Bitcoin cash price
With all of the action surrounding the recent hard forks, there is a lot of attention being paid to the price of Bitcoin Cash.
Bitcoin cash itself was created as a hard fork of bitcoin on August 1, 2017. On November 15, 2018, bitcoin cash split again, resulting in Bitcoin Cash ABC and Bitcoin SV.
While the 2017 hard fork that created Bitcoin Cash resulted in new value creation, Bitcoin Cash reached an all-time high price of 3,785.82 on December 20, 2017, it’s still unclear what the impact of the November 2018 hard fork will be on the long-term price of Bitcoin Cash.
What is Bitcoin Cash?
Bitcoin Cash was created as a hard fork from the original bitcoin blockchain. The hard fork was the result of a contentious split in the bitcoin community following a long-standing debate about whether or not to increase bitcoin’s block size.
Proponents of increasing the block size (a new block on the bitcoin network is confirmed every ten minutes and contains transaction size) say that it would help bitcoin scale. At the time of the bitcoin cash hard fork, bitcoin’s block size was one megabyte, and the people proposing bitcoin cash wanted to see the block size increased to eight megabytes.
The goal of increasing the block size was to give bitcoin the ability to confirm more transactions per block, to speed up network times and reduce transaction fees.
Big block advocates say that cheaper and faster transactions are needed to keep Bitcoin aligned with the original vision of Bitcoin as a system of peer-to-peer digital cash. By increasing the block sizes, more transactions can be processed per second, and transactions become cheaper because the ability to conduct more transactions decreases the need for miners fees.
With a restricted blocksize, as network traffic increased, Bitcoin miners (who are responsible for validating transactions and creating blocks, which are then put together into the blockchain) could charge greater fees for their services, and prioritize transactions willing to pay greater fees.
The combination of slow transaction times (at one MB, Bitcoin’s blockchain could only handle about seven transactions per second) and the increasing fees led to a scaling bottleneck.
However, advocates of keeping the block size small said that increasing the block size could potentially lead to increased centralization. Bigger blocks require more computation to validate, which means that miners would likely need more complex and expensive equipment.
In the long run, consolidating mining in the hands of companies or large investors that could afford to purchase the most advanced equipment could lead to centralization. If there are only a few mining interests then they could theoretically start dictating the rules that the blockchain would follow, which would be counter to the whole reason bitcoin was created in the first place.
Instead of advocating for increased block size, small block proponents are looking for other solutions to deal with potential bottlenecks, such as Segregated Witness, which reconfigures the set-up of bitcoin transactions and makes it possible to add layer two solutions, such as Lightning Networks, to settle some transactions off of the blockchain but still maintain the chain’s integrity.
While the bitcoin cash did not fully solve the scaling debate, it did allow the two projects to continue and pursue different ideas about the best way to build the future of crypto assets.
How Bitcoin Cash works
Bitcoin Cash works like Bitcoin in that the network is maintained by a permissionless and distributed proof-of-work system. Miners are responsible for validating transactions on the blockchain, while nodes contain a copy of all of the transactions on the blockchain. This two-part system of miners and nodes helps ensure the accuracy and security of the underlying network by providing checks and balances. (Nodes, for example, can reject blocks that are not properly validated.)
Besides general governance, Bitcoin Cash and Bitcoin also share general economic principles. Both have a finite supply of 21 million coins, which will be distributed on a pre-determined schedule. As the supply shrinks, mining will become more difficult.
Bitcoin Cash use cases
Bitcoin Cash was created and is marketed as a faster and cheaper form of Bitcoin. The goal is to have Bitcoin Cash compete with other forms of digital payment. Bitcoin Cash is accepted as a form of payment at some merchants, but the overall demand has not kept pace with the original expectations.
Bitcoin Cash has a significantly different market cap from Bitcoin, and the Bitcoin Cash price appears correlated to the price of bitcoin (as are most other cryptoassets) so when the price of bitcoin goes up, so does the price of Bitcoin Cash.