What is Bitcoin Cash (BCH)?

By Kraken Learn team
5 min
13 Kas 2023
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The Beginner’s Guide to BCH

Bitcoin Cash (BCH) is a cryptocurrency that intends to offer an alternative to the world’s oldest and most widely traded cryptocurrency, Bitcoin (BTC). 

Launching in 2017, Bitcoin Cash was created by a group of Bitcoin users who disagreed with the roadmap proposed by the project’s principal developer group, Bitcoin Core, and who believed different technical decisions were needed to bring Bitcoin to a global audience.

Bitcoin Cash proponents tended to believe Bitcoin required modifications to make it competitive with traditional payment systems like Visa and PayPal. They also advocated for lowering the fees users pay to send transactions, preferring to shift these costs to other parts of the network. 

Toward this goal, Bitcoin Cash modified Bitcoin’s code and released a new software version with features that were no longer compatible with Bitcoin. At launch, this effectively split Bitcoin into two blockchains (Bitcoin and Bitcoin Cash) and two separate assets (BTC and BCH). 

This meant any user who owned BTC could claim an equal balance of BCH at the time the two blockchains separated. 

Since then, Bitcoin Cash has been quick to add new features, increasing the amount of data it can store in each block to 32 MB. (Bitcoin has since moved to an entirely different system for counting its transaction data.)

Bitcoin Cash has also since borrowed features from other cryptocurrencies, including functionality that enables users to launch new types of tokens on its blockchain.

Who Created BCH?

The launch of Bitcoin Cash can be traced back to a group of businesses and developers who, growing tired with in-fighting over a network rule, decided to author and publish code that altered it.

Called Bitcoin ABC, the software that would create Bitcoin Cash was first revealed in June 2017. It then underwent testing before it was finally released on August 1, 2017. 

But developers weren’t the only ones involved in creating the fork. As the split required users to create a new blockchain from an old blockchain, mining businesses needed to devote substantial computing power to creating the first block on the new Bitcoin Cash blockchain. 

What’s the Difference Between Bitcoin and Bitcoin Cash?

Bitcoin and Bitcoin Cash differ most sharply in their approach to overall design philosophy.

Bitcoin Cash developers generally see consumer payments as more essential to growing BCH’s value in the short term, and so users may find it better suited for online spending. 

Bitcoin Cash’s most notable feature is that the blocks in its blockchain can be larger, allowing it to process more transactions every time one is added. The additional space enables users to avoid fees used on Bitcoin to determine priority in times of heavy demand. 

This also means that Bitcoin Cash users may have difficulty downloading their own copy of the blockchain. As blocks are larger, storing and auditing this record may be more costly. 

Bitcoin Cash users may also have to upgrade their software more frequently and exercise more care when doing so. As Bitcoin Cash’s developers add and change features at a faster rate, there is a greater chance some might be rejected by the network. 

Already, this more aggressive attitude to upgrades has caused Bitcoin Cash to split into two networks, Bitcoin Cash and Bitcoin SV. 

Why Does BCH Have Value?

Proponents of Bitcoin Cash believe that by focusing on making its transactions cheaper, consumers will begin to choose BCH in online transactions, making it more valuable.

Bitcoin Cash also maintains a number of the same properties as Bitcoin, including its scarcity. This includes the rule that only 21 million BCH can be created, and that the amount of new BCH introduced to the network is scheduled to decline over time (in events known halvings). 

As of the end of 2019, roughly 18.1 million BCH were in circulation, with 12.5 BCH being introduced with each block. In 2020, this figure will decline to 6.25 BCH.

Given the similarities of Bitcoin and Bitcoin Cash, traders may see it as a hedge that reduces their risk should Bitcoin’s roadmap limit its adoption or make its technology less valuable. 

What is the Future of BCH?

Like most cryptocurrencies, Bitcoin Cash remains an experiment. 

So, depending on how the Bitcoin Cash market evolves, we may learn lessons about cryptocurrency networks from observing the differences between Bitcoin and Bitcoin Cash. 

As of 2020, some essential questions facing Bitcoin Cash, include: 

  • Can BCH continue to subsidize cheaper transactions for users? OR Will fees be needed as the rewards available to miners continue to decline? 

  • Will maintaining multiple developer teams make BCH more secure? OR Will this competition lead to costly bugs and software errors?

  • Will more frequent upgrades improve BCH’s features? OR Will they cause more network splits, creating more alternative cryptocurrencies?

  • Will users prefer to buy and hold BTC as an alternative to gold and hard monies? OR Will they prefer to buy and spend BCH as an alternative to Venmo or PayPal? 

Doubtless, traders are watching the charts to see how these questions will be answered.

Hemen Başla

Now you're ready to take the next step and buy some Bitcoin Cash!