What is Bitcoin Cash and How Does it Work


It has been 12 years since the first cryptocurrency was introduced into the digital space. A cryptocurrency is a decentralized form of digital cash that permits individuals to conduct transactions without the need for third parties such as banks or governments.

Satoshi Nakamoto stated in his whitepaper that what was needed was “an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party”.

In recent years, more and more cryptocurrencies have come onto the market. One among them is Bitcoin Cash. Beginners regularly mistake Bitcoin Cash for Bitcoin in light of the very fact that they're similar in name only. So what's Bitcoin Cash?
Bitcoin Cash

What is Bitcoin Cash?

Bitcoin Cash was created in 2017 and is a hard fork of Bitcoin. A bit like Bitcoin, Bitcoin Cash is a decentralized peer-to-peer network encryption currency. It has all of the features of its big brother, Bitcoin, but the transaction speed is quicker.

Bitcoin Cash was created to tackle the problems of the Bitcoin blockchain. Since Bitcoin is the hottest cryptocurrency in the world, there are many transactions on the Bitcoin network. With every transaction, users complain about the transaction speed and the high transaction fees. If a transaction takes minutes or maybe hours to process, how can investors get interested in Bitcoin? Or, if transaction fees are high, how will retailers and micro-businesses use Bitcoin for transactions?

At the moment, there are many alternative currencies out there that offer faster transactions and lower transaction fees, like Ethereum and lots of other currencies. Concerned about the longer-term scalability of cryptocurrencies, few miners decided to make Bitcoin Cash unravel Bitcoin's limitations.

Although it's been four years since Bitcoin Cash was created, few people and newbies understand how the blockchain network works. Let's discuss how Bitcoin Cash works and the way it is often used for digital transactions.

How Does it Work?

Bitcoin Cash works equivalently as Bitcoin. Both Bitcoin and Bitcoin Cash have a hard cap of 21 million coins. Both protocols have nodes to verify transactions and use Proof-of-Work (PoW) consensus algorithms. You want to know what makes Bitcoin Cash different from Bitcoin, right? Well the similarities between them are technical.

Compared to Bitcoin, Bitcoin Cash has quicker transaction speed and lower transaction fees. With Bitcoin Cash, micro-businesses and retailers don't have to stress over high transaction fees and slow transactions. You don't have to wait a few minutes or hours just because you decided to buy morning coffee with Bitcoin.

One issue with Bitcoin Cash is that fewer individuals use it in everyday exchanges. it's yet to be embraced as a daily means of payment. Over time, with increasing awareness and further improvements, Bitcoin Cash will soon become the forerunner in digital currency transactions.

Bitcoin Cash also supports applications like CashShuffle and CashFusion. Bitcoin Cash uses these two applications to make payments easier, faster, and secure.

CashShuffle is a decentralized coin mixing protocol that will mix your Bitcoin Cash with other participants within the Bitcoin Cash network. CashShuffle is meant to guard your business and your funds. With CashShuffle, your transactions are private and can't be easily tracked. Many dollars have been shuffled since its inception, making CashShuffle one of the most popular applications on the Bitcoin Cash platform. However, shuffling coins requires a trusted third party to function. Quite ironic considering crypto is supposed to be decentralized and autonomous.

CashFusion is another application designed for Bitcoin Cash. The protocol allows anyone to make multi-party transactions with other participants within the network. A bit like CashShuffle, your data and transactions are private and transactions can't be easily tracked.

Unlike CashShuffle, which uses the coin-mixing method, CashFusion aggregates your funds with funds from other CashFusion users into one large transaction. Then your Bitcoin Cash (BCH) is sent back to your wallet, except, in this case, your transaction has been mixed up with other transactions, making it difficult for anyone to trace your transaction.

Pros and Cons

One advantage of using BCH is that the convention solves Bitcoin's scalability problem. Bitcoin transactions take an extended time. Bitcoin's block size is restricted to 1MB. Bitcoin Cash solved this problem by increasing the block size to 8MB and in some cases to 32MB. Expanding the block size means more transactions are often completed per block. With Bitcoin, 1,000 to 1,500 transactions are often completed per block. With Bitcoin Cash, you'll complete a mean of 25,000 transactions per block.

One downside is that the protocol always has to compete with Bitcoin for popularity. A war that was lost before it even began. However, as long as there's some innovation, Bitcoin Cash is going to be widely used as a transaction medium.


The future is bright for Bitcoin Cash. In 2018, Bitcoin Cash experienced its hard fork resulting in the creation of another derivative of Bitcoin called Bitcoin SV. What the future holds will depend on how Bitcoin Cash scales its transactions on the network.

The future is bright for Bitcoin Cash. In 2018, Bitcoin Cash experienced its hard fork leading to the creation of another derivative of Bitcoin called Bitcoin SV. What the longer term holds will depend upon how Bitcoin Cash scales its transactions on the network.

Posted Using LeoFinance Beta