What is Bitcoin Cash?
HISTORY OF BITCOIN CASH
Bitcoin Cash is not Bitcoin. Although, its history is the same as that of Bitcoin, since on August 1, 2017, Bitcoin Cash became the first direct fork of Bitcoin. This means that the original code of the first blockchain (blockchain) and its respective transactions were cloned to some extent (specifically, up to block number 478,558). From this point a new blockchain was created with different rules and therefore a new cryptocurrency apart from Bitcoin.
The proposed changes hoped to solve some problems that Bitcoin, by design, could not overcome. Some of these problems are:
1- Blocks of limited size: Bitcoin is limited in size to 1 MB per block, which is deficient in the eyes of those who develop Bitcoin Cash. To overcome this problem, they decided that it would be best to make a hard fork and limit the size of each block to 8 MB. With this change, they hope to include more transactions per block and improve scalability.
2- High transaction fees: Due to the low scalability of Bitcoin, there are situations in which transaction fees are very high. From the point of view of the Bitcoin Cash developers this threatens against massification and against the use of micropayments. For this other reason, they promoted the hard fork in order to improve this problem.
Both situations are very well known in Bitcoin and there are many proposals to improve it, but unfortunately, all were rejected. This is due to the deep and incompatible changes that originate in the chain of blocks and that would cause a hard fork of Bitcoin, which its Core Team and the community did not want.
BITCOIN CASH ECONOMY
Similar to Bitcoin, you can use Bitcoin Cash as a form of payment. But because Bitcoin Cash is relatively new, it has not become very established and using Bitcoin Cash as a form of payment is not very common. Even so, there are some virtual stores that accept cryptocurrencies such as Bitcoin Cash. They usually use a service that automatically transfers cryptocurrencies in currencies such as euros or dollars. In this case, it is the first step in getting the cryptocurrency accepted as a real payment method.
There are also some charities that accept Bitcoin Cash as donations. For example, there is EatBCH, it is a project that fights against hunger and only accepts Bitcoin Cash due to the speed of transactions and low transaction fees.
HOW BITCOIN CASH WORKS
How does it Work
Bitcoin Cash uses the same underlying blockchain technology as Bitcoin. This decentralized network consists of nodes that have a complete copy of the Bitcoin Cash transaction history. The nodes fulfill the function of reviewing each transaction and verifying its legitimacy. When Bitcoin Cash is sent, the nodes verify if the issuer has enough Bitcoin Cash to authorize the transaction.
When a node finishes checking the transaction, only at this point will the operation be collected in a block by a miner. As the blocks cannot be removed in any way from the chain, this is an extremely important process. Every miner is a node, but not necessarily every node is a miner.
To ensure that only honest entities are capable of creating a block full of transactions, creating one costs an enormous amount of computing power. It is almost impossible to achieve falsification of data, since you would need to have more than 50 percent of the total computing power.
A Bitcoin Cash address is a form of unique identification for each user that serves to be able to exchange (send or receive) cryptocurrencies quickly and easily.
In the world of cryptocurrencies, the address works in the same way as in the traditional financial system, whether it is to send or receive money transfers. Which is to say, it works like a kind of bank account.
Bitcoin Cash is designed to be a payment system. This means that it is possible to accept Bitcoin Cash when goods or services are provided. The speed of the transaction is a very big advantage since if someone pays in Bitcoin Cash, you will receive it in your digital wallet instantly.
How is it Obtained?
Before starting to mine we have to take into account if we want to do it on our own or in a mining pool. Next I will detail how each way works.
A mining pool is a group of Bitcoin Cash miners who use combined computational power to increase the chances of solving a puzzle. In a pool, your mining rig will receive smaller and easier-to-solve algorithms, and thanks to all the combined work you will see the chances of the pool to solve the largest algorithm and thus receive the reward. The moment a pool receives a reward, it is distributed among all participants, based on the amount of processing power that was contributed.
On the other hand, if on your own account you manage to extract a block of transactions, you will receive the full reward of 12.5 BCH all for yourself. But, it has a problem, and that problem is that unless you have a very powerful mining rig, which requires enormous amounts of electricity to operate it, you will not have any chance of successfully sealing a block. Therefore most miners choose to mine collectively in a pool.
In a similar way to Bitcoin, each transaction is registered in the chain of blocks (blockchain), in this way it allows to investigate the history of a cryptocurrency in order to avoid theft, false copies or undo transactions.