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Bitcoin Cash (BCH) 101 - Complete Guide

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Bitcoin Cash (BCH)
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Author: Harshini Nag Updated: January 28, 2022

Bitcoin Cash (BCH) is one of the many alternative digital currencies that came about after the creation of Bitcoin (BTC) in 2009. Bitcoin Cash is based on the same source code as Bitcoin, having forked from the main chain back in 2017 due to developer differences.

BCH boasts faster and cheaper transactions per second (TPS) than Bitcoin in an attempt to address scalability concerns of the original blockchain. Read this guide to bring yourself up to speed on the technology, function and potential Bitcoin Cash has for investors looking to hold the coin.

What Is Bitcoin Cash and Why Was BCH Created?

There was excitement when Bitcoin first launched. Advocates of digital currencies thought that the moment for a meaningful step towards the actualisation of decentralised finance had come. Less than 10 years after Bitcoin’s debut, philosophical differences among the founders led to a split in August 2017, the result of which was Bitcoin Cash.

BCH is a result of a push by a section of members of the community to increase the block-size limit of Bitcoin’s blockchain. The size of a single block of the original Bitcoin is limited at 1 megabyte (MB). For this reason, transactions over the Bitcoin blockchain network are slow and costly. Another reason Bitcoin Cash developers proceeded with the fork is due to proposed improvements to Bitcoin via the segregated witness (SegWit) protocol.

Some of the people that participated in the creation of Bitcoin Cash include Roger Ver, a prominent entrepreneur. Just a year after the founding, another disagreement arose and yet another fork happened. The result was two blockchain projects, where one was called Bitcoin Cash (ABC) and Bitcoin Cash (SV). The ABC stands for Adjustable Blocksize Cap while the SV stands for Satoshi Vision.

Because Bitcoin Cash ABC continues to use the original Bitcoin Cash client, it inherited the BCH ticker. In this article, therefore, our reference to Bitcoin Cash is simply Bitcoin Cash ABC. BCH leverages blockchain technology to enable users to pay their bills directly without relying on middle-parties like banks. Also, cross-border transactions via BCH are fast and cheaper than when using fiat currency.

How Does Bitcoin Cash Work?

Bitcoin and Bitcoin Cash are almost identical in their working. For example, both of the digital currencies are mined via proof of work (PoW) system, which is a means through which miners complete transactions on the network in order to get rewards in form of currency Bitcoin or BCH. 

Like the Bitcoin network, the Bitcoin Cash network is simply a collection of computers – also called nodes – that relate on a peer-to-peer basis. The decentralised nature of the network enables faster transaction speeds because of the absence of middlemen. 

The supply of BCH tokens is capped at 21 million (just like Bitcoin) and the current total supply is around 18.5 million. This means miners can still earn rewards in new BCH tokens. The Bitcoin Cash network supports fast transaction rates because of the SegWit solution. SegWit simply means that only a part of information related to a particular transaction is stored inside a block. The rest of the information can be stored outside the block.

Key 3 Selling Points of Bitcoin Cash (BCH)


Cheap transactions

The Bitcoin Cash network enables direct transactions, where you can send money directly to the recipient. As a result of the sidelining of banks, transaction fees are insubstantial. The current average fee is $0.0012 compared to Bitcoin’s $10.92 or banks that charge 6.68% of the transaction value.


A sturdy payment infrastructure

The BCH digital currency is the engine of Bitcoin Cash’s payment infrastructure. Add to that the security and transaction speed of the network. Bitcoin Cash developers have built a robust payment infrastructure that offers convenience for both merchants and consumers. All transactions are done online and you do not need an account.


Users enjoy greater privacy

The Bitcoin Cash network does not require users to share as much personal information as banks do. Within the Bitcoin Cash ecosystem there exists P2P trust because of immutability of information. This is one reason why third parties are not required to facilitate transactions and why not many personal details are required. As a result, users have more control over their financial privacy.

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Is Bitcoin Cash Worth the Investment?

Bitcoin Cash is a cryptocurrency well poised to thrive in the digital world. Over the past few years, the world has been advancing towards online platforms when it comes to major activities like shopping. Just about everything we can do today will be digitised in the coming decade.

In addition to the immense growth potential, BCH has been one among the few cryptocurrencies that have displayed little volatility. This means the token can be a great asset for a stable investment. However, noting that cryptocurrency at large is a fairly new concept, you must remain alive to the fact that the investments can carry huge risks. It's always recommended to do your own research before you buy BCH and other cryptocurrencies.

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Frequently Asked Questions

  1. Yes. BCH is a legitimate currency that many merchants and businesses accept. As of February 2020, 4,392 merchants – 1,894 of them being brick and mortar – accept BCH as a legitimate currency. Major merchants that accept BCH include BitPay, Payeer and CopPay.
  2. No. Bitcoin Cash makes it easy and simple to make payments. In the first place, all you need is a cryptocurrency wallet to store your tokens. From this wallet, you can send and receive BCH coins with the convenience that is unheard of in the legacy financial sector.
  3. Yes, BCH has plenty of benefits. The most obvious one is convenience. We all enjoy the convenience of doing everything on our phones. You do not need to carry around cards or remember bank details when making payments with BCH. The only information you need is your private key and wallet details and you are good to go. Another benefit of BCH is cheap and fast transactions. Compared to banks and other cryptocurrencies, the cost of using BCH to settle transactions is next to nothing.
  4. Yes. Besides using BCH as currency, the token could be held as an asset because it has intrinsic value. Consider someone who bought BCH in mid-March when one token was worth $160.17. By the time of writing, the value had grown to $266.90, which translates to about 67% growth. Other ways one can make money with BCH is to trade BCH CFD pairs over cryptocurrency exchanges, and there are many exchanges that offer such assets.
  5. Yes. BCH is backed by a secure network that is impossibly difficult for hackers to gain access to. In fact, immutability is one quality of blockchains that makes them extremely popular.
  6. No. There is no doubt that extreme volatility is one adjective that can be used to describe cryptocurrencies. This is because many tokens have displayed high volatility since their inception. On the contrary, BCH has shown little, if any, price volatility since the November 2018 fork.
  7. Yes. The Bitcoin Cash project has a strong case for future mainstream adoption. The most significant selling point is the rock-bottom transaction fees. As the public continues to increase its understanding of cryptocurrency, it is highly likely that they will notice the significance of the Bitcoin Cash network due to its cost-saving fees, it could become a very popular currency of choice for future consumers.
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