Newcomers to the world of cryptocurrency may be surprised to learn that there is more than one cryptocurrency that calls itself Bitcoin. These include the original Bitcoin (BTC) - known to some as ‘Bitcoin Core’, in reference to the underlying blockchain code, and which trades under the ticker BTC - and others including Bitcoin Cash, Bitcoin SV, Bitcoin Gold, and Bitcoin Diamond.
These alternative coins or spin-offs were created as a result of ‘forks’, where developers could not agree on the best structural path forward for the Bitcoin network, and as a result, branched out into their own alternatives.
Bitcoin Cash was created when the original network split off in two different directions in 2017. The goal of splitting from the original coin was to create a faster blockchain where transactions were cheaper. In this post, we’ll explore why the split happened, and how Bitcoin Cash differs from BTC.
In 2017, as Bitcoin experienced an intense surge in global popularity. The increasing number of transactions across the network was slowing the system down. The blocks in Bitcoin’s blockchain had the capacity to process approximately 4.6 transactions per second, compared with Visa’s 1,700 per second. This resulted in long queues for transactions to be confirmed, especially during key periods such as price rallies. This was considered by some to be an impediment to Bitcoin’s scalability and arguably detracted from the thesis for Bitcoin as a peer-to-peer payment network.
Two competing schools of thought emerged around how this congestion problem should be addressed. Bitcoin supporters wanted to reduce the amount of data each transaction required to speed up the process and to keep each block at the level of 1 megabyte as specified in Satoshi Nakamoto’s thesis.
Bitcoin Cash proponents supported the proposal to create larger blocks that would accommodate the data in instead. These blocks, which would be eight megabytes, would enable the confirmation of eight times the number of transactions across the network per second. Bitcoin Cash proponents saw this upgrade as essential to optimizing the network and furthering its potential as a peer-to-peer payments network.
Because decentralized networks rely on consensus, the argument went on in the Bitcoin community for years. Eventually, when no consensus could be reached, all Bitcoin network participants who run the protocols on their computers were asked to choose their preferred option.
In August 2017, the ‘smallblocks’ Bitcoin supporters launched SegWit, an upgrade to the bitcoin protocol, which reduced transaction sizes. This essentially allowed a larger number of transactions to be processed within each 1 megabyte block and made its transactions 75% faster. Further upgrade plans were being discussed for a ‘lightning network’ layer which would allow for instant and feeless transactions. On the same day, BitCoin Cash launched with larger blocks. Investors were able to ‘vote’ simply by choosing which coin to stay with.
Some people consider Bitcoin a long-term investment, like gold, while others see it as an alternative to fiat currency. Bitcoin Cash is designed for those who want to use crypto as a day-to-day currency. Bitcoin remains the more established currency by some distance, and most people do not consider the two direct competitors.
Since the fork in 2017, Bitcoin Cash is a completely separate coin to Bitcoin, operating on its own blockchain. It is considered one of the leading cryptocurrencies and has generally been considered a success. Bitcoin Cash provides much faster transactions and it is generally cheaper. Many proponents argue that it operates in closer alignment with the original intention Bitcoin was created for.
In November of 2018, the Bitcoin Cash network underwent its own hard fork, with Bitcoin Cash splitting between its original protocol (referred to as ‘Bitcoin ABC’) and Bitcoin SV. The Bitcoin SV camp promoted the vision of increasing the network’s block sizes once more, with plans to continue to expand the size of each block up to a maximum of 128 MB. The Bitcoin ABC cohort elected to set a block size limit of 32MB and added a layer of smart contract-like functionality to their protocol, in the form of a Simple Ledger Protocol. Bitcoin ABC emerged following this hard fork as the most popular network, and as such is widely considered to hold the title of the ‘true Bitcoin Cash’ network. This is the coin that EQUOS is listing.
Bitcoin Cash makes peer-to-peer payments easy, so you can split a bill or pay a friend back electronically without the need for a bank. It’s a cheap way to send money abroad without incurring bank fees, and it provides online payment options for those without access to the banking system.
According to bitcoincash.org, an increasing number of online retailers, especially in Korea and Japan, accept Bitcoin Cash, and you can shop in person at more than 4,000 retailers.
You can trade Bitcoin Cash on EQUOS.io, now.
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