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Bitcoin Cash (BCH) is a cryptocurrency that emerged as a hard fork of Bitcoin in August 2017. This split was the result of a disagreement among Bitcoin miners, developers, investors, and users over the SegWit2x consensus, leading to the creation of a separate blockchain with BCH as its native currency. The primary aim behind Bitcoin Cash was to address the scalability issues faced by Bitcoin, primarily related to its limited transaction capacity due to the 1 MB block size. To overcome this, Bitcoin Cash initially increased its block size to 8 MB and later to 32 MB, though in practice, blocks rarely exceed 1 MB.
Bitcoin Cash, like Bitcoin, operates as a decentralized peer-to-peer (P2P) electronic cash system, independent of central authorities. It shares many features with Bitcoin, including a fixed supply cap of 21 million coins, transaction immutability, and pseudonymity. Transactions on the Bitcoin Cash network are recorded in a public ledger, the blockchain, ensuring transparency and security against fraud.
Regarding its technical aspects, Bitcoin Cash does not support Segregated Witness (SegWit) or the Lightning Network, which were proposed by some in the Bitcoin community to enhance transaction efficiency. Instead, it focuses on increased block size to handle more transactions. The network also adjusts its mining difficulty more swiftly compared to Bitcoin, potentially offering advantages to miners.
As of mid-October 2023, there are approximately 17.12 million BCH-holding addresses, with the top 10 addresses holding close to 2.3 million BCH. This distribution occurred when Bitcoin Cash separated from Bitcoin, with nearly 16.5 million BCH coins distributed among existing BTC holders at a 1:1 ratio. The issuance of BCH follows a predictable schedule similar to Bitcoin, with halving events occurring approximately every four years, influencing the token's perceived scarcity and value.
BCH functions primarily as a digital currency for seamless P2P transactions, offering swift and cost-effective exchanges as a viable alternative to conventional fiat currencies for everyday transactions. Its governance involves a community of developers and stakeholders participating in decision-making processes, with changes to the network and protocol subject to community consensus.
As of July 2023, Bitcoin Cash has a market capitalization of about $4.63 billion, with a market price of $237.87. It employs a proof-of-work (PoW) protocol and the SHA-256 algorithm. Despite challenges and technical issues such as block time delays and security concerns, Bitcoin Cash has been recognized as a significant investment tool and is listed on various digital currency exchanges.
Bitcoin Cash (BCH) belongs to the Layer 1 sector of blockchain technology. The Layer 1 sector refers to the underlying protocol layer of a blockchain, which defines the core functionalities and consensus mechanisms of the network.
Ethereum remains the most prominent Layer 1 network, particularly in terms of decentralized applications (dApps) and cryptocurrency support. Despite this, Ethereum faces challenges such as slow transaction speeds and high fees, leading to interest in alternative Layer 1 blockchains.
Newer Layer 1 protocols have emerged, offering more sophisticated capabilities and addressing Ethereum's scalability issues. These platforms are often highly customized to support specific use cases, contributing to a diverse ecosystem of specialized blockchains tailored for different industries.
Innovations like Proof-of-Stake (PoS) and sharding have been implemented by networks like Ethereum 2.0 and Polkadot, enhancing scalability and reducing energy consumption.
The focus on decentralization remains a key aspect, with Layer 1 blockchains distributing control across a vast network of nodes, enhancing security, censorship resistance, and fostering a democratic ecosystem.
Ethereum's transition to PoS and the Shanghai upgrade, including advancements like EIP-4844 for proto-danksharding, continue to position Ethereum as a leading Layer 1 blockchain.
Continued growth in Layer 1 networks is expected, with a shift towards more nuanced, personalized, and commercial use cases, especially in areas like NFTs.
Regulatory developments are likely to play a significant role in shaping the future of the sector, with increased regulatory attention and potential new frameworks affecting how Layer 1 blockchains and their associated assets are treated.
Innovations in staking and the development of new protocols and applications are expected to continue, further enhancing the utility and adoption of Layer 1 networks.
The sector is likely to see diversification with the rise of industry-specific chains, such as Astar Network and Camino Network, which are tailored to particular industries and use cases.
Bitcoin Cash (BCH) has specific tokenomics that define its creation, allocation, and supply schedule:
Creation of BCH: BCH tokens are created through a process called mining. This is akin to Bitcoin, where miners solve complex mathematical problems to validate transactions and add new blocks to the blockchain. In return for their computational work, miners are rewarded with BCH coins.
Maximum Supply: The maximum supply of Bitcoin Cash is capped at 21 million coins. This is a hard limit, meaning that no more than 21 million BCH can ever be created. As of the last update, around 18 million BCH were already in circulation.
Initial Issuance and Halving: Initially, the block reward for mining a new BCH block was set at 50 BCH per block. This reward halves every 210,000 blocks, a mechanism similar to Bitcoin, designed to control inflation and extend the distribution of BCH over time. The first halving for Bitcoin Cash reduced the block reward to 25 BCH, and it continued to decrease with subsequent halvings. The current block reward is 6.25 BCH per block.
Long-Term Supply Schedule: The supply of Bitcoin Cash is designed to approach, but never reach, 21 million coins. It is expected that issuance will permanently halt around the year 2140, at approximately 20,999,999.9769 BCH, due to the halving events and the nature of the issuance schedule.
Token Distribution at Fork: When Bitcoin Cash was created as a fork from Bitcoin on August 1st, 2017, the existing Bitcoin holders received an equivalent amount of BCH. This means that all Bitcoin addresses holding a balance at the time of the fork automatically received an equivalent balance in Bitcoin Cash. This was a one-time event specific to the creation of Bitcoin Cash as a new chain.
Distribution Policy: The distribution of BCH following the fork was subject to specific policies on different platforms. For example, on the Bitfinex platform, all BTC wallet balances received BCH. However, margin longs in BTC/USD and margin shorts in other BTC pairs did not receive BCH. Similarly, margin shorts in BTC/USD and margin longs in other BTC pairs did not pay BCH. BTC lenders also received BCH. The distribution was managed through a socialized distribution coefficient, calculated based on the net amount of BTC committed in margin positions at the time of the fork.
Key Individuals and Organizations: Bitcoin Cash was initiated by a group of Bitcoin activists, developers, and China-based miners. This group was dissatisfied with Bitcoin's proposed SegWit improvement plans and favored a block size increase to better serve its function as a transactional currency. Prominent figures in this movement include entrepreneur Roger Ver and Jihan Wu of Bitmain. Roger Ver, in particular, has been a notable advocate of Bitcoin Cash and has played a significant role in its promotion and adoption as the CEO of Bitcoin.com. Another key player in the Bitcoin Cash community is Bitcoin ABC (Adjustable Blocksize Cap), a full node implementation team that has contributed significantly to the protocol development of BCH.
Community-Led Development: The development of Bitcoin Cash is characterized by a decentralized and community-driven approach, where a diverse group of developers around the world collaboratively contribute to its growth and innovation.
Funding and Support: The Bitcoin Cash Fund is a community-driven organization that provides financial support to projects aiming to boost the BCH ecosystem. This includes funding for innovative ideas and initiatives that contribute to the growth of Bitcoin Cash. Another example of a project receiving funding is Bitcoin Verde, a BCH full-node implementation founded by Josh Green of Software Verde. It received funding through platforms like Flipstarter, demonstrating a community-driven approach to funding BCH infrastructure and projects. In 2019, Bitcoin Unlimited provided funding for the Bitcoin Cash Protocol project, a collaborative effort within the BCH community led by Josh Green.
Creation and Initial Fork (August 1, 2017): Bitcoin Cash was created as a result of a hard fork from Bitcoin. The primary reason for the fork was a disagreement within the Bitcoin community over how to scale the network. Bitcoin Cash increased the block size limit to 8 MB, in contrast to Bitcoin's 1 MB, to allow for more transactions per block.
Difficulty Adjustment Algorithm Update (November 13, 2017): To stabilize the mining difficulty fluctuation caused by the initial hard fork, Bitcoin Cash implemented a new Difficulty Adjustment Algorithm (DAA). This change aimed to ensure a consistent block time, which is crucial for transaction processing speed and network stability.
Increased Block Size to 32 MB (May 15, 2018): Another hard fork took place to increase the block size from 8 MB to 32 MB. This change was made to further enhance the network's capacity for handling transactions. Notably, this update was not in response to current demand, as blocks were not being filled to capacity, but rather a proactive measure to signal continued commitment to scalability.
Canonical Transaction Ordering Rule (CTOR) (November 15, 2018): Implemented as part of a hard fork, CTOR changed the way transactions are listed in a block. Instead of the previous topological ordering, transactions were now ordered canonically, or sequentially. This was intended to improve block propagation times and scalability.
Bitcoin Cash Split into BCH and BSV (November 15, 2018): On the same day as the CTOR update, a contentious hard fork led to a split in the Bitcoin Cash community, resulting in the creation of Bitcoin SV (BSV). This split was primarily due to disagreements over the CTOR and other proposed updates.
Addition of Schnorr Signatures (May 15, 2019): Bitcoin Cash added Schnorr signatures to its protocol, a cryptographic signature scheme known for its simplicity and efficiency. This update aimed to enhance privacy and scalability features on the blockchain.
Infrastructure Funding Proposal (IFP) Controversy (2020): A significant controversy arose within the Bitcoin Cash community over a proposed Infrastructure Funding Proposal (IFP). The IFP suggested diverting a portion of block rewards to a fund for financing protocol development. This proposal faced substantial opposition and was eventually dropped.
Bitcoin Cash Node (BCHN) Emergence (2020): In response to the IFP controversy, a new implementation of Bitcoin Cash called Bitcoin Cash Node (BCHN) emerged. BCHN rejected the IFP, and over time, it gained significant support from miners and users, eventually overtaking Bitcoin ABC (the original Bitcoin Cash implementation) in terms of hash rate and community support.
Bitcoin ABC Forks to Create eCash (XEC) (November 15, 2020): Due to disagreements primarily around the IFP, Bitcoin ABC, the original implementation of Bitcoin Cash, forked to create a new cryptocurrency called eCash (XEC).
The progress and future roadmap of Bitcoin Cash (BCH) reflect its commitment to improving scalability, user experience, and functionality. Here are the key aspects:
Scaling the Blockchain: A cornerstone of BCH's development was increasing block size, moving from 1 MB (Bitcoin's limit) to 8 MB after the 2017 fork and further to 32 MB in 2018. This decision, though not driven by throughput issues, signaled a commitment to scaling. The long-term goal is vast scalability, potentially up to 1 TB blocks, enabling over 5 million transactions per second.
Optimizing for Full Nodes: Concerns about mining and node centralization due to larger blocks have been addressed through initiatives like canonical transaction ordering (CTOR) for faster validation and propagation of larger blocks. Efforts towards parallelization, including the Graphene protocol, are also underway to alleviate pressure from big blocks.
Extensible Protocol: BCH has enhanced its core protocol with significant extensibility. The addition of opcodes like OP_CHECKDATASIG and OP_CHECKDATASIGVERIFY bridges the BCH blockchain with external data, expanding its functionality for a broader range of events and value transfers. This pushes BCH into the realm of platform protocols, allowing for advanced smart contracting and interoperability with non-blockchain systems.
Convenience and User Experience: Plans to enhance convenience include making zero-confirmation payments near-instant through a secondary consensus mechanism called Avalanche, working alongside the existing Proof of Work system. This aims to secure transactions within three seconds, addressing the limitations of BCH's ten-minute block time for fast, secure payments.
Privacy and Fungibility: While privacy and fungibility are not primary focuses, BCH has integrated Schnorr Signatures, which allow smart contract data to appear similar to regular transactions, improving privacy but not to the level of full fungibility. No plans for major protocol-level privacy upgrades are currently in place, mainly due to scalability concerns.
Scalability Enhancements: Future scalability plans include sharding and layer-two protocols to manage increased transaction volumes, optimizing block size, and transaction throughput.
Merchant Adoption Initiatives: BCH is working towards broader adoption by partnering with merchants to facilitate its use as a payment method for goods and services.
User Experience Refinements: Enhancements in the user interface are prioritized to make BCH more accessible, especially for those new to cryptocurrencies.
Smart Contracts Integration: BCH is exploring the integration of smart contracts, which could bring it closer to blockchain platforms like Ethereum, enabling decentralized applications and programmable money.
Cross-Chain Compatibility: Efforts are underway to achieve cross-chain compatibility, which would enhance liquidity and open new opportunities in decentralized finance (DeFi) on the BCH platform.
Enhanced Privacy Features: BCH is considering integrating privacy-focused technologies to enable anonymous transactions, enhancing security and confidentiality in digital exchanges.
Bitcoin Insider:
Bitcoin Insider on Scaling the Blockchain:
Bitcoin Insider on Optimizing for Full Nodes:
Bitcoin Insider on Extensible Protocol :
Bitcoin Insider on Convenience and User Experience:
Bitcoin Insider on Privacy & Fungibility :
TechBullion on Bitcoin Cash’s Future:
Bitcoin Cash (BCH) currently exhibits a mixed outlook in terms of valuation and future prospects, as indicated by various sources and expert analyses:
Price: Approximately $227.
Market Cap: Around $5.115 billion.
Trading Volume: Approximately $441 million.
All-time High: $4,355.62.
All-time Low: $75.08.
Overall Sentiment: The overall sentiment for Bitcoin Cash as of mid-2023 is negative, with mixed predictions from different analysts.
Short-Term Predictions: Some forecasts suggest a potential price increase to $233.99 by December 2023, with a neutral to bullish market sentiment. However, other analyses predict a decline in value in the short term.
Long-Term Predictions: The long-term outlook varies greatly among analysts. WalletInvestor doesn't forecast a long-term increase, predicting a drop to $71.713 by the end of 2025 and $62.898 by 2028. In contrast, DigitalCoinPrice is more optimistic, forecasting that Bitcoin Cash could trade above $500 in 2023, stabilize at around $814 in 2025, and reach close to $989 by 2027. Coinpedia predicts that Bitcoin Cash may reach a potential high of around $435 by the end of 2023, and possibly up to $2,090 by the end of 2030.
Technical Issues: Bitcoin Cash faces technical challenges, such as a block time of nearly 10 minutes and potential security issues. The network’s complexity is increasing, and miners have to spend more resources to work effectively, which could impact transaction rates and security.
Dependence on Key Supporters: BCH's future is also influenced by its dependence on entities like Bitmain. Changes in support from such entities could significantly impact BCH's market position.
Market Dynamics: The cryptocurrency market is highly volatile and influenced by various factors, including regulatory decisions, technological advancements, and market sentiments. These factors can significantly impact the price and prospects of Bitcoin Cash.
arantees and should be considered alongside other market research and personal risk assessment.