferring companies such as PayPal and Visa. One of the causes that worry staunch bitcoin loyalists is that larger computer power is required to process larger block sizes. This will mean penury for small time block miners and may lead to power being concentrated in companies that can afford the most advanced technologies. Opponents were also worried that this new method will threaten Bitcoin’s consensus-driven approach.
However, at the time of writing this article, Bitcoin Cash has been in existence for over a year and it has considerably gone from strength to strength with many exchanges listing it. However, on November 15, 2018, Bitcoin Cash experienced its own hard fork with two new tokens or coins: Bitcoin Cash ABC and Bitcoin Cash SV.
Bitcoin Cash ABC and Bitcoin Cash SV:
Bitcoin Cash ABC, backed by Roger Ver and Jihan Wu (Bitmain Chief Executive Officer) was introduced as a protocol to fork every 6 months and Canonical Transaction Ordering (CTOR) which would compel transactions to be assorted into a block in a specific order. The development team behind ABC believed that this would help with scaling issues in the future.
Bitcoin ABC, in brief, is a vision to create money that is usable by every single person in the world. The project primarily aimed to achieve the above mentioned goal by utilizing a series of optimizations and protocol upgrades, that would go past the existing limits in terms of scalability.
However, Bitcoin Cash SV which was backed by Craig Wright, who calls himself Satoshi Nakamoto, was brought into existence to restore the former Bitcoin Cash network back to the original Bitcoin protocol which was launched in 2009. Some of the minor changes Wright proposed included: Determining the block size at 128 MB and rejecting CTOR.
On the other hand, BCHSV, as described on its website, “intends to provide a clear choice for miners and allow businesses to build applications and websites on it reliably.”
Some sources reported that the in fact, this much-touted hashwar was no ‘war’ and that it appeared to be politically motivated. However what is problematic is that both camps refused to implement replay protection as both claimed that they are the correct successor of the now-deceased Bitcoin Cash. A replay protection is a defensive measure, wherein transaction on a coin on one blockchain would not allow a second transaction of the same coin on another blockchain. Without a proper replay protection in place, the transaction valid on BCH ABC blockchain would also be valid on SV blockchain.
Despite the very fierce competition put forth by both the entrepreneurs, due to sheer and unbelievable public support, Bitcoin Cash ABC, won the hashwar and although exchanges had initially listed both the tokens, soon, they decided to withdraw SV.
