What Is Bitcoin Cash? - Myanmar Crypto Mining

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Mar 6, 2018

What Is Bitcoin Cash?

This guide will help explain the difference between the two most popular versions of Bitcoin: Bitcoin Cash ($BCH) and Bitcoin Core ($BTC).

Bitcoin.com was founded with a mission to spread peer-to-peer electronic cash to everyone in the world. Due to the recent scaling failure of the Bitcoin Core network, the BTC coin is no longer a useful form of money as fees continue to climb and transaction times slow to a crawl.

A brief overview of the two versions of Bitcoin: Core and Cash
In accordance with our original mission, Bitcoin.com is fully committed to Bitcoin Cash education and promotion. This is because Bitcoin Cash is the version of Bitcoin in which the original properties of digital money still exist. To learn more about the original goals of Bitcoin, we recommend that all newcomers read at least the first section of the Bitcoin Whitepaper.

What is Bitcoin Cash?

Bitcoin Cash (BCH) is an upgraded version of the Bitcoin Core software. It was released on August 1st, 2017.

The title page of the original Bitcoin Whitepaper by Satoshi Nakamoto, 2008
The main upgrade offered by Bitcoin Cash is an increase of the blocksize limit to 8mb. This effectively allows miners on the BCH chain to process more payments per second. This makes for faster, cheaper transactions and a much smoother user experience.

Why was Bitcoin Cash Created?

Bitcoin Cash was created to bring back the essential qualities of money inherent in the original Bitcoin software. Over the years, these qualities were filtered out of Bitcoin Core and progress was stifled by various people, organizations, and companies involved in Bitcoin protocol development. The result is that Bitcoin Core is currently unusable as money due to increasingly high fees per transactions and transfer times taking hours to days. This is all because of the problems created by Bitcoin Core’s blocks being full.

Bitcoin Core developer and Blockstream CTO is one of many “experts” who considers a slow, expensive network to be ideal
Basically speaking, “blocks” are groupings of new transactions that are added to the blockchain. In Bitcoin, transactions are processed block by block. Bitcoin was designed to target 6 blocks per hour, or one every ten minutes. Years ago, an artificial limit to the size of blocks was added to the Bitcoin Core code to prevent a possible attack vector where a mass number of transactions could weaken the network. At the time, transactions were free to make, so an attacker could send a huge number of transactions between his own wallets, forcing everyone else on the network to download and store large amounts of data. The block size limit was arbitrarily set at 1MB (i.e., the size of storage offered by a floppy disk from the mid-1980s). At the time, this was still thousands of times higher than the actual usage of the network demanded. It is clear that the block size limit was never meant to stifle growth of the network, but merely to defend against a theoretical attack vector.
User adoption of Bitcoin began slowly, and it wasn’t until 2012 that the blockchain was processing 250 transactions per block, or approximately 1,500 transactions per hour. It took two more years for this number to double, and by 2014 the Bitcoin network was processing 500 transactions per block.
Today, the Bitcoin Core network is at maximum capacity and processes approximately 2,500 transactions per block.

Chart showing growth of transactions/block overtime
The artificially small blocksize led to network congestion as demand for bitcoin transactions has continued to grow. Remember, to be verified and processed, a bitcoin transaction must be included in a block. If blocks are full, your transaction must wait to be included in the next block, but the next block is already full because others paid a higher fee than you, etc. This congestion has led to an ever increasing “fee market” where users pay extra to “cut in line” and move their transactions to the top of the list of pending transactions, known as the mempool. At the time of publication, there are more than 280,000 unconfirmed Bitcoin Core transactions.
To make matters worse, the developers of Bitcoin Core were either unwilling or unable to increase the blocksize to scale Bitcoin with demand. In their own words, the Bitcoin Core developers view this “fee market” and backlog of transactions as a positive trait of the Bitcoin Core network.
This has caused many in the community to create alternative cryptocurrencies as frustration with Bitcoin Core grew due to increasing fees and transaction times taking longer and longer. As a result Bitcoin Core has gone from nearly 100% market share in the crypto space to below 50% at the time of publication.
Enter Bitcoin Cash: A community-activated upgrade (otherwise known as a hard fork) of Bitcoin that increased the block size to 8MB, solving the scaling issues that plague Bitcoin Core today.

A flawed understanding of economics led to the failure of Bitcoin Core and the birth of Bitcoin Cash.

Blocksize? What is That Again?

To describe how the block size limit affects the speed and cost of transactions on the blockchain, let us use the following example:
It’s Saturday night and you’re about to visit the hottest club in town. Before this club became a big deal, it was a small local joint with a cool crowd, good music, and reasonably priced drinks in a small venue.
All of a sudden, people started talking about this venue and telling their friends, and now everyone wants to get in. The problem is, the club is in a building that can only hold 2,500 people. In this analogy, think of the club as a “block”, with limited storage capacity or size, and think of each patron as a bitcoin transaction.
When the club (block) is full at 2,500 people (transactions), the bouncer is instructed to form a line and start charging an increasingly high cover charge (transaction fees) for entry. More and more people keep coming to the hottest club in town, and as of today, the situation has become so bad that the line of people waiting outside is approximately 270,000 people long and the average cover charge is as high as $140. You’ve been waiting patiently for hours to get in, but people willing to pay more than you keep jumping to the front of the line and are keeping the club full. Even worse, each person (transaction) is only allowed to bid on their cover charge once. When you first got in line, you thought that paying $20 would be enough to get you in quickly, but now several thousand more people have joined the line and said they would pay more than you. There is nothing you can do but wait until everyone paying more than you gets in and the bouncer gets around to letting you in.
Despite this situation and much complaint from the community, the club management has stubbornly refused to move or build a larger building, and insist that a full club and ten times as many patrons waiting in line outside is not only good for business but that it would be impossible to expand their building to accommodate more patrons even if they wanted to.
In Bitcoin Core, the mempool is the lineup of people waiting to get into the club and the transaction fees are the cover charge the bouncer requires to let you into the 2,500 person capacity club.
At an average cost of as high as $140 per transaction and a line up of over 270,000 unconfirmed transactions, Bitcoin Core, a system that was created to explicitly be a “peer-to-peer-electronic cash system” has now become unusable for merchants and has priced out the majority of users in developed countries, let alone the entirety of users in smaller, developing countries.

Is Bitcoin Cash Cheaper to Use than Bitcoin Core?

Yes. Because transaction fees in both versions of Bitcoin are measured in satoshis-per-byte (a unit of Bitcoin is divisible to 8 decimal places and the smallest unit is called a “satoshi”) the way you have to accurately measure Bitcoin fees is not in dollars, but in satoshis.
Because Bitcoin Core blocks are always full and there’s a large line up of people, currently, the bouncer is charging more than 900 satoshis per byte for inclusion into a block. At the time of writing, it costs more than $30 to make a single Bitcoin transaction.
By comparison, Bitcoin Cash’s average fee is 19 satoshis per byte. With Bitcoin Cash, you can also set your fees manually as low as 2 satoshis per byte and be included into the next block, because there is plenty of room for everyone who wants to send a transaction.
 

Despite dramatic increase to fees and rapid market share loss Bitcoin Core developers refused to increase the blocksize
Bitcoin Core fees are above $30 as of December 21, 2017. This means that an address with less than $30 in it will be unusable as one must pay at least $30 in fees to even broadcast the transaction. Imagine trying to buy a sandwich for $7 and being told by the cashier, “That will be $37, please.” Even an address with $100 on it will lose a whopping thirty percent of their money as soon as they try to use it. Imagine you give your friend a $100 bill, but once it changes hands it’s only worth $70 to them. As soon as they use it, it becomes worth only $40. This is the current state of Bitcoin Core, completely broken.

Is Bitcoin Core Still Useful?

Supporters of Bitcoin Core often say that Bitcoin Core was never meant to be a currency and that its true classification is as a store of value, or “digital gold.”


Bitcoin Core developers have crippled the network due, in part, to faulty Economic understanding
To that end, they embrace and even encourage high-fees and slow transaction times. Apart from the fact that this is in direct opposition to the spirit of the Bitcoin whitepaper—Bitcoin: A Peer-to-Peer Electronic Cash System—such a claim is nonsensical since something can only be a store of value in relation to its ability to store and recall utility. If you lose more than $30 of value every time you want to use it, are you storing value or losing value? Bitcoin Core, as of late 2017, is more accurately understood as a volatile, speculative asset that is not reliably useful as a store of value, much less a form of money.
Both Bitcoin Core and Bitcoin Cash are demand-backed currencies. What gives a Bitcoin value is a combination of utility as a currency and the fact that people desire and want to own them.
Bitcoin Core no longer functions as a currency because of its tremendous fees and slow confirmation times. However, so long as demand for the coin continues, Bitcoin Core will continue to sell for meaningful value on open exchanges.



Some key metrics of BCH and BTC compared as of December 2017

Is Bitcoin Cash an Altcoin?

No. Bitcoin Cash is Bitcoin. It’s important to note that Bitcoin Cash is neither an altcoin nor a knock-off of Bitcoin Core. Bitcoin Cash is a hard fork of Bitcoin Core, meaning it shares the same transaction ledger and history of Bitcoin Core, and is true to the Bitcoin Core codebase until it diverged on August 1st, 2017.
The reality is that Bitcoin Cash is Bitcoin as it was meant to be—an electronic peer-to-peer cash system. This does not mean that BCH is BTC. Obviously, these two versions of Bitcoin are different networks, have different ticker symbols, and trade at different prices. But Bitcoin Cash, to a much greater degree, functions as Bitcoin, the digital cash system people all over the world believed in and invested in during the initial years of adoption that lead to the worldwide phenomenon of Bitcoin as it is known today. This spirit unequivocally lives on in Bitcoin Cash and is entirely absent from Bitcoin Core and its claim as a “store of value.”
Low transaction fees and quick confirmation times mean that both merchants and users from all over the world can use and embrace the Bitcoin Cash technology, benefitting themselves and their local economy while doing so.
The burden is now on Bitcoin Core to justify its ~$15,000 price tag when facing the affordable, upgraded version of Bitcoin that is Bitcoin Cash.

What Are the Advantages of Bitcoin Cash?

Average Bitcoin Cash transactions cost pennies (or less) and confirm in an average of 10 minutes, because the mempool of pending transactions is cleared with each new block. This means that Bitcoin Cash can be used in a similar manner as…well, cash.

Where Can I Buy Bitcoin Cash?

Coinbase and it’s exchange GDAX recently announced full buy and sell support for Bitcoin Cash. Create an account and to make your first BCH purchase. You can also find a list of local buyers and sellers through the LocalBitcoinCash platform. Instant crypto-to-crypto exchanges like Shapeshift and Changelly also support converting BTC to BCH. Also, the Bitcoin.com Wallet will have ShapeShift integration as of early 2018. For Canadians, nTrust is also an option.
For a full list of websites to buy and sell Bitcoin Cash, view the exchange listings on BitcoinCash.org

What Are People Doing With Bitcoin Cash?

Bitcoin Cash is being used for e-commerce, gaming, publishing, micro-transactions, and other online payments right now. Here is a short list of popular sites and services where you can use Bitcoin Cash:
  • The Accept Bitcoin Cash Initiative — A community-curated list of sites/merchants that accept Bitcoin Cash
  • Yours.org — a popular content publication platform where you can get paid and pay others for quality content
  • Tippr — A tipbot for Reddit and Twitter
  • Bitpay — A leading payment solution that offers a Visa debit card that can be loaded with Bitcoin Cash
  • Awesome Bitcoin Cash — A page featuring merchants, information, and other Bitcoin Cash projects

Why Do Some People Call Bitcoin Cash “bcash”?

There are some institutions and individuals who see BCH as a threat to their business and/or investment in other cryptocurrencies. These people oppose the existence of Bitcoin Cash and wish to undermine it as a viable alternative to Bitcoin. Instead of attempting a technical or economic critique of the low-fee, instant transacting of Bitcoin Cash these people refer to Bitcoin Cash as “bcash” on social media in hopes that this nickname will lead to confusion and diminish adoption.
If your wallet or exchange uses the term “bcash” they are likely referring to Bitcoin Cash; but, it should be noted that “bcash” is not the proper name, nor a commonly used abbreviation of Bitcoin Cash, and is a hostile attempt to confuse users. It would be best to proceed with caution when dealing with anyone who would use the term “bcash” instead of the currency’s actual name, Bitcoin Cash.

How Can I Get Involved?

Join the discussion: People all around the world are talking about Bitcoin Cash. Get involved on Twitter, Reddit, the Bitcoin.com forum, or start the discussion in a community you’re a part of!
Attend a meetup: Many cities around the world already host Bitcoin Cash meetups, including Tokyo, Oslo, San Francisco, Seattle, Seoul, London, Helsinki, and more! Don’t see your city? Start your own page on Meetup.com, and reach out to The Bitcoin Cash Fund for marketing support and goodies.
Help with merchant adoption: Money is useful for paying for goods and services, and having a healthy ecosystem of businesses supporting Bitcoin Cash is crucial. Run a business? Consider accepting Bitcoin Cash! Or talk to your favorite local businesses about accepting it.

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