Introduction to Cryptocurrency: BCH, Brother of BTC
Written by the CoinEx Institution, this series of jocular and easy to understand articles will show you everything you need to know about major cryptocurrencies, making you fully prepared before jumping into crypto!
BCH, which represents Bitcoin Cash, shares some same features as its big brother Bitcoin (BTC). Both are cryptocurrencies based on decentralization, using a peer-to-peer network and consensus initiative, going open source, and with the blockchain as the underlying technology.
Now that we have BTC, what is BCH for?
To answer this question, we have to trace back to the source of BCH — BTC. Nakamoto created BTC in 2008, and he also limited the block size to 1M at that time. This restriction not only guarantees the participation of weak-performance personal computers, but also prevents the risk of attacks overloading the Bitcoin network; after all, the system was still in its infancy and was very fragile. Under the 1M limit, a block can hold up to about 2000 transactions in 10 minutes, or 7 transactions per second.
As users of BTC transactions were growing in numbers with time passing by, the 1M block size has been unable to carry the ever-increasing transaction volume. As a result, the BTC network appeared congested, transaction fees soared, and transaction packaging became time-consuming…
Such problems gave rise to the call for capacity expansion in the BTC community. Some developers, represented by the core developer Core, hoped to ease the BTC congestion by Segregated Witness + Lightning Network. The following three years has seen users argue over this issue. After all, it involved too many people and too many things, which can’t be solved in a short while.
Then came the time when community conflicts seemed to have reached deadlock, and disputes over the hard fork were getting intense. On August 1, 2017, BTC finally got a hard fork, and its little bro, BCH, was generated!
Due to the version switching, the BTC blockchain was forked into two separate blockchains. Before the fork, everyone who owned BTC was entitled to the same amount of BCH. In this way, the upper limit of the block was upgraded to 8M, and later to 32M, which solved such problems as high fees, slow confirmation, and poor practicability in the old version of the BTC system, and fulfilled BTC’s commitment to being the “peer-to-peer electronic cash”.
Since then, the Bitcoin community has been divided into two and everyone is happy.
It’s fair to say that BTC is the predecessor of BCH, but after the fork, BCH has always been considered as “BTC” in a new direction. Congestion will hardly happen in the BCH community as BCH has larger blocks and can handle more transactions, unlike BTC, which proved ineffective in processing growing transactions due to small blocks. That is also the most obvious difference between the two, making the transaction fee of BCH much lower than that of BTC.
The BCH community is theoretically different from the BTC community under the current Core team. To put it simply, there remains little connection between BCH and BTC, and BCH, separated from its predecessor, has become a brand new cryptocurrency.
BCH also has its advantages, such as decentralization, anonymity, fixed listing and smart contracts.
1. The BCH network is jointly maintained by all users. Unless the vast majority of BCH users agree to make a certain change (such as rule modifications or version upgrade), no one or organization can change or stop BCH operation.
2. Like the Internet, the BCH network is working all year round! For 24 hours a day and 365 days a year, you can transfer money to anyone around the world! Regardless of the amount, all transactions require no one’s authorization or approval.
3. BCH also does a good job in anonymity. Generally there is no way to find who owns the address.
4. Of course, BCH also has a fixed upper limit. The BCH protocol guarantees that there will never be more than 21 million BCH. Compared to the government that continuously issues currencies, depreciating everyone’s deposits, BCH has a ration of supply, and an extremely stable inventory.
5. BCH is also a programmable currency, which can also implement smart contracts on the basis of currency. Programmable economy is an obvious solution to the transparency and credibility issues in economic operation, and can also reduce social operation costs.
Today BCH is maintained by several different development teams, and its market value has ranked second in the world. More and more merchants are accepting BCH payments, and there are multiple exchanges that support BCH pricing, such as CoinEx. CoinEx is also the first one to adopt BCH pricing.
Overseas, BCH supporters include former BitcoinCore chief developers Gavin Andresen and Roger Ver (known as Bitcoin Jesus).
In China, many of BCH supporters are veterans in this field, including Wu Jihan, Founder and CEO of Bitmain, Yang Haipo, Founder of ViaBTC / CoinEx, and Jiang Zhuoer, Founder of BTC.TOP Mining Pool.
At present, the circulating market value of BCH has reached 59.1 billion. By April 2020, BCH will perform the first halving at a block height of 630,000, and the reward will be reduced by 50% to 6.25 BCH after the halving.
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