Bitcoin Cash, also referred to as BCH, is a hard fork of Bitcoin. A hard fork is the result of the massive software update that made previously invalid transactions valid. While Bitcoin (BTC) is a store of value cryptocurrency, BCH is a transactional currency. 

BCH was created in August 2017 because users were divided on implementing Bitcoin Improvement Proposal. The Bitcoin Improvement Proposal sought to introduce SegWit in the BTC protocol to increase the processing speed. In this article, we will try to break down Bitcoin Cash processes to help you understand how it works.

1

The Bitcoin Cash Network

The Bitcoin Cash network differs from the Bitcoin network to a great extent. Bitcoin Cash sought to establish itself as a transactional currency. To do that, it had to increase the processing speed that the network offered. Bitcoin has a processing speed of 4.43 transactions per second. But with Bitcoin Cash, the processing speed increases to 8 times the BTC network.

The BCH network uses larger blocks, measuring up to 32 MB. Bitcoin allowed blocks of 1 MB only. This increase in the size of the block increases the processing speed. But it also increases the risk of a security breach.

2

Maintaining the Blockchain

The Bitcoin Cash network is a blockchain that follows the Proof of Work (PoW) consensus mechanism. So, let’s focus on the two keywords: blockchain and Proof of Work.

Blockchain is a system where information regarding transactions is recorded as blocks. These blocks link together to form chains accessible through peer nodes. The miners operate these nodes.

Proof of Work is a consensus mechanism where miners have to give proof of their work to win a reward.

Wherever a new block is created, miners have to verify the data on the block. To do that, they have to solve complex math problems. The one who cracks the problems the fastest receives the miner’s reward of 6.25 BCH.

3

Mining Bitcoin Cash

Mining Bitcoin Cash refers to bringing in more tokens in the supply chain. It is done by solving complicated maths problems to update information on the blockchain. Every time miners create a block and verify the information on it, they are rewarded. It helps bring more BCH tokens into the market.

To mine Bitcoin Cash, people need to have a powerful infrastructure to mine the cryptocurrency. In addition, cryptocurrency mining affects the battery life of the devices, so it is best to get a device dedicated to BCH mining. Otherwise, it might harm the appliance you are working on.

Bitcoin Cash mining can be done with the help of mining rigs, which are powerful computers dedicated to cryptocurrency mining. They help you crack the mathematical problem required to verify the information on the block.

The most popular mining rigs are ASIC units because they are application-oriented. You could also use CPU or GPU, but they are nearly not as efficient as ASICs. In addition, the software that you use should be compatible with the hardware.

4

Bitcoin Cash Value

Bitcoin Cash follows the same monetary policy as Bitcoin. So, Bitcoin Cash, too, is a deflationary cryptocurrency. That means that as time progresses, the buying power of Bitcoin Cash keeps on increasing.

The reason behind this is simple. The supply of Bitcoin Cash is limited. The number of Bitcoin Cash tokens is fixed, so no more tokens will be created in the future.

Like other cryptocurrencies, BCH value is volatile. But it has maintained a high price throughout. It is a transaction currency, so people want to have more of it. The increase in demand leads to a rise in price too.

The highest Bitcoin Cash value was in December 2017, when it reached $2442. The lowest Bitcoin Cash value dropped to $445 in September 2021.

FAQ

How is Bitcoin Cash different from Bitcoin?

Bitcoin Cash is different from Bitcoin because it is a hard fork of BTC. Although the source code is the same, the software is significantly different.

When was Bitcoin Cash launched?

Bitcoin Cash was launched in 2017 because users had contradictory opinions on implementing the Bitcoin Improvement Proposal.

What is a hard fork?

A hard fork changes the source code that alters the software entirely. So much so that those previous transactions might be rendered invalid by the new working rules.

What is PoW?

PoW stands for Proof of Work. It is a consensus mechanism where users have to solve a complicated maths problem to add information to the blockchain.

What does one need to be able to mine Bitcoin Cash?

To mine Bitcoin Cash, one needs to have a robust set-up to do the mining, a mining rig and a crypto wallet to collect the reward. 

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