Bitcoin Cash (BCH) is a virtual currency which launched in August 2017, created from a hard fork of Bitcoin (BTC).
Just like Bitcoin, the issuance limit of Bitcoin Cash is set at 21,000,000 BCH.
Also similar to Bitcoin, the Bitcoin Cash halving is set to happen once every 4 years.
BCH was developed to provide a short-term solution to the Bitcoin scalability problem by simply enlarging the size the of the blocks.
The BCH community has introduced some transactions which are yet to be verified and recorded on the blockchain network.
These are called zero confirmation transactions.
Features of Bitcoin Cash
Solving scalability problems
To understand the features of Bitcoin Cash properly, we need to know the reason for the hard fork from Bitcoin.
Each block on the Bitcoin blockchain contains a maximum of 1 MB of data. It means that the block size of Bitcoin is 1 megabyte.
In other words, the number of transactions that can fit into each block is limited.
As a result, if the transaction volume increases, the block size reaches the upper limit and new transactions cannot fit into the block.
When that happens, several problems crop up such as declined remittance requests, remittance delays, and increases in transaction fees. These problems are called scalability problems.
There are two methods which roughly solve this scalability problem.
The first method is the Segregated Witness (Segwit) method. It is the process by which the block size limit on a blockchain is increased by removing the signature data from Bitcoin transactions.
When certain parts of a transaction are removed, this frees up space or capacity to add more transactions to the chain.
However, since SegWit does not support ASICBoost, some people do not favor Bitcoin Cash. ASICBoost helps to improve the Bitcoin mining calculation speed.
The second method increases the block size to 1 MB or more. Major miners support this method.
As a result, Bitcoin Cash was born as a solution to the problem of Bitcoin block size limitation, thus allowing more transactions to be processed by increasing the size of the blocks.
While the block size limit of Bitcoin is 1 MB, the block size limit of BCH is 32 MB.
Mining difficulty is adjusted each block
Apart from the block size, BCH is different from Bitcoin in other aspects as well such as the mining difficulty adjustment.
Since the average time for mining a Bitcoin block is 10 minutes, the difficulty level is adjusted every two weeks (once every 2016 blocks).
On the other hand, Bitcoin Cash adopts a system adjusting the mining difficulty of each block in accordance with the daily hash rate (144 blocks).
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