What is Bitcoin Cash?
Since Bitcoin presented around 11 years ago, it was facing a constant problem called “scalability”. More specifically, scalability refers to the size of a block of transactions, which limited to 1MB for Bitcoin upon the creation. As a result, this limit not only causes delays in transactions processing time but also limits the number of transactions that network can process. Bitcoin Cash introduced in 2017 as a solution to this problem. It increased the number of transactions that can process by the network by increase the block size from 1MB to 8MB. In fact, it came to compete with other payment industry giants like Visa and PayPal.
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Why It created?
The first days that bitcoin created, there were not that much of transactions happening on the network. So, 1MB as a size of a block implemented to lower the risk of getting spam or DDoS-attack. After years, Bitcoin became more and more popular and the number of transactions happening on the network increased rapidly. As result, users had to wait long for their transactions to verify. It was in May 2017 that the situation got out of hand and some users reported having to wait up to 4 days for a transaction to get confirmed.
Although users had a chance to pay higher amount of transaction fee to speed up the confirmation process, it couldn’t solve the problem because it makes Bitcoin useless for small amount of transactions. Imagine that you want to use Bitcoin as a payment option to buy a cup of coffee for only $3, but you have to pay $15 as a transaction fee.
At this point Bitcoin had two options: Bitcoin Unlimited and Segregated Witness (SegWit)
Bitcoin Unlimited scrap the block size altogether. Although many miners supported this idea, a lot of developers were against it. They believe that the implementation of this idea will lead to small miners going out of business. As result, the massive mining corporations remain on the network and it causes centralization which is against Bitcoin purpose.
A segregated witness idea proposed as a solution to store some of the information and data in separate files outside of the blockchain. Although this solution could free up a lot of storage space and more transactions could fit in a block, many people believe it just make everything more complicated in compare to Bitcoin Unlimited.
Bitcoin Cash official announcement
The first implementation of Bitcoin Cash protocol called Bitcoin ABC. It announced by Amaury Sechet (former engineer at Facebook) in a Bitcoin conference in Arnhem, Netherland. Sechet and his team of developers announced that hard fork will take place on Aug. 1, 2017. In fact, they increased the block size from 1MB to 8MB and these changes required to split the network and create a new Blockchain which is separated from the original bitcoin network.
A lot of investors adopted the new cryptocurrency and Bitcoin cash became popular quickly. By the first day of its existence it could raise capital and become the third cryptocurrency behind bitcoin and Ethereum.