Bitcoin was created as an alternative to fiat money. But the extremely volatile exchange rate and the steady upward trend in the BTC price make it very difficult to use it for everyday payments. These same features have given bitcoin its place of honor among the most promising store of value and protection against inflation.
What is Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is one of the direct descendants of Bitcoin. The creators of the coin set themselves the goal of making it more accessible and easy to use. BCH is one of the already fairly numerous hard forks of Bitcoin.
This means that both assets are separate versions of the same protocol and up to some point have a common transaction history.
A hard fork occurs as a result of a radical update of the protocol if only a part of the community supports them. Some nodes switch to the updated protocol, some continue to use the original version.
The need for radical updates arose due to the insufficient bandwidth of the blockchain. Opinion in the community was divided. Some of the team suggested increasing the block size, while others insisted on the need for second-level solutions.
Ultimately, at block 478558, a chain with an increased block size separated from Bitcoin, which became known as Bitcoin Cash.
How BCH differs from BTC
Initially, the differences between the two coins were relatively small, but the developers of each of the networks set different goals. The number of differences has increased so much that now BCH and BTC are perceived as two completely different assets.
Difficulty adjustment
Both networks use the SHA-256 hashing algorithm, which means that BTC miners can switch to the BCH network if it is more profitable. This will immediately affect the computing power of the network. The BCH network has implemented a difficulty adjustment algorithm that ensures a stable rate of generating new blocks. If the block mining process slows down, the algorithm simplifies the task; if there is a threat of advance, it complicates it.
Block size
Bitcoin keeps the original block size at 1MB. The Bitcoin Cash block was originally twice as large, and after several network upgrades, it increased to 32 MB. This means that network fees are fractions of the price, with a maximum throughput of around 200 transactions per second.
Decentralized finance and smart contracts
Bitcoin does not support decentralized finance, while Bitcoin Cash already uses the Cashscript language to implement DeFi. This brings the capabilities of the BCH blockchain closer to those of Ethereum.
Issue of tokens
To issue Bitcoin-based tokens, you need to use the Omni layer. Theoretically, this layer is a platform for trading custom digital assets, but in practice, its implementation is focused on stablecoins.
The BCH network has implemented the Simple Ledger Protocol (SLP). This protocol provides the ability to create tokens on top of the Bitcoin Cash blockchain, similar to the Ethereum network. This protocol also supports non-fungible tokens, but their use in the BCH network is very limited.
Where to buy BCH
You can buy BCH for fiat money or exchange BCH to BTC on many cryptocurrency exchanges. The trading pair is available on Gate.io, Binance, Poloniex, Gemini, Kukoin.
If for some reason you are not satisfied with the prospect of working with traditional crypto exchanges, you can always use the services of Letsexchange. Here BCH can be exchanged for 350+ cryptocurrencies without account registration and additional fees.
