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Bitcoin Cash
Denominations
CodeBCH[1]
Precision10−8
Development
Implementation(s)Bitcoin Cash Node (“BCHN”)
Bitcoin Unlimited (“BU”)
Bitcoin Verde (“Verde”)
K•th
BCHD
Initial release0.1.0 / 9 January 2009 (15 years ago) (2009-01-09)
Latest releaseBCHN: 27.1.0 July 10, 2024 [2] /
Project fork ofBitcoin
Written inBCHN: C++
BU: C++
Verde: Java
K•th: C++
BCHD: Go
LicenseBCHN: MIT[3]
BU: MIT[4]
Verde: MIT[5]
K•th: MIT[6]
BCHD: ISC[7]
Ledger
Ledger start3 January 2009 (15 years ago) (2009-01-03)[8]
Split height#478559 / 1 August 2017 (7 years ago) (2017-08-01)
Split fromBitcoin
Split ratio1:1
Timestamping schemeProof-of-work (partial hash inversion)
Hash functionSHA-256
Issuance scheduleInitially BCH 50 per block, halved every 210,000 blocks
Block rewardBCH 3.125 [a]
Block time10 minutes
Block explorerblockchair.com/bitcoin-cash/blocks
Circulating supply19,767,947 [b]
Supply limit21,000,000[c]
Website
Websitebitcoincash.org[citation needed]
  1. ^ As of August 2024; halves approximately every four years.
  2. ^ As of September 2024
  3. ^ The supply will approach, but never reach, BCH 21 million. Issuance will permanently halt around 2140 at BCH 20,999,999.9769.

Bitcoin Cash is a cryptocurrency that is a fork of Bitcoin. Bitcoin Cash is a spin-off or altcoin that was created in 2017.[9][10][11] In November 2018, Bitcoin Cash split further into two cryptocurrencies: Bitcoin Cash and Bitcoin Satoshi Vision.[12]

History

Since its inception, Bitcoin users had maintained a common set of rules for the cryptocurrency.[13] On 21 July 2017, bitcoin miners locked-in a software upgrade referred to as Bitcoin Improvement Proposal (BIP) 91, which meant that the Segregated Witness (commonly referred to as SegWit) upgrade would activate at block 477,120. Segwit controversially would enable second layer solutions on Bitcoin such as the Lightning Network.[14]

A group of Bitcoin activists,[15] developers,[13] and China-based miners were unhappy with Bitcoin's proposed SegWit improvement plans meant to increase Bitcoin's capacity; these stakeholders pushed forward alternative plans which would increase the block size limit to eight megabytes through a hard fork.[16][13][17] Supporters of a block size increase were more committed to an on-chain medium of exchange function.[14]

In June 2017, hardware manufacturer Bitmain, described the would-be hard fork with the increased block size as a "contingency plan", should the Bitcoin community decide to fork implementing SegWit. The first implementation of the software was proposed under the name Bitcoin ABC at a conference that month. In July 2017, mining pool ViaBTC proposed the name Bitcoin Cash. Also in July 2017, Roger Ver and others stated they felt that adopting BIP 91 (that would later activate SegWit) favored people who wanted to treat Bitcoin as a digital investment rather than as a transactional currency.[13][17]

The Bitcoin Cash fork occurred on 1 August 2017, at block 478559.[18] Until the prior block (478558), the Bitcoin and Bitcoin Cash blockchains are identical. This means that anyone who owned one bitcoin at the time of the fork suddenly owned one unit of Bitcoin Cash.[19][20][11][21] The technical difference between Bitcoin Cash and Bitcoin (at the time of the fork) is that Bitcoin Cash allows larger blocks in its blockchain than Bitcoin which enables it to process more transactions per second.[22]

Bitcoin Cash was the first of the Bitcoin forks, wherein software-development teams modified Bitcoin's code and released coins with “Bitcoin" in their names, effectively creating "money out of thin air".[23] In relation to Bitcoin, Bitcoin Cash is characterized variously as a spin-off,[24] a strand,[25] a product of a hard fork,[26] an offshoot,[27] a clone,[16] a second version,[15] or an altcoin.

On 1 August 2017 Bitcoin Cash began trading at about $240, while Bitcoin traded at about $2,700.[20] On 20 December 2017 it reached an intraday high of $4,355.62 and then fell 88% to $519.12 on 23 August 2018.[28]

In 2018, the Bitcoin Cash maximum block size was raised from 8MB to 32MB[29][30][31].

In 2018 Bitcoin Core developer Cory Fields found a bug in the Bitcoin ABC software that would have allowed an attacker to create a block causing a chain split. Fields notified the development team about it, and the bug was fixed.[32]

As of 2024, over 40 major businesses accept Bitcoin Cash in Antigua and Barbuda.[33]

Regulations

US Regulators "have long admitted" that Bitcoin Cash should be supervised as a commodity and not under the jurisdiction of the SEC,[34] leading to companies seeing little regulatory risk with the cryptocurrency.[35]

In 2022, Colorado began accepting Bitcoin, Bitcoin Cash, Ethereum, and Litecoin for state taxes and fee payments.[36]

New York's Legislature introduced a bill that would establish "that state agencies are allowed to accept cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and Bitcoin Cash as payment."[37] The bill is currently in the assembly committee.[38]

Gary Gensler, the current chairperson of the SEC, stated in 2018 that Bitcoin Cash "appear to trigger the Howey Test."[39] Gensler also stated in a 2018 speech “over 70% of the crypto market is Bitcoin, Ether, Litecoin, Bitcoin Cash. Why did I name those four? They’re not securities.” However, in his official capacity, Gensler nor the SEC have assumed these positions.[40]

Other currency forks

In November 2018, Bitcoin Cash experienced a contested hard fork where the project split into two cryptocurrencies: Bitcoin Cash and Bitcoin Satoshi Vision.[12]

In November 2020, there was a second contested hard fork where the leading node implementation, BitcoinABC, created BCHA (now dubbed "eCash" or "XEC").[41][42]

Controversy

In 2017 there were two factions of Bitcoin supporters: those that supported large blocks and those who preferred small blocks.[22] The Bitcoin Cash faction favored the use of its currency as a medium of exchange for commerce, while the Bitcoin-supporting faction viewed Bitcoin's primary use as that of a store of value.[22] Bitcoin Cash is sometimes also referred to as Bcash.[43] Bitcoin Cash detractors call the cryptocurrency "Bcash", "Btrash", or "a scam", while its supporters maintain that "it is the pure form of Bitcoin".[22]

Gavin Andresen, a former lead Bitcoin developer endorsed Bitcoin Cash in a tweet in November 2017.[11][44]

The anonymous @Bitcoin account on X endorsed Bitcoin Cash in 2018.[45][46][47][48] The account was later briefly suspended by Twitter, possibly related to a "flood" of reports claiming "spam, hate speech, or price pumping" and brigading by some users calling on others to report it as a "fake @Bitcoin account." It was later reinstated.[47][49]

Emin Gün Sirer, a professor at Cornell, stated that Bitcoin Cash primarily focused on everyday use (largely through "grassroots, organic," merchant onboarding/adoption) whereas Bitcoin had an "enormous focus on price, an enormous focus on the 'store of value' narrative".[22]

Trading and usage

Bitcoin Cash trades on digital currency exchanges using the Bitcoin Cash name and the BCH currency code for the cryptocurrency.[50][51][52] On 26 March 2018, OKEx removed all Bitcoin Cash trading pairs except for BCH/BTC, BCH/ETH and BCH/USDT due to "inadequate liquidity".[24] As of May 2018, daily transaction numbers for Bitcoin Cash were about one-tenth of those of bitcoin.[24] Coinbase listed Bitcoin Cash on 19 December 2017 and the Coinbase platform experienced price abnormalities that led to an insider trading investigation.[53]

As of 2018, Bitcoin Cash payments are supported by payment service providers such as BitPay.[54] Both Robinhood and Revolut added support for Bitcoin Cash.[35][55]

As of 2021, PayPal has allowed users to buy, sell, hold, and checkout with bitcoin cash, bitcoin, ethereum, and litecoin, although PayPal users were not given the ability to transfer cryptocurrency outside of PayPal's system.[56] In 2022, PayPal enabled the sending Bitcoin Cash off app to users' own wallets/outside services.[57] Venmo also began supporting the cryptocurrency.[58] In 2023, Venmo also enabled support for transferring Bitcoin Cash off platform.[57]

As of 2021, the Dallas Mavericks accept Bitcoin Cash for payments.[59]

In 2021, Grayscale filed for its Bitcoin Cash Trust (ticker: BCHG) to become SEC-reporting. As an SEC reporting fund, BCHG will act as if it were a publicly traded company, filing quarterly reports, annual reports, audited financials, and otherwise to comply with the Securities Exchange Act of 1934. Separately, Grayscale's Digital Large Cap (GDLC) fund includes Bitcoin Cash in its composition.[60]

According to a 2022 Skynova survey, 36% of cryptocurrency-accepting businesses accepted Bitcoin Cash, in comparison to Bitcoin (58%) and Ethereum (35%).[61]

On 7 March 2024, Coinbase submitted a letter to the Commodities Futures Trading Commission (CFTC) outlining its proposal for monthly cash-settled futures contracts for Bitcoin Cash. On 1 April 2024, Coinbase Derivatives announced plans to introduce futures trading for Bitcoin Cash.[62][63][64][65]

On 5 July 2024, Mt. Gox announced that it began repayments of Bitcoin and Bitcoin Cash to some of its creditors.[66]

On 10 September 2024, eToro settled with the SEC agreeing to pay fines for operating as an unregistered trading platform. As a result of this settlement, only Bitcoin, Ethereum, and Bitcoin Cash will continue to be traded on the platform.[34]

Difficulty adjustment algorithm

Bitcoin Cash uses a proof-of-work algorithm to timestamp every new block. It can be described as a partial inversion of a hash function. Bitcoin Cash targets a new block to be generated every ten minutes on average. The time needed to calculate a new block is influenced by a parameter called the mining difficulty. If the total amount of mining power increases, an increase of the mining difficulty can keep the block time roughly constant. Vice versa, if the mining power decreases, a decrease of the mining difficulty can keep the block time roughly constant.[67]

To keep the block generation time equal to ten minutes on average, Bitcoin Cash uses an algorithm adjusting the mining difficulty parameter. This algorithm is called the difficulty adjustment algorithm (DAA). Originally, both Bitcoin and Bitcoin Cash used the same difficulty adjustment algorithm, adjusting the mining difficulty parameter every 2016 blocks. Since 1 August 2017, Bitcoin Cash also used an addition to the DAA, called an Emergency Difficulty Adjustment (EDA) algorithm. EDA was used alongside the original DAA and it was designed to decrease the mining difficulty of Bitcoin Cash by 20%, if the time difference between 6 successive blocks was greater than 12 hours.[67]

EDA adjustments caused instabilities in mining difficulty of the Bitcoin Cash system, resulting in Bitcoin Cash being thousands of blocks ahead of Bitcoin. To address the problem with stability, a change of the Bitcoin Cash DAA was implemented and the EDA canceled. The change took effect on 13 November 2017. After the change, the Bitcoin Cash DAA adjusts the mining difficulty after each block. To calculate the difficulty for a new block, the Bitcoin Cash DAA uses a moving window of last 144 blocks.[67]

See also

Notes

References

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