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Crypto Classroom Lesson #4: Bitcoin Cash (BCH)


Background

Bitcoin Cash is a cryptocurrency hard forked from Bitcoin on 1st August 2017, with the aim to speed up transaction time and cost.

Towards the end of 2017, Bitcoin transactions reached an all-time high and its 1MB block size were a concern for many users. Unconfirmed transactions started to pile up and increased the transaction time up to a few days. Users had to pay a higher transaction fee  to gain priority. Two solutions were brought up to solve this problem: Hard fork (increasing block size) and Soft fork (SegWit).

Due to disagreement between the two solutions, part of the community decided to hard fork the network. The hard fork split the network into a new blockchain, i.e. Bitcoin Cash.

 

What is a hard fork

A hard fork occurs when a new set of consensus rules are introduced to the network. It requires network participants to update to the latest version to continue to verify and validate new blocks on the new blockchain. Also, new blocks will no longer be compatible with the old chain.

When there is disagreement between community stakeholders on the underlying protocol (i.e. some refuse to follow the new consensus rules) a chain split will occur. Both chains will have identical transaction history prior to the fork but transactions on the chain will be separated independently after the fork.

 

Initial Features (Aug 1, 2017)

– Block size: 8MB

– Average block time: 10mins.

– Consensus algorithm: Proof-of-work

– Supply limit: 21,000,000 BTC

– Cryptographic Algorithm: SHA-256

 

Latest fork

On 15th November 2018, a hard fork on the BCH network caused a chain split into BCHABC (Bitcoin Cash ABC) and BCHSV (Bitcoin Cash Satoshi Vision). The below table shows a summary of both chains:

Written by Peter Chan
Trader @Genesis Block
For any queries please contact [email protected]